Santa Monica, CA – A former Automobile Club of Southern California insurance agent filed a class action lawsuit yesterday against the Auto Club over an illegal commission scheme designed to penalize employees who sell policies to people who previously did not have insurance. Auto Club agents can lose hundreds of dollars if they sell an insurance policy to first time drivers or others who have not had prior insurance.
The lawsuit, filed in Los Angeles Superior Court, alleges that the Auto Club and its insurance affiliate are violating a California law, enacted by the voters, that prohibits insurance companies from discriminating against people who previously did not have insurance. (Insurance Code section 1861.02(c).)
According to the lawsuit, the illegal commission scheme created financial incentives that led the company’s agents to disconnect telephone calls from consumers calling for a price quote, or quote them an artificially inflated premium, and generally to ignore customers who previously did not have insurance – all so that the agents would avoid the commission penalties.
The Auto Club whistleblower, Jill Rogers, was employed by the Auto Club in various capacities for 15 years. Her lawsuit, brought on behalf of a class of current and former Auto Club insurance agents, seeks to stop Auto Club from continuing the illegal commission scheme, and to require Auto Club to pay back commissions that Auto Club improperly withheld from agents when they sold policies to first time drivers and others who have not had insurance previously. â€¨
“The law says we have to treat all customers the same, regardless of whether they had insurance or not. It is wrong to penalize agents for complying with the law,” said Ms. Rogers, the former Auto Club agent representing other agents in the class action lawsuit. “I was a loyal employee of the Auto Club and became deeply disappointed when my superiors refused to address my concerns about the company’s practices.”
“Auto Club’s policy harms its own employees, and it harms consumers. Auto Club is disregarding the law here and it must be stopped,” said attorney Tim Blood, of Blood Hurst & O’Reardon LLP, which represents Ms. Rogers along with lawyers for Consumer Watchdog, the non-profit consumer advocacy group. “Auto Club’s agents who follow the law are entitled to be paid their full commission.”
Harvey Rosenfield, founder of Consumer Watchdog and co-counsel for Ms. Rogers noted that Consumer Watchdog had sued the company in 2002 for imposing a surcharge on motorists who could not show proof of previous insurance coverage. The company settled the matter in 2008, paying $22.5 million to approximately 120,000 policyholders. “The Auto Club is a Southern-California based membership organization that is supposed to put the interests of its policyholders first,” Rosenfield said. “It is very disturbing that the Auto Club is trying to do indirectly what it knows it is forbidden by law from doing directly.”
Click here to download the complaint: http://www.consumerwatchdog.org/resources/auto_club_conformed_complaint_10-24-12.pdf
More about that the 2002 lawsuit against the Auto Club: http://www.consumerwatchdog.org/newsrelease/settlement-lawsuits-auto-club-affiliate-announced
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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org
Blood Hurst & O’Reardon LLP specializes in the nationwide prosecution of class action lawsuits to obtain recoveries for its clients and correct corporate wrongdoing. Blood Hurst & O’Reardon LLP’s attorneys enforce the rights of consumers, insurance policy holders, homeowners, small businesses and investors in state and federal courts throughout the country. Blood Hurst & O’Reardon LLP is on the web at: http://www.bholaw.com