Suit Reveals Incriminating Insurance Company Documents


Previously, I have written here about dishonest insurance company practices that led to the mistreatment of claimants. First, I discussed the policy of insurance companies to “deny, delay, defend” all claims, offering intentionally low settlements to motor vehicle accident victims, then viciously fighting anyone who dared seek actual compensation for their injuries.

Then I talked about the insurance companies’ use of computerized estimators of medical expenses that seemed to deliberately underestimate the costs, often by not taking many variables into account.

Now it seems that both of these practices are criminally documented by internal memos, policy statements, and recommendations by independent contractors. Just as the Nazis’ own fastidious records of their crimes at Auschwitz, Dachau, Belsen, and elsewhere were the only way the world could be made to believe just what was going on, so too it seems that the company’s own documents reveal that their dishonest practices are far worse than anyone had suspected.

In a trial over a claim for $1.425 billion dollars, yes, billion with a “B,” an attorney for a Richmond, Kentucky woman revealed internal documents from Allstate Insurance Co, showing that the company did revamp its claims process in the mid-1990s in order, it says, to combat fraud, although as a side product, documents reveal that the company expected to make as much as $700 million annually.

The documents reveal that it routinely offered low settlements to its claimants, 90 percent of whom accepted the claim. The other ten percent who held out for more were all treated as if their claims were fraudulent. The company charged that these claims were inflated or “padded,” based on data from its computer program Colossus (anyone remember The Forbin Project?).

Now, however, documents also reveal that not only did Allstate skew the data to produce artificially low values (as in the Colorado Case against State Farm), but allowed its adjusters to manually enter “offsets” to create an even lower value. But why would adjusters do this? Because, as documents reveal, they were under pressure from their supervisors to cut payouts by as much as 13% per year.

In their defense, Allstate attorneys claim that the practices were designed to combat bodily-injury payouts that were rising at faster than medical inflation. They claim that soft-tissue damage claims were rife with fraud.

Perhaps the only downside of this case that is revealing many dishonest insurance practices is that the claimant might be at fault here with a fraudulent claim. Apparently, the claimant’s attorney had denied requests for medical records. Further, the claimant did not disclose a previous workers’ compensation claim and concealed a pre-existing back condition. Furthermore, her claim amount kept rising from $7298 to $75,000 to $6 million to $1.425 billion, and though this final amount might be karmically justified as a punitive amount for their bad practices, it seems a shame that it might go to someone who is dishonest themselves. It is like finding oneself cheering for Stalin against Hitler.

The only remedy for this solution is for rank-and-file claimants to refuse to accept paltry settlements. If we all fight these unjust practices, they will become unprofitable as surely as if insurance companies are hit by massively unjust settlements like this one. If you or someone you love has been involved in an accident, know that the insurance companies are intentionally lowballing your claim. Demand more, and if they refuse, then contact a lawyer at to get help making them pay. This is the only way we can stop them from making record profits at our expense.