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A federal court action in Hartford, Conn., the “Insurance Capital,” may show just how far insurers can go to discourage accident victims from hiring lawyers. For Allstate Insurance Co., of Northbrook, Ill., the issue is a matter of free speech and cost control. But for plaintiffs’ lawyers across the country, Allstate’s aggressive “Do I Need an Attorney” campaign is insultingly deceptive and fraudulent. Senior U.S. District Judge Peter C. Dorsey is currently studying Sandra L. White, et al. v. Allstate. New London, Conn., attorney Robert I. Reardon Jr. has requested certification of the case for a national class action. Plaintiffs’ lawyers estimate that hundreds of thousands of people might qualify for the national class. So far, at least 47 plaintiffs in 22 states have filed independent lawsuits, claiming they trusted Allstate and are worse off for doing so. In scripted phone calls and direct mailings, Allstate touts the advantage of speedy settlement and warns consumers that lawyers deduct a fraction of the settlement as a fee. Reardon’s suit, which has four named plaintiffs, asks Dorsey to certify the case as either a statewide or national class action. “My understanding is that our case is the furthest along of any case in the United States right now, in terms of the class certification process. We hope the judge will act on our application very soon,” said Reardon. A former president of the Connecticut Trial Lawyers’ Association, Reardon attacked the Allstate campaign through the state legislature, courts and agencies. A 1998 legal opinion from Connecticut Attorney General Richard Blumenthal found Allstate’s letters violate state law, prompting Allstate to halt its campaign in Connecticut. Yet elsewhere, battles still rage. On Nov. 30, 2000, in Richmond, Va., the 4th U.S. Circuit Court of Appeals upheld a West Virginia finding in Allstate Insurance Co. v. The West Virginia State Bar, concluding Allstate is engaged in the unauthorized practice of law with its advice. Charleston, W. Va., trial lawyer James C. Peterson initiated that case. In 1998, Peterson also attempted the first national class action against Allstate, filing in Illinois because, Peterson said, “We felt it would be fair that Allstate has to face the music in its home state.” A state judge in Chicago refused to certify a class last April 26, on multiple grounds. Peterson said in an interview this month that he’s encouraged by the 4th Circuit ruling and is about to file his own national case against Allstate. He’d also join one in Connecticut if it is certified. “The lawsuit has to be national, because the conduct is national,” said Peterson. “It makes no difference to me whether it’s in West Virginia, Connecticut or Illinois.” Like Reardon, Peterson represents individual plaintiffs who claim the Allstate campaign cost them time, money and legal rights. The recent plaintiffs’ victory in the 4th Circuit, the highest court to rule so far, has rekindled interest in a national case. The unauthorized practice of law that the federal court found “is a misdemeanor in West Virginia,” said Peterson, “and it’s prima facie proof of negligence by Allstate. I intend shortly to file a nationwide class action here in West Virginia as well.” VICTIM AS CUSTOMER Allstate’s controversial campaign grew from its 1995 “Claims Core Process Redesign,” which targeted soft-tissue injury claims, where damage and damages are hardest to prove. Allstate trained adjusters with a 500-page text that explained how to gain victims’ trust and win settlements. A copy of the manual, obtained by The Law Tribune, states that, in accidents valued between $1,500 and $15,000, do-it-yourself clients averaged settlements of $3,464, and clients with attorneys averaged $7,450. It disclosed that a claimant with a lawyer would typically “settle for two to three times more than unrepresented claims.” Through spokesmen, Allstate has defended its practices as cost control — and marketing. In an interview with The Law Tribune in 1996, Allstate spokeswoman Stephanie Kossler said that accident victims “hopefully are beginning to learn they can work with us directly. They will be treated fairly and equitably.” The Allstate form letter says claimants are to be regarded practically as customers of the company. Ultimately, said Kossler, if the settlement experience is positive, claimants might become customers. “They’d say, ‘Why don’t I become an Allstate insured?’ It’s a great opportunity for us,” she said. In Hartford the state’s largest law firm, Day, Berry & Howard, is defending Allstate. Day Berry Litigation Section heads Thomas J. Groark and Peter M. Holland sought to dismiss the White case in 1999 on grounds that “Allstate has no common law or statutory duty to settle fairly with third-party claimants.” Allstate’s courtroom argument doesn’t blur the roles of claimant and “customer.” In court, the third parties were simply legal and economic adversaries. The insurer argued that the third-party plaintiffs are neither policyholders nor judgment creditors, and thus have no rights against Allstate under Connecticut’s Unfair Trade Practices Act or the Connecticut Unfair Insurance Practices Act. Dorsey refused to throw out the case. He found the state’s unfair trade practices act did apply, and deferred ruling on the insurance act. The pleadings, according to Day Berry lawyers, are currently under seal.

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