Tuesday, 04 March 2008 16:17

Supreme Court Refuses to Hear Any More Appeals from Allstate on HB 1131

The last avenue for relief from the strictures of Texas H.B. 1131 has been blocked off for Allstate Insurance Company as the U.S. Supreme Court turned down the company’s petition for writ of certiorari, refusing to hear further appeals. After nearly five years of fighting, it appears the collision industry and the state officials who supported them by banning tied repair shops in the state have prevailed. The 5th U.S. Circuit Court of Appeals in New Orleans dismissed Allstate’s  request, saying the law did not violate the Constitution.

“While we are disappointed that the Supreme Court declined to hear Allstate’s challenge to Texas H.B. 1131,” explained Allstate’s Communications Manager Mike Siemienas, “we are continuing to provide exceptional service at the more than 60 Sterling shops nationwide including the 15 we currently operate in Texas. Allstate supports customer choice when choosing a repair facility and we believe Sterling should be an option available to consumers across the country.”

Now, by the order of the Courts, consumers in Texas have the option to choose a repair shop other than an Allstate-owned Sterling Collision Center. The saga of H.B. 1131 can be found at www.autobodynews.com.

Problems abound

Meanwhile, all is not quiet on the eastern front as Allstate continues to battle in the Florida courts. On October 16, 2007, the Florida Office of Insurance Regulation (FLOIR) issued subpoenas to several Allstate companies doing business in Florida. The subpoenas directed the Allstate companies to appear in a public hearing in Tallahassee to testify about the companies’ reinsurance program, their relationships to risk modeling companies, insurance rating organizations or companies and insurance trade associations. All appropriate company documents related to the above topics also were to have been provided before the January 15, 2008 hearing.

Those hearings were abruptly halted, however, by Florida Insurance Commissioner Kevin McCarty claiming that Allstate had failed to submit all the requested documents.

“Allstate’s total lack of cooperation and responsiveness made it unproductive to continue the hearing,” said McCarty. “The bottom line is that it is not fair to Florida consumers that this company has not complied with our subpoenas and is not willing to explain to us their relationships with rating agencies, modeling companies and trade groups and how these relationships have influenced the huge rate increases they have requested. I am as deeply concerned as any consumer at the lack of respect that Allstate has shown toward their statutory responsibilities.”

FLOIR General Counsel Steve Parton further explained that “Allstate did provide some documents, but refused to provide documents specifically related to their communications with catastrophe modeling companies, insurance rating organizations and insurance trade associations.”

Commissioner McCarty advised those in the hearing that he was adjourning to consider his options, which could include a fine, suspension or even revocation of Allstate’s certificate of authority – essentially taking away its right to do business in Florida.

The very next day, McCarty suspended the certificate of authority of Allstate Companies to write new insurance in Florida until they fully comply with the subpoenas. “In view of Allstate’s ongoing, blatant disregard of our subpoenas, I have little choice but to take an action that will send a clear message about how seriously I am taking this issue. Suspending their certificate of authority to write new business in our state should make my point.

“If Allstate is willing to pay $25,000 per day in fines to a Missouri court for its ongoing failure to provide similar documents, it’s obvious to me that it will take more than a monetary sanction to get them to comply with our subpoenas.”

Instead of documents, Allstate submitted 51 pages of objections to the subpoenas. The suspension applied to Allstate Insurance Co., Allstate Indemnity Co. and Allstate Property and Casualty Co., and it only suspends the companies from writing new business in Florida. Existing policyholders will not be affected.

This was the first time the FLOIR suspended a company for failure to “freely” provide he documents required by Florida law.

Shortly thereafter, Allstate filed an Emergency Motion for Immediate Relief in the First District Court of Appeals challenging the suspension.

McCarty stood his ground, however, asserting that he was standing behind his Order. “This is just another step in the process that enables Allstate to further delay production of the documents we requested. Allstate’s motion is not unexpected, and it will not stymie my commitment to Florida’s consumers to get to the bottom of this issue.”

Both sides move forward in courts

To this end, the FLOIR filed its response with the Court seeking to have the suspension of the Allstate Companies’ certificates of authority reinstated after the Court stayed the suspension.

“The stay was only a minor setback,” added McCarty. “Everyone needs to keep in mind that the full appeal is still pending before the court. Florida consumers deserve to know what is in the documents that Allstate is so aggressively guarding, and my office is determined to get them.”

Continued Bob Hunter, director of insurance for the nonprofit Consumer Federation of America and a former Texas insurance commissioner, “It seems to me that providing the requested documents should be an easy decision, unless Allstate really has something to hide.”

“While I am disappointed that the District Court did not decide to reinstate my office’s suspension of Allstate,” stated McCarty, “I am encouraged that the Court on its own motion has decided to expedite the appeal process.”

The District Court of Appeals has expedited Allstate’s appeal of the commissioner’s January 17 Order suspending the companies’ licenses to write any new business in Florida and has directed that briefs addressing the issue be filed.

As required under Florida law as part of the process that began when the Immediate Final Order was issued, McCarty filed an administrative complaint on a non-emergency basis seeking to suspend the certificates of authority of the Allstate Companies to write new insurance policies in Florida.

The complaint is based in part on Allstate’s failure to provide witnesses and documents as subpoenaed by the Office; falsely labeling subpoenaed documents as trade secret and falsely certifying its rate filings. The complaint also alleges that Allstate violated Florida law by not properly certifying its rate filings as required by House Bill 1A, passed in January 2007.

“Seeking to suspend a company’s license is not something we take lightly,” said Parton. “However, in light of their defiance of the Florida Insurance Code, we think it is necessary to make the point that actions such as we have seen by Allstate will not be tolerated.”

This story promises to be as complicated and intriguing as the saga of H.B. 1131.

Documents related to this case can be found via www.floir.com.

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