Allstate suspended in Florida

[Guest guest]

Dear Doctors:I wanted to update you on an issue I have been working on for a number of years that impacts your practice - the McKinsey Documents.  These are a set of documents generated by the worlds leading consulting company McKinsey & Co. for Allstate in the mid 1990s during its redesign of Allstate's claims handling methods.  They document McKinsey's plan, and Allstate's implementation of its claim system ("CCPR") as a way to cut claims payments to doctors and injured people.  A small number of lawyers around the country, including myself, have been working on this for several years so that the public could know how seriously they have been abused by Allstate.  Some highlights of these documents include a discussion of how Allstate should stop treating certain injured people with "Good Hands" and start treating them with "Boxing Gloves," as well as how they are to implement a "zero-sum game" where if Allstate wants to win (profit more), doctors and their injured patients have to lose (financially.)   There is also a discussion of how Allstate and McKinsey intended on changing the insurance market by changing the public (and juror's) perspectives (how to get the public to distrust trial lawyers and turn away injured people when on juries) as well as how to influence legislation to prevent them from being held legally accountable for their conduct.   In short, its all worked like a charm, leading Allstate to generate earnings of over 3000% more since implementing this program in the mid 1990s.  While cutting claim values by 30%, the company has asked for repeated premium increases from state insurance regulators, resulting in record profits despite unprecedented natural disasters in our country.Late Friday, April 4, 2008, the District Court of Appeals, First District, State of Florida upheld the Florida Office of Insurance Regulation’s suspension of Allstate from writing insurance in the State of Florida.  The Office had suspended Allstate weeks before for a refusal to produce the McKinsey documents during an investigation of the company.   That investigation, started as a result of the media surrounding the Trial Guides legal book From Good Hands to Boxing Gloves, and Hunter’s reference to the same issues in a recent paper, resulted in Allstate being cut off from a market comprising 17% of its national sales.  The Florida court found Allstate guilty of arbitrary reductions of “bodily injury claim payments to its policyholders and beneficiaries by up to 20%.”  It also determined that Allstate was engaged in ongoing criminal activity by failing to cooperate with the Office of Insurance Regulation’s investigation of a crime, and that this constituted a danger to the public health, safety or welfare of citizens.  Realizing the seriousness of this, given a pending shareholder lawsuit against the company in Illinois for other problems resulting from the company’s refusal to turn over the documents in several cases nationally (including a $25,000 penalty per day for contempt), Allstate posted 150,000 documents related to McKinsey on their web site.   This number of documents is substantially more than the number they had represented were “all” of the McKinsey documents, to several courts in the country (around 12,900).  But it wasn’t that ruling alone that scared Allstate into finally disclosing the documents.  It was that Trial Guides is about to release a public version of From Good Hands to Boxing Gloves.  As the Miami Herald-Tribune said just as that book was going to print “Berardinelli's plan to publish a book for the general public next month, and a Florida appellate court decision against Allstate on Friday, may have finally convinced Allstate it was losing the war.”Please note that while the McKinsey documents are now available on Allstate's web site, only the book by Berardinelli called "From Good Hands to Boxing Gloves" will tell you what they mean in detail, and the financial and practical aspects of how they have impacted claims.  Only plaintiff lawyers can purchase the legal text which is around 700 pages long.  For all others interested in this topic, you can pre-order the public book now at http://www.trialguides.com/allstatebookpublic.htm   or on Amazon.com  I got to see an advance copy of the public book, and I must say that even I learned a few important things.  It will give you a good wake up call as to what has happened in your insurance practice.The problem is, that McKinsey didn't just consult Allstate.  They consulted a number of other insurers, and so some of the practices implemented at Allstate at McKinsey's suggestion (Colossus, MIST, etc.) are now widespread, perhaps most notably the Minor Impact - Soft Tissue ("MIST") strategy of paying very low amounts on these claims or taking them to trial.  As for McKinsey, its lack of concern for you and your patients is nothing new; it was the primary strategist behind Enron's business model.  I encourage you to each forward this to any legislator or insurance commissioner with whom you have contact.  They have been used just like the public as Allstate's pawns in profiting at the public's expense.  Its time that this unprecedented profiteering at the expense of the American people ended.Here are a few more links tied to this story:The Herald Tribune Story:http://www.heraldtribune.com/article/20080406/NEWS/804060659/1661The McKinsey Documents posted at Allstate's web site:http://media.allstate.com/categories/54/releases/4393Respectfully,Dr. DeShaw, Esq. Dr. DeShaw, Esq., P.C.Portland OfficeFox Tower805 SW Broadway, Suite 2720Portland, OR 97205(503) 227-1233Seattle OfficeColumbia Center701 5th Ave., Suite 4200Seattle, WA 98104www.doctorlawyer.net(866) THE-FIRM