A Pennsylvania judge has ruled that Allstate Insurance Co. illegally discouraged consumers from obtaining lawyers to help resolve their personal injury claims from the insurer.

Commonwealth Court Judge Dan Pellegrini issued the ruling Jan. 18 in response to a lawsuit filed in December 1998 by Pennsylvania Attorney General Mike Fisher. Fisher accused Allstate of "willfully misleading" consumers by providing them with personal letters and documents that touted the benefits of allowing the insurance company to settle their claims without the aid of attorneys.

A hearing to set civil penalties against Allstate has been set for Feb. 15. Fisher is seeking as much as $1,000 per violation. Barbara Petito, a spokesperson for Fisher, says that one distribution of any of the forms results in a violation. She says Fisher's office does not know exactly how many violations there are, but says there are likely "thousands."

Pennsylvania is the only state to have filed such a lawsuit against the Northbrook, Ill.-based insurer. Fisher and Allstate both filed motions for summary judgment on Sept. 1, 2000. Fisher's was granted, and Allstate's was denied. (A motion for summary judgment is made after discovery is completed but before the case goes to trial.)

"This is a tremendous victory not only for Pennsylvania consumers, but consumers across the country who are involved in accidents with Allstate's policyholders," Fisher says. "No longer will they be subject to misleading or deceptive information about their right to be represented by an attorney."

Christine Sullivan, assistant vice president of claims for Allstate, says her company "respectfully disagrees" with Pellegrini's decision and intends to appeal. She says that Allstate has revised its forms over the past few years, and does not currently use the same forms that were in question in the lawsuit.

"Allstate simply provides information to claimants to allow them to make informed decisions," she says. "In an environment where people are often inundated with advertising from plaintiffs' lawyers, we believe our voice is entitled to be heard as well."

Causing "confusion and misunderstanding"

Fisher's lawsuit targeted three Allstate brochures: "Do I Need An Attorney?," "Authorization to Furnish Medical/Employment Information," and the "Quality Service Pledge." In his opinion, Pellegrini issued the following comments on each brochure:

• Of "Do I Need An Attorney?," he wrote that "clearly the intent of this document is to sway the claimant away from using an attorney to settle his or her claim and to suggest that there is no benefit to using an attorney because to do so might net a smaller settlement."
  
• Of the "Authorization to Furnish Medical/Employment Information," he wrote that "not only is this conflicting information likely to cause confusion and misunderstanding, but without the benefit of an attorney to review the document, the claimant could lose any benefit in a settlement and the information could be used against him or her if the matter went to litigation."
  
• Of the "Quality Service Pledge," Pellegrini says that the pledge is accompanied by a cover letter to the third party claimant. He wrote that the pledge is "deceptive because it serves to reinforce the cover letter's attempt to instill confidence and the belief that Allstate has the interest of the third party claimant at heart, when, in fact, it probably does not because it would be in conflict with its representation of its policyholders and its duty to its shareholders."