The Insurance and Reinsurance Report

Allstate Settles Class Action Discrimination Lawsuit for $4.5 Million

EEOC v. Allstate Insurance

(Eastern District of Missouri, September 14, 2009)

 

On September 14, 2009, Allstate settled an age discrimination action agreeing to pay 90 former employees approximately $4.5 Million. The litigation arose out of Allstate’s efforts to convert its workforce from employees to independent contractors.

 

In order to facilitate the transition, Allstate enacted a hiring moratorium for one year, beginning in 2000. It was alleged that the moratorium had a disparate impact on individuals over 40 years old. In addition to the payment, the stipulated order provides for discrimination prevention training, posting of notices and other relief designed to educate Allstate managers in order to prevent future violations. 

 

For a copy of the settlement agreement, click here

 

By Brian R. Biggie and Joseph A. Oliva

 

http://www.goldbergsegalla.com/attorneys/Biggie.html

http://www.goldbergsegalla.com/attorneys/Oliva.html

Deception and Estoppel Preclude Insurer's Claim for Deductible Reimbursement After Class Action Settlement

American National Fire Insurance Company v. York County (1st Circuit (Me) August 5, 2009)

The insured, York County, was sued in a class action for its strip search policy. ANFIC covered a period during which these claims arose. The ANFIC policy had a $5,000 per occurence deductible, which ANFIC maintained applied to each claim. ANFIC previously reserved its rights on this issue. ANFIC after protracted negotiations agreed to participate in a class settlement where it contributed $750,000. The record indicates that under any calculation (with the deductible applied per claim or not), the entire $1M ANFIC policy was at risk if the matter proceeded to trial. After the suit was resolved, ANFIC commenced an action against York County to recover the $750,000 payed eupon the basis that a deductible should be credited for each of the almost 1,500 claims. The District Court granted sumamry judgment to York County and the First Circuit affirmed, stating that "actions speak louder than words" when it came to ANFIC entering into the agreement without reaffirming its per claim deductible position. The Court found that insurer misled the County of York and that the County relied upon the insurer's representations to its detriment.

For a copy of the full decision, click here

By Daniel W. Gerber and Thomas F. Segalla

http://www.goldbergsegalla.com/attorneys/Gerber.html

http://www.goldbergsegalla.com/attorneys/Segalla.html

Class Action Lawsuit Filed Against Insurance Brokers for Allegedly Assisting the Robert Allen Standford's Ponzi Scheme

Samuel Troice et al v. Willis Group Holdings, LTD et al

(Northern District of Texas, July 2, 2009)

 

Just days after it was announced that fallen Stanford Financial Group’s disgraced CFO, James Davis, would plead guilty to his role in Stanford’s alleged $7 billion ponzi scheme, a group of Mexican investors filed a class against complaint against Stanford’s insurance brokers, including Willis Group Holdings, Ltd., alleging the brokers effectively became partners in the ponzi scheme by issuing letters certifying that Stanford was “safe and sound,” and making representations regarding the existence of insurance coverage for the investments, including undergoing annual “stringent” risk management reviews.  The letters were used by Stanford in marketing their allegedly fraudulent investments.

 

The plaintiffs claim Willis “crossed the line from being mere insurance brokers…to joining the [Stanford] sales force” by issuing the letters   It is alleged that the brokers knew or should have known that the statements were false.  The causes of actions against the brokers allege that the brokers actually sold the securities through untruths and omissions, aided and abetted Stanford in its ponzi scheme, that the brokers participated in a fraudulent scheme by, and were engaged in a conspiracy. 

 

For a copy of the complaint click here

 

By Sarah J. Delaney

 

http://www.goldbergsegalla.com/attorneys/Delaney.html

Fourth Circuit Dismisses Title Insurance Overcharge Class Action

Arthur v. Ticor Title Insurance Co. of Florida

(4^th Cir. [MD] June 18, 2009)

A class action was brought against Ticor Title Insurance Co. under the federal Real Estate Settlement Procedures Act for charging excessive rates for title insurance policies and sharing the money with agents during home refinancings. The action sought treble damages for the overcharges in addition to compensatory and punitive damages for violations of the federal law, as well as negligent misrepresentation and civil conspiracy under Maryland law.

Affirming the dismissal of the action, the Fourth Circuit federal appeals court ruled that the federal claim was brought under the wrong statute and in the wrong forum since the statute does not relate to charges of excessive fees and the claims "cannot be squared with the plain language of the statute." With regard to the conspiracy and negligent misrepresentation claims under Maryland law, the Circuit Court held that they "warranted dismissal, primarily for want of exhaustion" of administrative remedies.

For a copy of the decision, click here

By Bryan D. Richmond

http://www.goldbergsegalla.com/attorneys/Richmond.html