Allstate suckers its own insured after car accident
If you wondered why judges and attorneys don't respect the "good hands" people, despite all the money Allstate spends on advertising, you could go back and read about their "good hands or boxing gloves" memoranda: more than a year ago we put an entry in the log describing Allstate's policy emphasizing profits and hard-ball litigation over its fiduciary duty to insureds. If you don't want to take the time to go back to that memorandum, read Thornton v. Allstate Insurance Company, just decided by the Michigan Court of Appeals.
Thornton was injured in a 2001 motor vehicle collision. Under Michigan no fault law, Allstate was responsible for his medical expenses, including attendant care and rehabilitation. When Allstate "refused to pay," Thornton filed suit in 2002. Ultimately that case was dismissed by Thornton voluntarily after the parties agreed to attempt to resolve the dispute through facilitation. When facilitation did not achieve an agreement, Thornton's attorneys filed suit again in 2006, but Allstate refused to pay any benefit that was now more than one year old. (Michigan's no fault act prohibits collecting any personal injury protection benefit that was incurred more than one year before suit was filed.)
The Court agreed that all "stale" claims should be dismissed, despite an Affidavit from Thornton's attorney attesting to the fact that Allstate had agreed to waive the one-year back rule if he voluntarily dismissed the lawsuit and attempted a facilitated settlement. Thornton argued that the terms of the parties' agreement constituted a factual question to be decided after weighing the testimony of Thornton's and Allstate's negotiators.
The Court disagreed, holding that under Michigan's MCR 2.507 a purported agreement between the parties will not be enforced unless there is a writing signed by the party who disputes the agreement, or a confirmation of the agreement in open court by both parties. Since Thornton's original attorney had not insisted on compliance with MCR 2.507, Thornton could not collect any of his expenses that were more than one year old at the time the second lawsuit was filed. Allstate managed to avoid paying all of the unpaid expenses from 2001 through mid-2005.
Certainly, Thornton's counsel was either incompetent or unduly naive and trusting. This kind of cleverly aggressive misuse of its own insureds is standard fare, in our experience, when dealing with Allstate, and dealing with Allstate always requires excessive caution. Decades back, an insurer was considered to owe a fiduciary duty to its insured, but that quaint suggestion has been eradicated in Michigan by aggressive lobbying on the part of the insurance industry, and the holdings of the "Engler Majority" on Michigan's Supreme Court. After a collision or injury, no one should trust the word of a party in an adverse position, however, it is rare that we see from other auto insurance carriers the totally cynical behavior that is apparently mandatory policy for Allstate.