Date: 10-11-2007

Case Style: Geneva Hager v. Allstate Insurance Co.

Case Number: Unknown

Judge: Thomas Clark

Court: Circuit Court, Fayette County, Kentucky

Plaintiff's Attorney:

J. Dale Golden, Lexington, Kentucky

Defendant's Attorney:

Floyd Bienstock and Mindy Barfield, Steptoe & Johnson LLP, Phoenix, Arizona

Description:

Geneva Hager, age 60, sued Allstate Insurance Co. claiming that it's claim-handling procedures violated Kentucky's Unfair Claims Settlement Practices Act. Hager claimed that Allstate failed and refused to settle the claim that she made for injuries that she claimed that she sustained in a 1997 rear-end automobile accident in Lexington, Kentucky until late in 1999 after her case was scheduled for trail. She claimed that Allstate's policies and procedures for handling CCPR and MIST claims were unfair and unreasonable. She claimed that the "McKinsey" documents proved systematic bad faith on Allstate's part. McKinsey & Co. was hired by Allstate to overhaul its claims handling process in the 1990s. The documents describe the claims handling as a "zero sum economic game" in which "Allstate gains" and "others must lose." McKinsey recommended that Allstate "hold the line" with claimants and deploy "boxing gloves." The documents were the centerpiece of his case in Plaintiff's effort to prove that Allstate purposefully delayed the payment of her claim and played hardball. She claimed that Allstate handles minor-impact, soft-tissue injury cases, or MIST cases in an unfair and unreasonable manner. Hager sought $475 million for mental anguish and $950 million in punitive damages.

Allstate claimed that its claim-handling processes, called Claim Core Process Redesign, which was implemented in 1995, were intended to vigorously investigate and root out exaggerated, "padded" and fraudulent claims. It claimed the processes actually expedite legitimate claims by measuring how quickly adjusters contact claimants and how long it takes them to close claims. It asserted that McKinsey and it determined that it should focus on holding the line in minor impact cases, which constitute the large majority of injury claims that are typically small and handled by young lawyers.

Outcome: Defendant's verdict.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: Editor's Note: There is no question that the insurance industry has gotten more difficult to deal with on soft tissue cases and have probably significantly reduced the average payout on such cases and caused many to be dismissed by plaintiff's lawyers who cannot afford to pay what it costs to present their clients cases to juries for determinations of damages.