Could an auto insurer send injury claimants a flyer encouraging them to settle without an attorney?

Plain-English summary

In September 1998, Connecticut’s AG advised the insurance commissioner that Allstate’s “Do I Need An Attorney?” flyer appeared to violate Public Act 97-58. The law restricted insurers from telling people known or believed to have bodily-injury or wrongful-death claims against insureds that they did not need an attorney, or otherwise discouraging counsel. The AG pointed to the flyer’s suggestion of a quicker settlement without a lawyer, its emphasis on attorney fees without fuller context, and its repeated invitation to seek an offer from Allstate before consulting a lawyer.

The AG did not make the final administrative violation finding. He said the commissioner had to assess the actual communication and surrounding facts, give notice and a hearing before sanctions, and create a record sufficient to support any finding. He also analyzed a possible First Amendment commercial-speech objection and concluded that applying the law to this flyer was constitutional in the circumstances described. He recognized that a court, not the agency, would ultimately decide constitutionality in a challenge. The act targeted communications to people with claims; the opinion distinguished broader advertising to people without existing claims.

Claimants at the time

The opinion addressed an insurer’s attempt to influence whether an injured claimant hired counsel. It did not say every insurer explanation of settlement options was prohibited.

Insurance regulators and insurers at the time

The AG regarded this flyer as apparently within the prohibition, subject to the commissioner’s factual determination and hearing process. Written communications could also be submitted for advance review under the act.

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the AG itself impose sanctions on Allstate?
A: No. He gave an advisory view and left any violation finding and sanctions to the commissioner after proper process.

Q: What language troubled the AG?
A: He identified suggestions to obtain an offer before speaking with counsel and claims about delay and attorney fees that, read together, discouraged representation.

Q: Did the AG reject every constitutional challenge in advance?
A: No. He offered his view on this application and said a court would make the ultimate constitutional determination.

Background and statutory framework

The insurance department asked whether a specific insurer flyer fell within Public Act 97-58 and whether applying the act would violate commercial-speech protection. The AG evaluated the described flyer, statutory hearing process and the limits of an agency constitutional ruling.

Citations and references

Statute: Public Act 97-58.

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1998-formal-opinions/the-honorable-george-reider-insurance-department-1998016-formal-opinion-attorney-general-of-connecti

Original opinion text

The Honorable George Reider, Insurance Department, 1998-016 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General Richard Blumenthal

September 28, 1998

The Honorable George Reider

Commissioner

Insurance Department

153 Market Street

Hartford, CT

Dear Commissioner Reider:

Your office has asked this office for advice about the applicability and constitutionality of Public Act 97-58, § 1, with regard to Allstate's "Do I Need An Attorney?" flyer.

Public Act 97-58, § 1 provides:

(a) No insurer licensed to transact business in this state may, on behalf of itself or its insured, send or knowingly permit to be sent any written communication or make any oral statement to any person known or believed to have a claim for bodily injury or wrongful death against one of its insureds that affirmatively advises against the need for or discourages the retention of an attorney to represent the interest of such person in prosecuting or settling such bodily injury or wrongful death claim.

(b) If any insurer or any employee of an insurer makes a written or oral communication in violation of subsection (a) of this section, the Insurance Commissioner, after reasonable notice and an opportunity for a hearing, may impose sanctions pursuant to title 38a of the general statutes, except chapter 704 of the general statutes, including, but not limited to, the imposition of civil penalties.

(c) An insurer shall be deemed to be in compliance with subsection (a) of this section with respect to any written communication if the written communication in question has been approved, prior to its use, by the Insurance Commissioner who has determined that the proposed written communication does not violate said subsection (a).

It is important to note at the outset that the Act requires that the Insurance Commissioner determine in the first instance whether a communication violates the law. Therefore, our determination as to applicability of the statute is merely advisory. Further, should your office determine that a hearing is appropriate under subsection (b), it would be necessary for the record to contain sufficient evidence to allow the Commissioner to find facts sufficient to prove a violation before any sanctions may be imposed. With these caveats in mind, we will review the flyers and assume the following facts to be true.

Allstate Insurance Company, the State's largest auto insurer, sends its "Do I Need An Attorney" flyer to individuals involved in accidents with Allstate policyholders. (The latest version of the flyer, as revised by Allstate, is attached to this letter.) Although, it would be important to know and make a record of how quickly this flyer is sent, what is sent with it, whether it is sent regardless of whether the victim already has an attorney, and what, if any, follow-up communications occur, it appears that Public Act 97-58 prohibits the flyer's distribution. We assume Allstate sends this written communication to persons known or believed to have a claim "for bodily injury or wrongful death against one of its insureds." The following portions of the flyer, separately or together, appear to "affirmatively advise against the need for or discourage the retention of an attorney to represent the interest" of the claimant:

The offer of an attorney at Allstate expense for minor victims, for whom settlements require court approval. The representation that a study shows that insurance claims are settled more quickly without an attorney (no evidence is given why that is so, although the implication is that the claimant's attorney will create delay, and no comparative evidence is given regarding the size of settlements obtained without an attorney versus those with an attorney). The statement that attorneys "often take up to one third of the settlement" is not patently false, but the flyer does not point out that a lawyer's fee is negotiable and that under Connecticut Tort Reform legislation, the maximum allowable fee recoverable is less than 1/3 of any recovery over $300,000, including only 10% of any recovery over $1.2 million. See Conn. Gen. Stat. § 52-251c(b).

The encouragement of claimants to seek an offer from Allstate before speaking to a lawyer, which may lead to "oral statements" that discourage consulting a lawyer at all (e.g. time limits on the offer). The last paragraph repeats the "up to one-third" statement, and again encourages the claimant to seek an offer from Allstate before contacting a lawyer. We believe that an objectively reasonable person would conclude that the flyer, read as a whole, "advises against the need for or discourages the retention of" an attorney. In fact, an objectively reasonable person could conclude that the avoidance of attorneys was the flyer's sole intent. Therefore, it appears that the flyer violates Public Act 97-58, again emphasizing that the ultimate determination of this issue is yours to make.

Allstate may try to argue that its flyer is "commercial speech" protected by the First Amendment, and therefore that, as applied to the flyer, Public Act 97-58 is unconstitutional. Although an administrative agency has an obligation to construe statutes in a constitutional manner, it is not ultimately authorized to declared a statute constitutional or unconstitutional. Caldor, Inc. v. Thorton, 191 Conn. 336, 344 (1983). Thus, the determination of the statute's constitutionality must ultimately be made by a court, although some of the agency's factual findings may be important to such a judicial determination.

We believe that in the context of the flyer presented here, the statute is facially constitutional. First, a statute is presumed constitutional and the party attacking it has the burden of proving it unconstitutional beyond a reasonable doubt. Fair Cadillac-Oldsmobile Isuzu Partnership v. Bailey, 229 Conn. 312, 316 (1994). Second, the flyer is protected by the First Amendment, if at all, only to a limited extent under the doctrine of "commercial speech." Commercial speech does not receive the full measure of First Amendment protection afforded political speech, but rather "enjoys a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, and is subject to modes of regulation that might be impermissible in the realm of noncommercial expression." Florida Bar v. Went For It, Inc., 115 S.Ct. 2371, 2375 (1995).

Any constitutional challenge must therefore be analyzed under the framework established by the United States Supreme Court in Central Hudson Gas & Electric Corp. v. Public Serv. Commission, 447 U.S. 557 (1980): "At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest." Id. at 566.

Presumably, the flyer concerns "lawful activity," although to the extent your investigation and hearing in some fashion determines the flyer to be "misleading," the flyer would enjoy no protection. As to the other three prongs of the Central Hudson test, we believe that the governmental interest in regulating such communications are in fact "substantial," as reflected by the Legislature's passage of Public Act 97-58 itself, and that Public Act 97-58 "directly advances" that interest. Finally, the regulation is not more extensive than necessary to serve that interest. The Public Act only regulates communications with those who are known or believed to have claims. If Allstate wished to advertise or communicate the same information contained in the flyer in a different way (newspaper advertisements, television commercials or pamphlets available to a broader population) to persons who do not yet have claims, as an informational measure, this regulation would not prohibit it. In sum, we believe the application of Public Act 97-58, .1 to the flyer is constitutional.

We hope this has answered your inquiry.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

RB/GTD/tb