Judge Drops Allstate Fine Over McKinsey Report

A Missouri judge yesterday vacated more than $7 million in fines and sanctions he had imposed on Allstate before the company agreed to make public a consultant's report on handling claims.

Judge Michael Manners in Jackson County Circuit Court, Independence, Mo., dismissed the fines Wednesday following a settlement agreement two weeks ago of a lawsuit which touched off a legal battle over disclosure of what Allstate argued was a company trade secret.

The material was demanded by a plaintiff's attorney as part of a bad faith action brought against Allstate by former policyholder Paul Aldridge, who sued the company alleging the insurer had mishandled the claim against him from an accident he had in 2000.

In the course of his suit, Mr. Aldridge's attorneys sought to obtain a report produced by McKinsey & Company, which reportedly advised the insurer to adopt a bare-knuckled strategy of handling claims by delaying action on them, denying them and going to trial.

The report became an issue in Florida, where the insurance regulator asked for it along with other Allstate material, and cancelled the insurer's ability to write new business until it came to terms and agreed to provide the documents he asked for.

Mike Siemienas, a company spokesman, said the insurer was pleased to settle the case but that settlement details were confidential.

When Allstate initially balked at providing the report, Judge Manners had imposed a fine of $25,000 a day. The company did not pay it, but Deborah Walker, judicial assistant to Judge Manners, said there had been no attempt to hold the company in contempt, so the money was never collected.