Allstate Insurance Co. will reimburse thousands of Washington
drivers for out-of-pocket medical expenses under a tentative
settlement of a class-action lawsuit.
Pamela Coffell of Snohomish
County sued Allstate in 2005, alleging that the company arbitrarily
limited payouts of reasonable medical expenses resulting from a car
Rather than cover the full cost of her medical bills, the company
used a billing software program that arbitrarily determined the
average pay rate for a procedure in the geographical area and then
paid out only 85 percent of the rate, said David Breskin, an
attorney for plaintiffs.
Coffell had personal-injury protection on her car insurance and
paid premiums on the policy, believing that Allstate would cover the
full cost of reasonable expenses regardless of who was at fault,
said Robert Kornfeld, another attorney for the plaintiffs.
After she was involved in a car accident in July 2004 and
submitted her medical expenses, Allstate often didn't cover the full
costs, leaving her to make up the difference, Kornfeld said. The
company never explained why, he added.
The amount may have been small each time, but it added up to
hundreds of dollars that Coffell had to pay out of her own pocket to
cover the gap, Kornfeld said. "They should be forced to disclose
that. It's not fair," he added.
Ryan Priest, a spokesman for Allstate, said the company has
entered a tentative settlement. "However, we deny wrongdoing in
connection with the litigation," he said. "We believe our medical
bill review practices are in full compliance with Washington state
A hearing to complete the settlement is scheduled for Nov. 19
before King County Superior Court Judge William Downing.
The lawsuit, which was certified as a class action, may affect
30,000 to 40,000 insured in this state, Breskin said.
The tentative settlement covers anyone who was injured in an
accident covered by an Allstate car insurance policy and filed
claims under personal-injury protection or Medpay coverage and whose
claims were adjusted using "the ADP or Mitchell Medical bill review
system," according to the settlement.
Those covered by the lawsuit will receive $45 and a percentage of
their out-of-pocket expenses based on their coverage, according to
"Adjusters do use medical review databases to assist in making
fair and accurate claim payment determinations, and that is a common
practice in the insurance industry," Priest said. "Without proper
medical bill review, auto insurance could quickly become a blank
check for inflated charges and potential fraud."
But attorneys for the plaintiffs argued that Allstate didn't make
a determination that such expenses were unreasonable before deciding
not to pay them in full. Consumers might want to consider that
before buying the policy, they said.
Personal-injury protection "covers reasonable and necessary
medical expenses for injuries sustained in an automobile accident,
up to three years from the date of the accident and up to $10,000,"
according to the state Insurance Commissioner's Office. It also
allows for income replacement, funeral expenses and loss of
Washington has a mandatory insurance law, but it doesn't require
drivers to have personal-injury protection. Insurers, however, are
required to offer the coverage.
Allstate settles lawsuit -
Insurer will reimburse drivers for medical costs (PDF Version)