Only two defendants remain in Colossus class action

Michelle Massey, East Texas Bureau Nov. 19, 2008, 7:00am

TEXARKANA, Ark. – Following four years of intense discovery requests and un-ruled upon motions, only two defendants remain and continue to fight in the massive Colossus class action in Arkansas court.

Out of approximately 581 insurance companies originally sued, only the Westfield Insurance Group remains. The other remaining defendant is the owner of the Colossus computer software, Computer Science Corporation.

The original class action was filed on Feb 7, 2005, against insurance companies that use Computer Science Corporation's software Colossus, Insurance Services Office's software COA, and Claim IQ's software Injury IQ.

The proposed class action alleges that insurance companies use these programs to systematically undervalue bodily-injury claim settlements in an effort to profit. Defending the use, the insurance companies argue these programs can provide a consistent estimate for bodily-injury claims through the data inputs of insurance adjusters.

Recently, the proposed class of plaintiffs filed the first amended motion for class certification, announcing the remaining plaintiff seeking class representation is Oklahoma resident Chad Hunter.

Plaintiff Chad Hunter's bodily-injury accident at issue occurred in 2001 with OneBeacon Insurance Group responsible for the claim. Hunter settled his claims for $25,250 and released OneBeacon Insurance Group from further liability.

Although he signed a release of liability, Hunter then pursued OneBeacon again in the Colossus litigation and has recently settled his claims against OneBeacon, allowing the company to be dismissed from the Colossus lawsuit.

The plaintiffs maintain Hunter is an adequate class representative due to the alleged scheme between insurance and software companies.

The court document states, "Hunter asserts claims for which he seeks a joint and several liability determination against defendants CSC and Westfield based on their participation in the 'Overarching Colossus Scheme' – that is, engaging in an overarching fraudulent scheme to conceal the truth about Colossus from the public and to wrongfully profit by using Colossus in the adjustment of bodily injury claims, including UM/UIM claims. "

However, defendant Westfield Group is opposing the motion for class certification and seeking dismissal arguing that this plaintiff cannot maintain the lawsuit because there is no actual claim against them. The defendant states that Hunter has never been a Westfield customer, submitted a claim, or had a policy with Westfield and therefore has "lack of standing."

Further, Westfield argues that Hunter does not fulfill the six requirements necessary for class representation: (1) numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (superiority).

The complaint asserts claims against Westfield for breach of contract, insurance bad faith, unjust enrichment, fraud, constructive fraud, and conspiracy. With no insurance policy or insurance claim against Westfield, the insurance company argues Hunter cannot maintain those claims.

Although this litigation has been pending for more than four years, Westfield believes that the plaintiffs' counsel has been unable to find a class representative with any connection to Westfield.

With regard to the "overarching scheme" or civil conspiracy, Westfield states it did not set savings targets with the Colossus software but "used past bodily injury settlements as a guide, thereby ensuring that it set Colossus to reflect the actual values for claims, not some arbitrary savings target."

Elaborating further, Westfield insists that it has a clear history of paying 40 percent more on settlements than the Colossus benchmarks.

According to the most recent scheduling order, a hearing on the defendants' motion to dismiss will be held on Dec. 1. The hearing on the motion for class certification is scheduled for Dec. 2.

Computer Science Corporation and other defendants USAA, ANPAC, GEICO and Claim IQ Inc. are continuing the battle in a separate litigation. The severed defendants maintain the severance was only because they refused to settle.

The lead plaintiffs' attorneys are John Goodson and Matt Keil of the Texarkana law firm Keil and Goodson.

Miller County Circuit Court Judge Kirk Johnson is presiding over the litigation.

Case No: CV-2005-59-3

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