Missouri Judge Dismisses $7 Million in Fines Against Allstate

July 25, 2008

A Jackson County judge agreed on Wednesday, July 23 to throw out a contempt order against Allstate Insurance after determining the company had finally complied with his directions to release confidential documents.

The Kansas City Star reported on its Web site that the decision negates more than $7 million in fines that Allstate had accrued after Judge Michael Manners last year began levying penalties of $25,000 a day against the company in a bad-faith case.

The two sides agreed to settle the case on confidential terms last week, avoiding a Monday trial date. During a hearing Wednesday, Manners agreed that the company was no longer out of compliance with his order to release the confidential records and lifted the contempt order.

The case stems from an 8-year-old accident on Interstate 70 involving Allstate policyholder Paul Aldridge, of Hawaii, who struck a truck from behind, severely injuring the driver. Aldridge later sued Allstate for bad faith after it refused for years to pay a claim.

Attorneys for both Aldridge and the accident victim, Dale Deer, of Warrensburg, requested a set of records prepared by consultant McKinsey & Co. on behalf of the insurance company that showed how it set up a claims payment system in the 1990s aimed at generating big earnings while keeping claims payments low.

Allstate refused to turn over the records, saying they contained trade secrets and would reveal the company’s trial strategy.

But the company, facing issues over the records in several states, agreed in April to post 150,000 pages of documents on the Internet related to how it handles customer claims.

Information from: The Kansas City Star, http://www.kcstar.com

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