In the mid-1990s, Allstate Insurance underwent a radical change designed to increase its profits. With the help of McKinsey Consulting, Allstate made a radical shift in its policies that aimed to force personal injury claimants, including its own customers, to accept reduced payouts or face years in court. For example, in adjusting personal injury claims, Allstate started using a computer program, Colossus, that spit out rigid settlement values on personal injury claims. However, the numbers were programmed into the system so that average payouts on personal injury claims were decreased by approximately 20%. The new policies also included contacting potential claimants as soon as possible in order to try and settle their claims before the claimants had a chance to hire an attorney. And once attorneys were hired, Allstate was more aggressive in engaging in conduct that was designed to drag out cases and increase the costs to litigate, thus causing claimants to settle for reduced amounts and discouraging attorneys from taking the cases at all.
A set of documents, loosely referred to in the personal injury arena, as the “McKinsey Documents,” had been rumored to have been very aggressive in the advocacy for the policies. Because of that, plaintiffs’ attorneys have done what they can to obtain the documents for bad faith litigation, and Allstate has done everything to protect the documents. In fact, Allstate has refused to produce the documents in response to numerous court orders. In Indiana, Allstate was fined $10,000.00 for not producing the documents. In Missouri, Allstate faces a $25,000.00-a-day contempt fine that now exceeds $4 million for failing to produce the documents. And as recently as last month, Allstate argued in a New Mexico courtroom that the documents were trade secrets and releasing the documents would give Allstate’s competitors an unfair advantage.
But Allstate’s hand was finally forced. In Florida, an appellate court ruled that the state of Florida could ban Allstate from writing any new insurance policies in the state if Allstate continues to refuse to turn the documents over to state regulators. In response, Allstate has now posted over 150,000 of the documents on its website (available here). But Allstate is once again falling short. Reports from many that are familiar with the documents and who have had a chance to review the posted documents insist that Allstate has still not released all the documents.
This is an evolving story that will likely continue to get a lot of play in the blogosphere. It will be nice to see Allstate explain why they spent literally millions of dollars arguing that these documents were protected only to turn around and not only produce them, but to make large portions of them available on the internet. We’ll see how this turns out. For now, you can find posts on the topic at Victoria Pynchon’s Settle It Now blog, Slabbed (continuing coverage), the Insurance Coverage Blog, Chip Merlin’s blog (with great analysis of the problem), Tort Burger, and the Trade Secrets Blog.