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Six racketeering suits are accusing insurance companies of conspiring with an independent valuation service to underestimate the value of damaged vehicles. The suits, filed in state court in Fulton County, Ga., include three brought by individual policyholders and three proposed class actions. Allstate Insurance Co., Progressive Casualty Insurance Co., Atlanta Casualty Co., and State Farm Insurance Co. are among the defendants. The common denominator in all six cases is a Delaware corporation, CCC Information Services Inc. Chicago-based CCC collects data on the market value of vehicles, compiles it into a database, and sells the information to insurance companies and repair shops. That information includes what is known as total-loss valuations, a value assigned to vehicles when the damage is too extensive to justify repairs. CCC is the source for at least 80 percent of all total-loss valuations in the country, according to the suits. The Fulton cases, as well as others filed in different parts of the country, allege that CCC is an independent company in name only. Actually, the suits say, it works hand-in-hand with insurers in a conspiracy to undervalue total-loss vehicles, thereby saving insurance companies money. The number of those defrauded nationwide by that conspiracy, one of the suits contends, “is surely staggering.” One proposed class action, which seeks to include Georgia policyholders whose vehicles were declared total losses and who received reimbursement during the past six years, estimates the size of the class of plaintiffs in that suit would be “in the thousands.” With such numbers, the Georgia class actions alone, if successful, could be costly for insurers and for CCC. CCC has yet to answer the newly filed Georgia class actions, but has denied the claims in the three other cases. Robert S. Guttman, general counsel and senior vice-president of the company, says, “We plan to vigorously defend these matters against the allegations.” And, Guttman insists, “We continue to believe in our product.” BUTLER, WOOTEN FOR PLAINTIFFS The Georgia plaintiffs are represented by one of the state’s heavyweight plaintiffs firms, Columbus, Ga.-based Butler, Wooten, Overby, Fryhofer, Daughtery & Sullivan. While the firm is best known for its pursuit of product liability and personal injury claims, it brings considerable clout to any case. The lead plaintiffs’ lawyer in the six Fulton cases is a partner at Butler, Wooten, Jason L. Crawford. Crawford contends that the very purpose of CCC is to “save insurance companies money.” His co-counsel, Columbus sole practitioner Gary O. Bruce, agrees, calling CCC’s valuation process “a tool used to justify low-balling.” The values provided by CCC, the plaintiffs’ lawyers contend, are consistently lower than other independently published values, including those of the National Automobile Dealers Association and the Kelly Bluebook. And they’re often based on inaccurate and possibly false information, says Crawford. On an individual claim, the plaintiffs lawyers say, the low-balled value might save the insurance companies several hundred to several thousand dollars. TREBLE DAMAGES SOUGHT The suits, which allege fraud and racketeering, seek compensatory damages, treble damages under the state Racketeer Influenced and Corrupt Organizations law, and unlimited punitive damages. In court documents, CCC denies such claims and argues that its database provides an accurate and fair market value for vehicles. In a motion for a judicial declaration, CCC says the suits unfairly attack the integrity of its product. The insurers also deny the claims. In one of the cases, which names Allstate as a defendant, Allstate lawyers Robert D. McCallum Jr. and K. David Steele of Atlanta-based Alston & Bird call the allegations of fraud “sweeping generalizations” that lack a factual basis. They argue that, at best, the plaintiff’s claims are not a tort claim, but an insurance matter that falls under the jurisdiction of state insurance officials. McCallum was out of town, and Steele declines comment, other than to say his client denies the suit’s allegations. Georgia’s insurance regulations obligate insurance companies to reimburse policyholders who suffer total losses of their vehicles by replacing the vehicle or paying a cash equivalent settlement. The cash settlement must be based upon the actual cost, less any deductible, of purchasing a comparable vehicle. That means paying fair retail value, the plaintiffs contend. But plaintiff Denise Griffin, a Five Points, Ala., resident, claims in her suit that she received much less than fair retail value from Progressive, based on CCC’s valuation. CCC, she contends, came up with its figure based on a comparable vehicle available at a Columbus area dealership for $7,990. She later discovered that the comparable vehicle in question had been sold for $9,910, two weeks before CCC’s valuation was made. Griffin got just $7,050 from Progressive for her totaled car, and claims she should have received $8,970. Plaintiff Terrell Brown, of Cusseta, Ala., claims in his case that the valuation that CCC provided to Allstate on his totaled vehicle was $4,372 — $900 lower than any other published value. Plaintiffs claim that CCC’s method of arriving at their valuations is fundamentally flawed. USED CAR DEALERS CHECKED According to affidavits, CCC uses field inventory representatives, or FIRs, to visit local used car dealerships and record prices. That information is then sent to the company for inclusion in its database. The plaintiffs claim the recorded prices aren’t “asking” prices, or retail prices, but a “take” price — an arbitrary, hypothetical price the dealer claims to be the rock-bottom price. In addition, the suits contend, CCC ranks vehicles by their condition at the time of loss, from “exceptional” to “dealer ready”, to “average private,” and finally, “poor or below average. ” Nearly all total loss vehicles, the suits say, are rated “ average private.” That classification means insurers will underpay the fair retail value because the valuation is based on “average private,” and not “dealer ready” condition, the plaintiffs claim. Finally, they say CCC makes arbitrary adjustments to the value to account for a vehicle’s body, paint, mechanical condition, and interior. In the suit involving Allstate, the insurer is arguing that the case is a simple dispute over a vehicle’s value, and nothing more. “The common nucleus of all Plaintiff’s claims is an alleged violation of the Georgia Insurance Code and regulations,” defense lawyers wrote in a recent brief. They point to a clause in Terrell Brown’s policy that provides that in such disputes, either side can invoke an appraisal process. Under such a procedure, both the policyholder and the insurer name an appraiser to set a value. Differences between the two appraisers are to be settled by a third appraiser, chosen either by the first two appraisers or a judge. The defense lawyers want Fulton State Court Judge Susan B. Forsling to stay the case while that appraisal process is followed. One other Fulton judge has done just that. Fulton State Court Judge Myra H. Dixon ordered Duluth, Ga., resident Andrea DeHaan’s suit against CCC and Atlanta Casualty Co. stayed while the appraisal process proceeds. In her June 28 order, Dixon wrote that the survival of DeHaan’s tort claim “is dependent on the outcome of the appraisal process.” Not surprisingly, the plaintiffs’ legal team, which also includes Jonathan H. Waller of Birmingham, Ala.’s Campbell, Waller & McCallum, has asked Dixon to reconsider her order, protesting that if it stands, Atlanta Casualty will “trumpet” its win, and other insurers will use it against other plaintiffs. They say DeHaan can’t find an appraiser who will do it for someone suing an insurer and that the cost to hire one would exceed any amount of recovery in an appraisal proceeding. Insurance companies add that clause to policies, knowing full well that policyholders can’t really afford to invoke it, the plaintiffs’ lawyers argue, adding that the appraisal process is a “hollow” remedy.

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