Insurance carrier forced to disclose computerized claims-adjustment process

A federal judge in Camden has handed down what appears to be the first federal court ruling to allow an insured to inspect a carrier’s computerized claims-adjustment process. U.S. Magistrate Judge Joel Schneider directed Allstate to produce “the data, pricing and software Allstate used between 2000-2004 to adjust property losses in New Jersey,” along with passwords, keys and activation codes needed to access and use it. The disclosure was ordered in Opperman v. Allstate New Jersey Insurance Co., a suit by a couple over Allstate’s handling of their claim for damage to their home in a 2004 fire. The Oppermans allege Allstate omitted and underpriced many items and they could not find a reputable builder willing to do the repairs at Allstate’s price. The Oppermans sued Allstate on behalf of a class of similarly situated individuals making claims under Allstate policies. Although Allstate and its software licensing company opposed the inspection of its claims adjustment software, Judge Schneider said the plaintiffs’ need for access outweighs the potential harm from disclosure of trade secrets. It is unknown whether Allstate intends to appeal the ruling.

This case will no doubt be cited by plaintiffs’ attorneys in New Jersey (most likely with success) to gain access to claims processing software and related tools from insurance carriers.

Greg Lois is the managing partner of LOIS LLC and dedicates his practice to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 & 2017 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@loisllc.com