Some insurance companies have preferred contractor programs under which the insurer, or a party they contract with, develops a network of contractors who are available to repair property damage for insureds.  The insurer typically subjects contractors to a background check of some kind before they are included in the network, and may require contractors in the network to adhere to certain pricing requirements.  In some jurisdictions, statutes or regulations allow insurers only to make a list of preferred contractors available to insureds, whereas in other jurisdictions insurers can offer an incentive for insureds to use preferred contractors, such as by receiving a reduction in their deductible or receiving some kind of guarantee with respect to the repairs (either from the insurer or the contractor).  The goal of these programs is to improve the quality of repairs and keep costs down, thereby benefitting both insureds and insurers. 

A recent class action filing in Ohio state court against Allstate Indemnity Company and Alacrity Services, LLC alleges that Allstate’s preferred contractor program is purportedly in violation of Ohio law.  In Boynton v. Alacrity Services, LLC.pdf, CV 12 786626 (Ohio Ct. Cm. Pleas July 9, 2012), the plaintiffs allege that Allstate required them to use one of the contractors in its preferred contractor program, and that the work was performed poorly.  They allege that Allstate has a relationship with Alacrity whereby Alacrity manages the network of preferred contractors, Allstate makes claim payments directly to Alacrity, and Alacrity retains a percentage of the claim proceeds (allegedly 2.8%) for its services in managing the network.  Plaintiffs claim that by allowing Alacrity to deduct this 2.8%, Allstate is wrongfully passing on the cost of Alacrity’s services to insureds, and that this procedure was not properly disclosed to them.  The complaint seeks certification of an Ohio statewide class and “potentially” a nationwide class.  The complaint pleads various theories of relief, including breach of contract, conversion, restitution, constructive trust, declaratory relief and unjust enrichment.

It’s too early to tell whether this case will gain any traction.  It seems to me that, assuming the facts pleaded are true, the 2.8% withholding could be properly characterized as compensation from the contractor to Alacrity. 

Tags: Allstate
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

Read more about Wystan Ackerman
Show more Show less
Related Posts
Auto Insurance Total Loss Class Action: Ninth Circuit Affirms Denial of Class Certification
February 15, 2022
Upcoming Webinar on COVID-19 Business Interruption Insurance Class Actions
May 16, 2020
Labor Depreciation Class Action: New Eighth Circuit Decision
September 28, 2017