TEXARKANA, Ark. – Computer Science Corp., the distributor of the insurance software Colossus, has agreed to settle out of a pending class action in Miller County, Ark.
The settlement leaves only one company, Westfield Insurance Group, remaining out of approximately 581 insurance companies named in the original complaint.
The original class action was filed on Feb. 7, 2005, against insurance companies that use Computer Science Corp.'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 software programs to systematically undervalue bodily-injury claim settlements in an effort to increase profits. 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.
The preliminary settlement filed March 5 provides for CSC to host a Web site describing Colossus, the front-end expert system, consultation process and the tuning process. The Web site will also provide descriptions and examples on how severity points are used to compare pain and suffering and how the user of the software turns those points into dollar recommendations.
The settlement also provides for the corporation to implement policies regarding Colossus-related information in a judicial or regulatory proceeding. Computer Science will not object to the production of a Colossus consultation report in litigation. Further, the company states it will include a copy of this settlement with all Colossus-related discovery.
CSC will advise its licensees of how the software is a recommendation and settlement values will differ for individual circumstances and claimants.
"The Colossus recommendation is only a tool, and should not be used as the sole basis for determining the amount to be paid for a Bodily Injury Claim," the court documents state.
CSC denies any wrongdoing or liability and also denies the litigation met the Arkansas rules to be tried as a class action. The defendant maintains settlement is necessary due to lengthy litigation and appeals, risk and rising expenses.
The preliminary approved settlement will provide $28 million in attorney fees and costs. The final approval hearing is scheduled for Aug. 3 at the Miller County Courthouse in Texarkana, Ark.
The remaining defendant, Westfield Insurance Group, claims that even after four years of extensive litigation, plaintiffs' counsel has been unable to find a class representative with any connection to Westfield.
Westfield Group is seeking dismissal arguing that the plaintiff cannot maintain the lawsuit because there is no actual claim against them. The defendant states that the current class representative has never been a Westfield customer, submitted a claim, or had a policy with Westfield and therefore has "lack of standing."
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.
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. Computer Science's agreement includes the settlement of the separate litigation.
The lead plaintiffs' attorneys are John Goodson and Matt Keil of the Texarkana law firm Keil and Goodson. Other class counsel includes Oklahoma City attorneys, Jason Roselius, Chad Ihrig, and Derrick Morton of the law firm of Nelson, Roselius, Terry, O'Hara, and Morton; attorneys Reggie Whitten, Simone Gosnell Fulmer and Michael Burrage of the law firm of Whitten, Burrage, Priest, Fulmer, Anderson, and Eisel and Texarkana attorney Michael Angelovich of the Nix, Patterson, and Roach law firm.
Miller County Circuit Court Judge Kirk Johnson is presiding over the litigation.
Case No: CV-2005-59-3