PrimeTime: States Probe Allstate Insurance

ByABC News

Oct. 19, 2000 -- Janet Jones was blinded in one eye, and her face had to be reconstructed, after a car crashed into her minivan three years ago.

While she was still in the hospital, her husband Terry got a call from a representative of Allstate Insurance Company, the company that insured the driver who hit Janet. Still, Terry was struck by how thoughtful and caring the adjuster was with him. “[It] was really reassuring at the time to know somebody was there for us,” he says.

In keeping with the company’s motto, the Jones family thought they were “in good hands.” But a three-month PrimeTime investigation has revealed a calculated company effort to reduce the likelihood that claimants will hire lawyers.

Claimants Feel CheatedLinda Brown was an Allstate adjuster for 12 years. She tells PrimeTime senior correspondent Chris Wallace that Allstate employees were trained to be empathetic and to treat claimants in a friendly manner in order to prevent them from getting an attorney. Why? She says to save the company money.

Allstate faces more than 50 lawsuits for allegedly deceiving thousands of people its policyholders hit in automobile accidents. Those people could have hired lawyers to sue Allstate. But many now say that after being convinced to work with the company, without an attorney, they signed away rights and settled for millions of dollars less than they should have.

Thomas Moore, one of the dozens of people suing Allstate, spoke with PrimeTime. “Usually in an accident that’s the first, one of the things you think of — an attorney,” he says, “but they put me at ease so much, that I discounted the idea.”

Janet and Terry Jones also sued Allstate saying that after the company convinced them to settle, they learned that limited how much money they could get from the manufacturer of Janet’s defective seatbelt.

The Washington state judge in their case ruled that Allstate engaged in the unauthorized, negligent practice of law — a decision the company is appealing.

Many claimants got a brochure that explains that people hit by its policyholders may not need lawyers because they could settle “more quickly” without them. The document also said attorneys often take up to 40 percent of any payment. They also received a service pledge telling them they were Allstate customers, and an adjuster was their claim representative. In the wake of lawsuits and state investigations, Allstate has stopped using that customer service pledge.

Allstate sent PrimeTime a statement saying it is “committed to resolving all claims fairly and appropriately,” and wants to give claimants “important information” to make an “informed decision” on whether to hire a lawyer. The company refused ABCNEWS’ request for an interview.

Allegations Spur InvestigationsAccording to Brown, Allstate’s representatives dealt with claimants according to specific guidance and materials they received from the company. PrimeTime obtained a copy of a confidential 1995 company training manual that says one goal of the program is to reduce the need for attorney involvement. The manual instructs adjusters to make early contact, act as advocates, and establish empathy with the claimants. It even gives them suggested scripts to use in their conversations with claimants.

Brown, an adjuster at Allstate’s Lexington, Ky., office until last year, says she refused to read the scripts. Once a highly rated employee, she says that was one of the reasons why she was fired for poor performance. She in now suing Allstate.

Officials in nine states have opened investigations into Allstate’s practices. Pennsylvania Attorney General Mike Fisher is suing Allstate for violating consumer protection laws, arguing the company’s actions were fraudulent and deceptive. “[They] say that ‘you’re in good hands because you’re our customer.’ [But] the injured party isn’t Allstate’s customer,” Fisher says, “they are adversaries.”

But Bob Zeman, of the National Association of Independent Insurers — a group that lobbies for Allstate and other companies — denies Allstate is misleading injured drivers. He says the company’s efforts are aimed to counter ads by trial lawyers looking for business.

Zeman cites studies done by the Insurance Research Council which found that people with attorneys received an average of $800 less — after paying legal fees — than people without lawyers.

Nevertheless, Allstate’s own 1995 training manual states the opposite, saying that people with attorneys settle, not for less, but for two to three times more money. The company says that figure is no longer accurate.

But Sandra White says that was not true in her case. White, who lost part of her knee in an accident, says Allstate initially offered her $50,000, but after she got an attorney, the company settled for $100,000. Even after legal fees, White ended up with an extra $16,000.

Thomas Moore, however, says that beyond the outrage over the money, there is a lot of heartache.“You hear about different scams and how people have been taken and you always think ‘well, that can’t happen to me,’” he says. “Well, when this was over, I figured ‘wow, boy, I’d been scammed by the best.’”

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