Insurance companies respond to Colossus class action severance

Michelle Massey, East Texas Bureau Jun. 26, 2008, 7:32am

TEXARKANA, Ark. – Newly severed defendants in the Colossus class action -- USAA and ANPAC Insurance Companies -- have filed emergency motions for the Miller County Circuit Court to reconsider and vacate the Severance Order and to stay the case pending appellate review.

Judge Kirk Johnson granted plaintiffs' request for severance on June 11 and then two minutes later, denied defendants' service and jurisdiction motions.

Defendants USAA, ANPAC, GEICO, Claim IQ Inc. and Computer Science Corporation will continue in a separate litigation with named plaintiffs, Jerry Crandall, Erlinda Soto and James Basham.

Lead plaintiffs' attorney John Goodson filed the original class action complaint on Feb 7, 2005, against Computer Science Corporations' software Colossus, Insurance Services Office's software COA, Claim IQ Inc.'s software Injury IQ and approximately 581 insurance companies who use the software.

The plaintiffs allege that the software programs are cost containment tools used to systematically undervalue bodily-injury auto claim settlements. The insurance and software companies maintain the programs provide consistent estimates of bodily-injury claims through the data inputs of insurance adjusters.

Within its emergency motion, defendant USAA asserts the judge's severance order "will only complicate everything in this litigation for all parties and the Court." Further, USAA argues the severance results in the denial of its "fundamental due process right" to stay proceedings during the appellate review of the recently denied service motions.

Although Judge Johnson wrote he would attempt to protect defendant Computer Science Corporation from unreasonable expenses and duplication of discovery, USAA argues it will not be protected from any rulings or judgments in the original litigation.

USAA contends the recent orders will force it to litigate this case on three fronts: the appellate level, the original litigation, and the newly severed litigation.

Thus, the defendant maintains the "severance order is fundamentally flawed, and the resulting burden on USAA is fundamentally unfair."

Prior to Judge Johnson's recent orders, defendant ANPAC argued the plaintiffs did not have standing to sue because as of the fifth amended complaint, there was not a named plaintiff insured by ANPAC.

Within its emergency motion, defendant ANPAC argues Judge Johnson's recent orders "bootstrap this nullity" by allowing the addition of new plaintiff James Basham within the severed litigation.

ANPAC argues the orders are violating its "due process rights under the Arkansas and U.S. Constitutions and represent an abuse of discretion."

Arguing the plaintiffs' are manipulating the judicial proceedings, the defendants are asking the Circuit Court to vacate the severance motion and the original litigation should be stayed to permit appellate review of the denied service motions.

Hensley v. CSC, Case No: CV-2005-59-3
Basham v. USAA, Case No: CV-2008-0217-3

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