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Allstate must pay $21 million for defaming doctor

March 22, 2011 by Steven M. Gursten

Michigan auto insurance attorney warns car accident victims about insurance companies targeting doctors that they don’t like

Claims adjusters regularly discourage injured Michigan car accident victims from treating with certain doctors that claims adjusters don’t like. They can’t legally do this, of course, but it still happens every day. Some doctors are too much of an “advocate” for injury victims, and actually have the audacity to stand up for their patients. So many insurance companies and claims adjusters steer people to doctors they know are more conservative (read: send hurt people back to work faster).

In some cases, such as where there is traumatic brain injury, there are only a small handful of doctors in Michigan who provide TBI treatment in private practice outside of the major hospitals, so the insurance companies routinely refuse to pay submitted claims (our auto insurance attorneys are frequently called to help crash victims get their medical bills paid for, when insurance companies refuse to pay). These insurance companies also come up with all sorts of ways to give these doctors a very hard time.

But what Allstate Insurance Company did to one doctor who regularly treated auto accident victims is in a league of its own.

In a nutshell, Allstate Insurance Company decided that it would do everything it could to destroy a radiologist’s medical practice and stop him from treating auto accident victims.

According to Supreme Court of Arkansas’s January 2011 opinion in the case, in order to discourage auto accident victims from using Dr. Jon Dodson’s physical therapy services — and to discourage car accident lawyers from sending their injured clients to the doctor for help — Allstate refused to pay claims that involved his services. And through its agents, Allstate began getting the word out that Dr. Dodson was running an “illegal” practice.

Allstate’s smear campaign worked — at least in the short term — because the doctor was effectively run out of business.

Allstate tries to ruin a doctor who treats car accident victims

In the end, Allstate came out the loser. An Arkansas jury slapped the auto insurance giant with a $21 million verdict for compensatory and punitive damages, and the Supreme Court of Arkansas upheld the verdict in Allstate Insurance Company v. Jon H. Dodson, M.D.

In rejecting Allstate’s objection to the $15 million punitive damage award, the Supreme Court of Arkansas said the following:

“The enormity of the wrong is great enough to support punitive damages, considering that Allstate continued this conduct over a period of several years, resulting in severe damages to [the physical therapist’s] reputation and medical practice. Also supportive of the assessment of punitive damages is the fact that this course of conduct was taken by a nationally recognized insurance agency and, apparently, in accordance with their national claims practices and procedures to curb small, soft-tissue claims.”

It starts with a complaint from Allstate

Dr. Jon Dodson is a radiologist whose practice in Little Rock and Pine Bluff, Arkansas, provided, among other services, physical therapy treatment to auto accident victims.

Allstate began its crusade against Dr. Dodson with complaints about his physical therapists: the insurer claimed that Dodson’s therapists were not properly licensed, according to the Supreme Court of Arkansas’s opinion. Soon Allstate’s complaints were followed by actions. The insurer began to refuse to pay claims submitted by auto accident victims who had availed themselves of Dodson’s physical therapy services.

That was followed by a two-prong smear campaign. First, Allstate adjusters badgered Allstate customers who had sought physical therapy from Dodson for their auto accident-related injuries. The adjusters told Dodson’s patients that he was padding his bills, billing for unnecessary services, “running an illegal business,” and using “illegal personnel that were not qualified to give therapy.” Second, Allstate sought to further choke off Dodson’s business by targeting the attorneys who sent their auto accident clients to Dodson for therapy.

The “word on the street” was that clients who went to Dodson got less money in their auto accident settlements and would not get their physical therapy bills covered. Soon enough, the lawyer referrals to Dodson’s practice dried up.

Taking Allstate Insurance Company to court

Desperate and at the end of his rope, Dr. Jon Dodson did the only thing he could do. He sued Allstate and two of its insurance adjusters. In his complaint, he alleged defamation and tortuous interference with his business.

There were a series of trials and appeals, but finally Dodson prevailed. At his third and final trial, a jury clobbered Allstate with a $6 million compensatory damages award and a $15 million punitive damages award. The jurors were no doubt moved by expert testimony that Allstate had a “nationwide practice of deliberately low-balling small insurance claims for bodily injury and taking advantage of financially-vulnerable personal injury victims.”

In rejecting Allstate’s objection to the compensatory damages amount, the Supreme Court of Arkansas said:

“[T]here was substantial evidence to support the jury’s verdict for compensatory damages. We further hold that the is compensatory damage award of $6 million does not shock the conscience of this court or demonstrate passion or prejudice on the part of the jury, especially in light of [expert] testimony estimating Dodson’s lost profits to be between $8 million and $14 million.”

Lucky for Dr. Dodson that he found himself in the “good hands” of a conscientious, fair-minded Arkansas jury and Arkansas’s justice-driven supreme court.

I’ve blogged and written about this insurance abuse before – especially Allstate’s famous 3Ds – Delay, Deny, Defend strategy against auto accident victims. On Thursday, I’ll discuss Allstate’s use of MIST Colossus software in efforts to low-ball injured auto accident victims who need protection.

Steve Gursten is recognized as one of the nation’s top attorneys handling serious car accident and truck accident lawsuits, and insurance litigation. He routinely writes about insurance company abuse and the No-Fault laws in Michigan, and is available for comment.

Related information:

Dealing with auto insurance companies in Michigan

Michigan insurance attorneys call out greedy auto insurance companies

How to read your auto insurance policy

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (248) 353-7575 for a free consultation with one of our auto insurance attorneys.

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