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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
COMMONWEALTH
OF :
PENNSYLVANIA , ACTING BY
:
ATTORNEY GENERAL D.
:
MICHAEL FISHER,
:
Plaintiff
:
:
NO. 1009 M.D. 1998
v.
:
ARGUED: March 10, 1999
:
ALLSTATE INSURANCE
:
COMPANY,
:
Defendant
:
BEFORE:
HONORABLE JAMES GARDNER COLINS, President Judge
HONORABLE JOSEPH T. DOYLE, Judge
HONORABLE DORIS A. SMITH, Judge
HONORABLE DAN PELLEGRINI, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Judge
HONORABLE JIM FLAHERTY, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Judge
OPINION BY JUDGE PELLEGRINI
FILED: April 13, 1999
Presently before this Court are the preliminary objections of Allstate
Insurance Company (Allstate) to the complaint filed by the Commonwealth of
Pennsylvania (Commonwealth) alleging that Allstate has violated the provisions of
the Unfair Trade Practices and Consumer Protection Law (Consumer Protection
Law) 1 and has engaged in the unauthorized practice of law under 42 Pa. C.S.
§2524.2

1 Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §201-1 201-9.3. The
Attorney General brought the action pursuant to the authority granted to him in Section 4 of the
Consumer Protection Law, which provides:
(Footnote continued on next page...)

As alleged in the Commonwealth's complaint, since 1995, Allstate,
under its claim handling procedures, contacts individuals (claimants) who have or
may have claims against Allstate policyholders attempting to have them settle their
claims quickly by telling them they will offer them a fair amount, that they don't
need an attorney and obtaining authorization from claimants to obtain their medical
and employment records. As part of this procedure, the complaint alleges that
Allstate distributes to these claimants three one-page documents; a "Quality
Service Pledge" (Pledge), a letter entitled "Do I Need an Attorney?" (Letter), and a
form entitled "Authorization to Furnish Medical/Employment Information"
(Authorization).

(continued...)
Whenever the Attorney General or a District Attorney has reason
to believe that any person is using or is about to use any method,
act or practice, declared by section 3 of this act to be unlawful, and
that proceedings will be in the public interest, he may bring an
action in the name of the Commonwealth against such person to
restrain by temporary or permanent injunction the use of such
method, act or practice.
2 42 Pa. C.S. §2524 provides, in pertinent part:
[A]ny person, including but not limited to, a paralegal or legal
assistant, who within this Commonwealth shall practice law, or
who shall hold himself out to the public as being entitled to
practice law, or use or advertise the title of a lawyer, attorney at
law, attorney and counselor at law, counselor, or the equivalent in
any language, in such a manner as to convey the impression that he
is a practitioner of the law or a corporation complying with 15 Pa.
C.S. Ch. 29 (relating to professional corporations), commits a
misdemeanor of the third degree upon a first violation.
2

The Pledge3 states that because a claimant has been involved in an
accident, Allstate is determined to provide that claimant with "quality service"
which includes keeping the claimant apprised of the claim process and answering
any questions that a claimant may have. It also provides that Allstate will conduct
a quick and fair investigation into the facts of the case and will make an
appropriate offer of compensation to the claimant. The Pledge concludes by
stating, "Your claim representative is dedicated to carrying out this Quality Service
Pledge."

3 The full text of the "Quality Service Pledge" provides:
Because you have been involved in an accident with an Allstate
policyholder, we will provide you with quality service. In an effort
to provide you with this quality service, we promise you the
following:
1) We will fully explain the process, take the time to
answer all questions and concerns you may have, and keep you
informed throughout the claims process.
2) We will conduct a quick, fair investigation of the facts in
your case.
3) To the extent that our policyholder was at fault in the
accident:
We will assist you in providing for the repair of your
vehicle and in determining your temporary transportation
needs.
If you qualify, we will make an appropriate offer of compensation
for any injuries you may have suffered.
Your claim representative is dedicated to carrying out this Quality
Service Pledge.
3

The Letter is a document containing five questions and answers on
whether a claimant should hire an attorney.4 The Letter reiterates that a claimant is

4 The full text of the Letter provides:
(1) Am I required to hire an attorney to handle my claim?
No. In fact each year Allstate settles claims directly with many
accident victims with no attorneys involved in the claim settlement
process. In cases where the accident victim is a minor, however,
the law may require that the claim settlement be approved in court.
In those specific circumstances Allstate will provide an attorney at
no cost to you in order to obtain the court approval.
(2) Will an Attorney make the claim settlement process faster
for me?
A recent study by the Insurance Research Council found that
people who settle claims without an attorney generally settle their
claims more quickly than those who hire attorneys do.
(3) How much are attorney's fees and who pays for them?
Attorneys often take up to one-third of the settlement you receive
after deducting expenses incurred. If you settle directly with
Allstate, however, the total amount of the settlement is yours.
(4) If I don't get an attorney now, can I still get one later?
You may hire an attorney at any time in the process. In each state,
there is a time limit (generally no less than one year following the
accident) for taking legal action against our policyholder. If an
attorney believes he or she can achieve a higher settlement, you
can then see whether the attorney is able to accomplish that. And,
you may wish to hire an attorney on the condition that the
contingent fee apply only to the settlement amount in excess of
what Allstate offered you without the attorney's assistance.
(5) Should I seek the advice of an attorney?
(Footnote continued on next page...)
4

not required to hire an attorney and that the Insurance Research Council indicates
that claims may actually be settled quicker in cases where an attorney is not
involved. It provides that the final decision on whether to retain an attorney is the
claimant's, that an attorney may offer valuable advise and may be able to advance
the claimant's interests, but that a claimant may wish to seek a settlement with
Allstate first and then contact an attorney making it a condition that the attorney's
fees apply only to a settlement amount above that which was initially offered by
Allstate.
The Authorization form provides that the claimant authorizes Allstate
to contact employers, medical providers or any person with knowledge of the
claimant's injuries to provide medical and employment information to Allstate.
The form also provides that Allstate and its representatives will use the information
to verify and evaluate the claim in order to determine an appropriate resolution.
Further, it states that the authorization will remain valid until the claim with
Allstate is "legally concluded" but that the claimant may revoke the authorization
at any time by notifying Allstate in writing.

(continued...)
Whether you should retain an attorney is your decision. An
attorney may be able to provide valuable advice, and may be able
to advance your interests. However, keep in mind that attorneys
often take up to one-third after deducting expenses incurred of the
settlement you receive from an insurance company. You may wish
to seek an offer from Allstate first, and when retaining an attorney
make a condition that the contingent fee apply only to the
settlement amount in excess of what Allstate offered to you
without an attorney's assistance.
5

Based on these facts in Count I of its complaint, the Commonwealth
alleges that Allstate makes representations in these three documents that are unfair,
deceptive, misleading and create the likelihood of confusion constituting violations
of Sections 2(4)(ii)-(iii), (v) and (xxi), 73 P.S. §§201-2(4)(ii)-(iii), (v), (xxi), of the
Consumer Protection Law5 because, inter alia, Allstate:
· misrepresents to claimants that it is acting in their
interest, when, in fact, it is a legally adversarial position
relative to third party claimants when it is acting in its
own interest or in the interest of its insured;
· misrepresents to claimants that it is in the claimant's best
interest to deal directly with Allstate and that hiring an

5 Section 2(4) of the Consumer Protection Law provides, in pertinent part:
"Unfair methods of competition" and "unfair or deceptive acts or
practices" mean one or more of the following.
* * *
(ii) Causing likelihood of confusion or of misunderstanding as to
the source, sponsorship or approval or certification of goods or
services;
(iii) Causing likelihood of confusion or of misunderstanding as to
affiliation, connection or association with, or certification by,
another;
* * *
(v) Representing that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits or quantities
that they do not have or that a person has a sponsorship, approval,
status, affiliation or connection that he does not have.
* * *
(xxi) Engaging in other fraudulent or deceptive conduct which
creates a likelihood of confusion or of misunderstanding.
6

attorney is not necessary because their claim may be
settled more quickly without an attorney and will result
in a higher net settlement;
· fails to disclose that a claimant may waive valuable rights
by not contacting an attorney or that retaining an attorney
may result in Allstate paying a higher gross settlement;
and
·

discloses that information gathered under the
authorization is not used simply in the claims process but
may be used against the claimant in litigation.
The Commonwealth alleges that all of these misrepresentations or
failure to disclose by Allstate is part of a willful, calculated effort on Allstate's part
to mislead claimants to their detriment and for the benefit of Allstate.
In Count II, the Commonwealth alleges that Allstate has engaged in
the unauthorized practice of law by making the above representations because they
involve the exercise of legal judgment regarding the merits of the claim filed by
third parties and the necessity of retaining an attorney to pursue those claims.
Based on those two counts, the Commonwealth seeks a declaration
that Allstate has violated the Consumer Protection Law and has engaged in the
unauthorized practice of law. As a remedy, it seeks an order:
· preventing Allstate from designating itself as the claim
representatives of third parties, from representing that the
Insurance Research Council is an independent, objective
source of information;
· directing Allstate to conspicuously set forth a claimant's
right to counsel and that a claimant may be waiving
7

valuable rights by not contacting an attorney, and to
disclose that the Insurance Research Council is privately
funded by insurance companies; and
· to have Allstate refrain from further violations of the
Consumer Protection Law and to pay civil penalties to
the Commonwealth for each willful violation of the
Consumer Protection Law.
In response to the Commonwealth's complaint, Allstate has filed
preliminary objections in the nature of a demurrer to both Counts contained in the
Complaint.6 In its preliminary objection to Count I, it argues that the actions of
insurance companies are regulated exclusively by the Unfair Insurance Practices
Act (UIPA)7 and claims such as the ones brought by the Commonwealth here must
be brought under the UIPA by the Insurance Commissioner. Because UIPA is
exclusive, it contends that the Consumer Protection Law does not apply to the
unfair or deceptive acts of insurance companies and, correspondingly, the Attorney
General has no jurisdiction to maintain this action.8

6 Preliminary objections in the nature of a demurrer admit all well-pleaded facts and all
inferences reasonably deduced therefrom. We will sustain the objections only if the law clearly
does not permit recovery on the facts alleged. All doubts shall be resolved in favor of overruling
the demurrer. Africa v. Horn, 701 A.2d 273 (Pa. Cmwlth. 1997).
7 Act of July 22, 1974, P.L. 589, as amended, 40 P.S. §§1171.1- 1171.15.
8 Allstate also raises in its preliminary objections to Count I that its communications were
constitutionally protected and that its communications to third parties do not constitute "trade" or
"commerce" as those terms are defined in the Consumer Protection Law. Allstate neither briefed
these issues nor raised them in oral argument before this Court. Consequently, those issues are
abandoned and will not be considered by this Court. See Jackson v. Indiana University of
Pennsylvania, 695 A.2d 980 (Pa. Cmwlth. 1997); Commonwealth v. Rodgers, 605 A.2d 1228
(Pa. Superior Ct.), petition for allowance of appeal denied, 532 Pa. 655, 615 A.2d 1311 (1992)
(issue identified but not properly developed in brief is abandoned).
8

Contrary to Allstate's contention that UIPA is the exclusive remedy
for fraudulent insurance practices and that an action cannot be brought under the
Consumer Protection Law, Section 13 of UIPA explicitly states that it is not the
exclusive remedy providing that "the powers vested in the [Insurance]
Commissioner by this act are additional to any other powers to enforce any
penalties, fines or forfeitures authorized by law with respect to methods, acts,
practices declared to be unfair and deceptive." By plainly providing that powers
vested in the Insurance Commissioner are additional to any other powers
authorized by law with respect to methods, acts or practices that are unfair or
deceptive, it cannot be clearer that the General Assembly did not intend that claims
such as the ones brought by the Commonwealth here must be brought under the
UIPA by the Insurance Commissioner.
Moreover, there is nothing in any of the language of the Consumer
Protection Law that insurance companies are not covered by its provisions, and the
General Assembly could have included such language if it desired because the
Consumer Protection Law was reenacted after UIPA. See also Commonwealth v.
Monumental Properties, Inc., 459 Pa. 450, 458 n.5, 329 A.2d 812, 815 ("there is
no indication of an intent to exclude classes or classes of transactions from the
ambit of the Consumer Protection Law. When the Legislature deemed it necessary
to make an exception from the Law's scope, it did so in clear language.")9

9 We also note that Allstate's reliance on D'Ambrosio v. Pennsylvania National Mutual
Insurance Company, 494 Pa. 501, 431 A.2d 966 (1981), for the proposition that the Insurance
Commissioner has the exclusive authority to regulate insurance companies is misplaced. Our
Supreme Court merely held in that case that it would not judicially create a private cause of
action in trespass seeking damages for emotional distress and punitive damages against an
insurance company for its alleged bad faith actions. See also Pekular, supra (Court in
(Footnote continued on next page...)
9

In Pekular v. Eich, 513 A.2d 427 (Pa. Superior Ct. 1986), petition for
allowance of appeal denied, 516 Pa. 635, 533 A.2d 93 (1987), our Superior Court
also reached an identical conclusion when faced with the issue of whether the
UIPA was the sole manner of redress for private individuals against allegedly
unfair and deceptive practices of insurance companies. The private-party plaintiffs
in Pekular filed a complaint against State Farm Insurance Company and Eich, its
claim representative, in which Count III of that complaint sought monetary
damages under the Consumer Protection Law. State Farm filed preliminary
objections to Count III alleging that because the allegations in that count fell within
the purview of acts and practices that are prohibited by the UIPA, the plaintiffs
could not maintain a separate action under the Consumer Protection Law. State
Farm, much like Allstate does here, argued that there is an irreconcilable conflict
between the UIPA and the Consumer Protection Law, which according to the rules
of statutory construction, required that the more specific provisions of the UIPA be
given effect over the more general provisions of the Consumer Protection Law.
The Superior Court disagreed that there was an irreconcilable conflict,
stating that "the limited penalties of the [Unfair Insurance Practices Act] do not
represent the sole and exclusive deterrent to alleged unfair or deceptive acts of
insurers and their agents," and held instead that the plaintiffs could maintain a
cause of action under the Consumer Protection Law even though the actions
alleged were covered by the UIPA. The Superior Court also stated:

(continued...)
D'Ambrosio concerned only with supplementing the UIPA with, as yet, unrecognized common
law claims and that case does not preclude an action under the Consumer Protection Law).
10

Our conclusion that there is no inherent irreconcilable
conflict is supported by the fact that the UIPA contains
no provision either stating or implying that the power
vested in the Insurance Commissioner represents the
exclusive means by which an insurer's unfair or
deceptive acts are to be penalized or that the insured is
precluded from seeking private compensation for
damages incurred. Further, as noted previously, we are
mindful of the fact that our Legislature did not see fit to
exclude insurers, insurance agents, or insurance
transactions from the broad scope of CPL regulation in
either the original enactment of the CPL in 1968 or, more
importantly, in its subsequent reenactment in 1976, a full
two years after the enactment of the UIPA.
Id. at 433-34. See also Hardy v. Pennock Insurance Agency, Inc., 529 A.2d 471
(Pa. Superior Ct. 1987) (the UIPA does not represent the sole and exclusive source
of statutory redress of alleged unfair or deceptive acts of insurers and their agents
and such alleged acts may be redressed under the Consumer Protection Law).
Although Pekular involved a private cause of action against an
insurance company under Section 9.2, 73 P.S. §201-9.2, of the Consumer
Protection Law, we find that its reasoning is equally applicable here and hereby
adopt it. We see no reason, therefore, why the Commonwealth should not be able
to bring a similar claim under Section 4 of the Consumer Protection Law, 73 P.S.
§201-4, even though its alleged actions may also be prohibited under the UIPA.
Accordingly, Allstate's preliminary objections to the Attorney General's standing
and jurisdiction to bring this case are overruled.
11

Allstate also demurrers to Count II of the complaint and contends that
its communications to third parties and the allegations of the complaint do not
constitute the unauthorized practice of law under 42 Pa. C.S. §2524. The
Commonwealth asserts, however, that Allstate has assumed the role of claimant's
counsel by promising to deliver services that would ordinarily require the exercise
of legal judgment, such as being their claim representative, answering questions,
giving legal advice about retaining an attorney and making a determination about
whether compensation is due and the amount of such compensation.
Our Supreme Court in Dauphin County Bar Association v.
Mazzacaro, 465 Pa. 545, 351 A.2d 229 (1976), defined what is meant by the
"practice of law" in the following terms:
Marking out the abstract legal boundaries of legal
practice would be an elusive, complex task "more likely
to invite criticism than achieve clarity." The threads of
legal consequences often weave their way through even
casual contemporary interactions. There are times, of
course, when it is clearly within the ken of lay persons to
appreciate the legal problems and consequences involved
in a given situation and the factors which should
influence necessary decisions. No public interest would
be advanced by requiring these lay judgments to be made
exclusively by lawyers. Where, however, a judgment
requires the abstract understanding of legal principles and
a refined skill for their concrete application, the exercise
of legal judgment is called for. While at times the line
between lay and legal judgments may be a fine one, it is
nevertheless discernable. Each given case must turn on a
careful analysis of the particular judgment involved and
the expertise that must be brought to bear on its exercise.
12

Id. at 553, 351 A.2d at 233 (citations omitted).
We agree with Allstate that the complaint fails to state a claim that
Allstate is engaging in the practice of law. Although it does state in its pledge that
it will evaluate the facts of the case and offer what it believes to be a fair offer of
compensation, nothing of the allegations in the complaint can be construed such
that Allstate is offering legal advice to claimants or is rendering legal judgment
regarding the merits of any claim. At best, the complaint may be summarized as
alleging that the Commonwealth believes that Allstate misrepresents that it will
perform an unbiased review of the case and is discouraging claimants from hiring
attorneys. Even if those allegations are proven to be true and Allstate has engaged
in unfair or deceptive practices that create the likelihood of confusion or
misunderstanding, the complaint does not set forth that Allstate is engaging in the
practice of law or is offering legal advice in its communications to third party
claimants. As a result, Allstate's preliminary objections to Count II of the
complaint are sustained and Count II is dismissed.
An appropriate order will be entered.

DAN PELLEGRINI, Judge
13

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
COMMONWEALTH
OF :
PENNSYLVANIA, ACTING BY
:
ATTORNEY GENERAL D.
:
MICHAEL FISHER,
:
Plaintiff
:
:
NO. 1009 M.D. 1998
v.
:
:
ALLSTATE INSURANCE
:
COMPANY,
:
Defendant
:
O R D E R
AND NOW, this 13th day of April , 1999, upon consideration of
Defendant's preliminary objections to Plaintiff's complaint, it is ordered that
Defendant's preliminary objections to Count I of Plaintiff's complaint are
overruled. It is further ordered that Defendant's preliminary objections to Count II
of Plaintiff's complaint are sustained.

DAN PELLEGRINI, Judge