LOS ANGELES (CN) – Policyholders claim an insurer conspires with an attorney to do “Inquisition-style” investigations to deny claims, targeting vulnerable clients, particularly minorities who do not speak English as a first language.
Jeffrey Blackman and three others sued Progressive Choice Insurance Co. and Teresa Starinieri, an attorney with offices in Carlsbad and Folsom, in Superior Court.
Blackman claims Progressive “delays and denies valid automobile and motorcycle theft and vandalism claims as a calculated component of its corporate culture.”
“Progressive’s institutional bad faith involves a flagrant, arrogant and unlawful abuse of the claims-handling process,” the complaint states. “Progressive targets vulnerable claimants, especially those of minority ethnicities who do not speak English as a first language, for protracted, Inquisition-style claims investigations that invariably end in unwarranted denial. Progressive knows from experience that these claimants generally do not possess the wherewithal or resources to enforce their rights, and so Progressive takes advantage of them to bolster its bottom line.
“In every case, Progressive conspires with defendant Teresa M. Starinieri (Starinieri), an independent attorney who subsists by investigating so-called suspicious insurance claims for budget insurance companies. Progressive retains Starinieri to find alleged inconsistencies in claims and to recommend denials based on those inconsistencies, which generally are immaterial and irrelevant to the claim itself.
“Every plaintiff in this action endured an improper adversarial claim investigation conducted by Progressive and Starinieri. Every plaintiff in this action cooperated meekly for months with seemingly endless requests for documents, records, recorded statements and examinations under oath. Every plaintiff in this action ultimately saw his or her claim wrongfully denied by Progressive based on the recommendation of Starinieri.”
According to the 24-page complaint: “Progressive markets itself as providing affordable, reliable car insurance for working class people. The company devotes a substantial amount of its budget to advertising aggressively in the print and broadcast media.
“Once it lands a customer and sells a policy, one of the first pieces of paper Progressive issues to its new policyholder is entitled New Policy Information. It reads as follows:
“What you should expect from an insurance company
“When you need help, we will respond quickly and provide a clear explanation of your coverage, rates and repair options. We respect your privacy and … [w]e appreciate your trust.
“Yet once a claim comes in, Progressive flouts its promised respect for privacy and delves into every corner of the claimant’s life in order to concoct reasons not to pay.”
Blackman says the purpose of Progressive’s claims investigations are not “to valuate a claim and pay it.” He says, “The investigation’s primary objective is to show that the theft involved an ‘intentional act’ – in other words, the complicity of the claimant.”
The complaint continues: “Progressive does not inform the claimant that the company has targeted him or her as a criminal culprit. Instead, the claim examiner or special investigator assigned to the claim calls the claimant unannounced and requests a recorded statement, ostensibly to better ‘resolve’ the claim. This is a false pretense. The goal of the interview is to begin compiling bits and pieces of statements that can be used later to deny the claim based on alleged inconsistencies.
“Once the decision has been made to fully pursue an ‘intentional act’ claim denial,
Progressive retains Starinieri.
“In order to harvest as many inconsistencies as possible, Starinieri plows extensively. She sends a seven-page Letter of Representation to the claimant, including a laundry list of demanded materials and a catalog of legal authority supposedly warranting her requests.”
Blackman says Starinieri’s letter is a “laundry list of document demands. This roster spans two pages and numbers 17 separate demands. Almost every demand is compound, rendering the actual number of requests near 50. The demanded records include the following:
“All insurance policies held by the claimant, regardless of their relationship to the
“Federal income tax returns;
“Records of any disability payments;
“Documentation of pension income;
“All maintenance records of the stolen vehicle;
“All invoices, receipts and cancelled checks from maintenance payments;
“All remote controls used for the vehicle;
“All records of purchase of the vehicle, including all records of financing and
refinancing arrangements with any banks;
“Original bank account statements, including those for personal and business
checking, savings or money market accounts;
“Original bank deposit books for every personal and business bank account;
“All monthly balance statements and profit-and-loss statements from all businesses
from which the claimant derives income;
“All partnership agreements or equivalent in any businesses run by the claimant;
“All personal and business loan agreements, notes or other similar instruments;
“All court records arising from all divorces;
“All lease agreements for home or office;
“All cell phone bills for all personal and business cell phones;1
“All home phone bills;
“All business phone bills.
“Starinieri demands receipt of the complete production within 10 days of the date of
her letter. Taking into account the time to post the letter, for the letter to reach the claimant, for the claimant to post the response and for the response to reach Starinieri, the claimant usually has 2-3 business days to retrieve and assemble the compendium of documentation.
“The letter next quotes liberally from the Penal Code, warning the claimant of the criminal penalties for submitting a fraudulent claim or false information.
“Starinieri’s letter concludes by quoting unlawful language from the insurance policy that purports to require the claimant to cooperate unconditionally with the investigation. The excerpt asserts, unlawfully, that ‘a person seeking coverage must cooperate with us in any manner concerning a claim or lawsuit.’ (Emphasis added.) …
“When the claimant inevitably cannot produce the documents within the given timeframe, Starinieri informs the claimant that she has taken the EUO [examination under oath] off calendar and will reschedule it only once she has received her full complement of demands.”
Many of the claimants give up, and Starinieri “sums up her investigation with the label ‘noncooperation’ and recommends a claim denial, which Progressive obediently follows,” according to the complaint.
The claimants who do make it to the examination under oath are usually deposed by Starinieri “for 2-4 hours, eliciting testimony on a variety of topics not connected to the insured incident but rather running to the claimant’s character. This includes questions concerning personal relationships, career status, financial records and details on bank transfers and phone bills,” the complaint states.
Starinieri then sends a letter to the claimant “that she cannot conclude her investigation until she receives additional information, which she demands the claimant procure and convey to her – again, on the claimant’s time and at his or her expense,” the complaint states.
It continues: “Once Starinieri receives all her initially requested documents, completes her EUO and receives all her supplemental information, she takes about 30-60 days to assemble a collage of snippets from the claimant’s records and testimony. She then concludes from the collage that the claimant is lying about something and recommends to Progressive that the claim be denied.
“Starinieri knows that Progressive always follows her recommendations and that the company makes no independent effort to verify her findings. Starinieri knows that based on her recommendations Progressive denies paying claims that should be paid according under California law. By acting in concert with Progressive to unreasonably deny claims, Starinieri receives personal financial gain, to herself personally and to her law firm, which promotes itself as investigating ‘suspicious’ claims for insurance companies.
“In the end, based on Starinieri’s report, a Progressive claims representative dispatches a Denial Letter to the claimant. Often the Denial Letter is riddled with typos and grammar errors, making it partially unintelligible.
“Instead, the Denial Letter defames the claimant by accusing him or her of insurance fraud. It does so by 1) first stating there is ‘no coverage for the claim’; 2) then reciting a collage of facts of the loss that suggest inherent contradiction; and 3) concluding with citation to the section of the policy titled conspicuously FRAUD OR MISREPRESENTATION, which reads:
‘We may deny coverage for an accident or loss if you or a person seeking coverage has concealed or misrepresented any material fact or circumstance, or engaged in fraudulent conduct, in connection with the presentation or settlement of a claim. After applying the facts known to us to the applicable policy language we have concluded that we are not able to afford coverage to the above captioned claim because our investigation confirmed that you made incorrect statements and representations to use with regard to material facts pertaining to your claim.'”
The policyholders seek punitive damages for fraud, bad faith, and breach of contract. They are represented by William Shernoff with Shernoff Bidart Echeverria, of Claremont.