Insurer Allstate has been hit with a class action lawsuit, accusing the company and its affiliates of allegedly citing workers compensation paid to other insureds to short claimants certain benefits they believe they are owed, allegedly in violation of California state law.
On May 3, attorneys with the firms of Hagens Berman Sobol & Shapiro, of Phoenix, and Nunes Law, of Fresno, filed suit in Fresno County Superior Court, on behalf of named plaintiff Jeffrey P. Sundquist Jr., of Fresno County.
According to the complaint, Allstate, based near Chicago, stands as the third largest insurer in California, holding an 11% share of the California insurance market and collecting about $46 million in premiums annually in California.
Robert B. Carey
| hbsslaw.com
The complaint notes Allstate has announced its premiums have increased in California by an average of 30%.
However, the complaint asserts Allstate has allegedly underpaid coverage under their policies addressing incidents involving uninsured or underinsured motorists.
Under such UM/UIM policies, such coverage generally allows Allstate customers to receive the same coverage they would receive if the other person involved in an auto collision or other incident had been fully insured.
The complaint centers on provisions of California's Uninsured Motorist Act, which specify how insurers can calculate coverage under UM/UIM policies when the damage-causing incident involves employees of a company, who may be eligible to receive workers' compensation benefits, in addition to coverage under an UM/UIM policy.
The complaint accuses Allstate of allegedly violating the California law by allegedly reducing insurance coverage by factoring in workers' comp payments paid to others.
According to the complaint, Sundquist was involved in an auto collision in September 2018, when the vehicle in which he was riding while returing from a worksite was struck head-on by a vehicle driven by another man, identified as Matthew C. Aguiar. According to the complaint, Aguiar was intoxicated at the time of the crash, and held sole liability.
Two of Sundquist's co-workers were killed in the crash, and Sundquist "suffered serious bodily and emotional injuries."
According to the complaint, Aguiar's insurance policy provided coverage only up to statutory minimums. According to the complaint, his insurer paid only $30,000, which was divided among the survivors and the families of those killed in the crash.
According to the complaint, Sundquist also received $53,000 in workers' comp benefits as a result of the crash.
The complaint says Sundquist's employer held a policy through Allstate providing for $100,000 in UM/UIM coverage. According to the complaint, the policy "should have covered the full amount of those damages not covered by workers' compesnation."
However, Allstate allegedly declined coverage for Sundquist, citing a "reservation of rights" to offset the coverage based on four categories of payments, including workers' comp benefits received.
Allstate allegedly asserted this should allow it to completely deny Sundquist's claim.
The complaint asserts the denial of Sundquist's claim stands as the company's standard operating procedure, and "reflects Allstate's legal position as a matter of corporate policy and practice" to use workers' comp payments "to offset its policy limits by 100% and eliminate any possible UIM benefits" owed to Sundquist and similar claimants.
The lawsuit further accuses Allstate of allegedly violating its own policy language in using workers' comp payments to deny underinsured motorist coverage claims.
The complaint asserts language used by Allstate in its denial letters to Sundquist "suggested that Allstate was invoking an offset based on the total amount of workers' compensation benefits received by all UIM claimants."
"Although California law allows Allstate to contract with its insureds to provide for an offset of its UIM liability by amounts insureds receive from workers' compensation, the law does not allow Allstate to write (or interpret) its policy language in a way that effectively 'transfers' its workers' compensation offset between different individual insureds," the lawsuit said.
The plaintiffs seek to expand the action to include all others in California for whom Allstate allegedly denied or reduced UM/UIM coverage, citing workers' comp coverage elsewhere.
The complaint estimates there could be thousands of additional plaintiffs within the proposed class.
The lawsuit asks the court to order Allstate to readjust claims "using proper standards and procedures and put the insured in the position they would have been had the money been paid timely."
The lawsuit further asks the court to order Allstate to pay unspecified compensatory and punitive damages, plus attorney fees.
Plaintiffs are represented by attorneys Frank M. Nunes, of Nunes Law; and Robert Carey and John DeStefano, of Hagens Berman.
In a release announcing the lawsuit, Nunes said: “We believe that California’s Uninsured Motorist Act makes clear that insureds have rights to certain benefits and compensation under their policies. We intend to fight for the thousands of Californians we believe were underpaid because of Allstate’s corporate-level decisions.”
Allstate did not respond to a request for comment.