Allstate accused of wrongfully practicing law

Accident victims advised they don't need a lawyer to handle claim

January 14, 1999|By KNIGHT RIDDER/TRIBUNE

CHICAGO -- The Good Hands People are battling in court again, this time defending their right to send materials such as a flier called "Do I Need An Attorney?" to non-Allstate customers who have been injured by Allstate policyholders.

Northbrook, Ill.-based Allstate Corp., which has been sending the information since 1995, says it is required by law to settle claims quickly and fairly, and that it is within its rights to let claimants know that they do not need a lawyer to handle a claim.

Two state attorneys general see it differently, as do five people who took Allstate's advice and later felt cheated by the amounts they received.

The insurer has modified wording in the mailings in New York, New Jersey, North Carolina, Texas and Utah at the request of the attorneys general or insurance departments in those states.

Pennsylvania's attorney general is suing Allstate, and Indiana's Department of Insurance is looking into the matter after receiving a letter of complaint from its state attorney general last month.

And Cook County Circuit Judge Kenneth Gillis ruled this week that attorneys representing the five people who felt shortchanged can continue their pursuit of nationwide class action status for their lawsuit against the insurer.

"It is only by way of a nationwide class action that you can cure the problem for everyone," said Clint Krislov of Krislov & Associates in Chicago, the lead plaintiff firm in the Cook County lawsuit.

Krislov also is supporting an action by David Novoselsky & Associates in Chicago to restrain the giant insurance company from continuing to send such notices.

That suit, and the one by Pennsylvania's attorney general, assert that Allstate is engaging in the unauthorized practice of law by sending the information.

Peter Debreceny, an Allstate spokesman, said some trial lawyers are undoubtedly upset about the mailings because they might be costing them business.

Throughout the insurance industry, claims are settled faster when claimants do not have attorneys, and according to the Insurance Research Council, 80 percent of claimants without attorneys are satisfied with the amount they receive vs. 55 percent of those who hire attorneys.

Debreceny admits that, for the industry, people with attorneys receive higher claim payments on average, but says that is because those claims are typically the more serious ones.

In his complaint, Krislov asserts that Allstate saves $8,000 per claim when claimants do not hire attorneys.

Pub Date: 1/14/99

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