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Wells v. Allstate Insurance Company

August 12, 2002



Pending before the court is plaintiff's motion to certify a class of Allstate policyholders or beneficiaries who made a claim for uninsured motorist benefits from March 20, 1997 to the present. *fn1 Although problems with typicality and commonality preclude blanket certification of the proposed class, plaintiff's allegations support the certification of a narrower one. A class limited to Allstate policyholders or beneficiaries who (1) between March 20, 1997 and October 19, 2000, (2) made a claim for uninsured motorist benefits which Allstate paid in part or in full, (3) for, inter alia, bodily injury, and (4) at some or all points during the claims process were represented by counsel satisfies the class certification requirements of Fed. R. Civ. P. 23.


The named plaintiff and putative class representative, Eunice Wells, was an Allstate policyholder on January 2, 1998, when she was struck by a car while crossing the street. The driver stopped his car, helped Wells to the curb, and provided his name and pager number before leaving the scene. Neither the name or pager number was correct. Wells suffered bodily injury in the form of a broken leg, which required hospitalization and surgery.

Wells' Allstate policy provided for uninsured motorist coverage up to $25,000. Almost a year after the accident, on December 28, 1998, Wells' then-counsel submitted a claim to Allstate for the full coverage amount, including $7,730 in medical bills and $11,040 in lost wages. Allstate declined to settle her claim until Wells provided a recorded statement and authorization to obtain medical records. By summer 1999, Wells had provided the requested information, but Allstate still refused to settle the claim.

In March 2000, Wells filed a two-count suit in Superior Court. The first count sought recovery of her uninsured motorist benefits. *fn2 The second count, brought on behalf of the class, charges a violation of the District of Columbia Consumer Protection Procedures Act, D.C. Code § 28-3904 ("Consumer Protection Act"). The complaint alleges that Allstate did not disclose material facts about its claims handling processes, *fn3 specifically that Allstate:

ù "has not divulged to the purchasing public" that it engages "in a course of action designed to specifically deny and/or delay timely uninsured motorist benefits." Am. Compl. ¶ 3.

ù "did not inform plaintiff, and others similarly situated ... that [they] would be required to retain counsel and fully litigate [their] claim[s] to a likely trial before a jury in order to collect benefits." Id. ¶ 4.

ù "failed to advise the plaintiff, and other[s] similarly situated, ... that Allstate Insurance Company ... ha[s] ... a corporate policy in effect [of] often extending low offers of settlement and if claimant insists that he/she is being treated unfairly and refuses to accept same, it adopts a 'scorched earth litigation tactic.'" Id. ¶ 11.

In ruling on a motion for class certification, a court does not reach the merits of plaintiff's case, but assumes allegations pled in the complaint are true. See In re Lorazepam & Clorazepate Antitrust Litig., 202 F.R.D. 12, 14 (D.D.C. 2001) (citations omitted). However, the court's analysis is not limited to the four corners of the complaint. "A district court certainly may look past the pleadings to determine whether the requirements of rule 23 have been met. Going beyond the pleadings is necessary, as a court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues." Castano v. American Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996) (internal footnote and citations omitted).

Following limited discovery for the purposes of class certification, Wells refined her claims to allege that Allstate altered its claims handling procedures as part of its 1994-1997 Claims Core Process Redesign, see Tr. 5/29/02 at 80, to the detriment of claimants, but failed to disclose these changes to its customers or the public. As part of that redesign, Allstate refers its uninsured motorist claims to one of three units: a unit for claimants represented by counsel, a unit for non-represented claimants, and a Special Investigations Unit. See Tr. 5/29/02 at 11.

There is evidence that claims of those represented by counsel are processed differently from claims of those who do not have attorneys. Allstate's Claims Core Process Redesign Manual contains two matrices listing the steps to investigate and verify damage claims brought by, respectively, claimants represented by counsel and claimants who do not have attorneys. See Pl. Ex. 5. These steps may be required, recommended, optional, or not required, depending on the nature of the injury (subjective or objective), whether a subjective injury was the result of an accident involving major or minor impact force, and whether the cause of an objective injury is questionable or not.

There is evidence that in almost every factual scenario involving similarly situated claimants with and without counsel, the insurer requires more steps and paperwork to settle a claim for those represented by attorneys. For example, an individual represented by an attorney who suffers a subjective injury as the result of a minor force accident is required to provide a statement or interview and employment/wage verification. For an individual who suffers the same type of injury, under the same circumstances, but does not have an attorney, the statement or interview is optional and the employment/wage verification is recommended, rather than required. For an individual like Wells -who suffered an objective injury that Allstate characterizes as having questionable causation, and who has an attorney - a statement or interview is required, and additional internal procedures (claimant carrier contact, peer records review, and medical management) are mandatory. If Wells had not been represented by counsel, an interview or statement would have been recommended, the additional procedures of claimant carrier contact and medical management would have been recommended, and peer records review would have been optional. A comparison of the Damage Verification Guidelines (for settlement with represented claimants) and the Damage Investigation Tools Matrix (for claimants without counsel) shows twenty-four instances where a more stringent claims handling procedure applies to the represented segment, and only two cases where a more stringent claims process applies to unrepresented claimants. *fn4 See Pl. Ex. 5.

Allstate acknowledges that it applies different claims handling procedures to represented and unrepresented claimants, but claims this fosters efficiency rather than delay. See Tr. 5/29/02 at 15-16. But Allstate concedes that claimants represented by counsel receive settlements two to three times greater than those who proceed without counsel, and admits that the goal of the Claims Core Process Redesign was to reduce the level of attorney representation. See Tr. 5/29/02 at 83-84.

Wells argues, in a nutshell, that Allstate policyholders are damned if they do retain an attorney, through a more stringent, lengthy claims settlement process; and damned if they don't, through a denial of their claim or a nominal settlement offer, and that Allstate fails to disclose this information to its customers:

Allstate seeks to gain unfair advantage over the class members by preventing them from seeking legal representation to advise its own policy holders of their rights. ... Allstate seeks to delay payment or "low ball" members of the purported class in an effort to gain leverage to negotiate lower claim payments, all to the detriment of the class members. If a class member sought out the advice of an attorney, the defendant embarked on a mission to make the claim process as onerous and peril-frought as possible, seeking "in person" recorded statements, medical and wage authorization releases, [and] making the claim process slow, duplicitous and, ultimately, unfair. Pl. Mot. at 2-3.

Wells, who retained counsel and received a full settlement only after protracted litigation, falls into the "damned if they do" category. A class of similarly situated individuals, excluding claimants not represented by counsel, satisfies the criteria for class certification set forth in Fed. R. Civ. P. 23.


Plaintiff's proposed class is entitled to certification if it meets the numerosity, commonality, typicality, and adequacy requirements of Fed. R. Civ. P. 23(a), and presents a situations where "questions of law or fact common to members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3). The plaintiff bears the burden of showing that the Rule 23 requirements have been met. "In order to establish that they are entitled to certification of a class, plaintiffs bear the burden of showing that a class exists, that all four prerequisites of Rule 23(a) of the Federal Rules of Civil Procedure have been met and that the class falls within at least one of the three categories of Rule 23(b) of the Federal Rules of Civil Procedure." Pigford v. Glickman, 182 F.R.D. 341, 345 (D.D.C. 1998); AmChem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). In circumstances where the class as defined by the plaintiff does not meet the requirements of the Federal Rules, a district court has "broad discretion to redefine and reshape the proposed class to the point that it qualifies for certification under Rule 23." Wagner v. Taylor, 836 F.2d 578, 589-590 (D.C. Cir. 1987).

A. Rule 23(a) ...

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