A federal judge rejected Geico’s attempts to put the brakes on a class action complaint accusing the insurer of offering insufficient recompense during the early days of Covid-19.
At issue in the complaint is the company’s Geico Giveback promotion, through which the company applied a 15% premium reduction on new and renewed auto insurance policies while lockdown-style orders issued by Gov. JB Pritzker significantly reduced many drivers’ mileage and crashes related to driving across the state. In July 2020, James and Roxanne Thomas sued Geico, alleging the deduction was insignificant compared to its customers’ risk profiles, which they said constituted a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Attorney Antonio Romanucci and others from the firm of Romanucci & Blandin, of Chicago, filed the class action lawsuit in Cook County Circuit Court, and filed similar complaints on behalf of other clients against others insurers, including American Family, Allstate and Progressive. All the lawsuits said the actual miles driven dropped as much as two-thirds compared to pre-pandemic norms, so a 15% reduction or rebate was insufficient.
In an opinion filed Feb. 6, U.S. District Judge Sharon Johnson Coleman ruled on Geico’s motion to dismiss the Thomases’ October 2021 amended complaint, a response to her March 4, 2021, ruling on their initial filing.
“The question presented to this court is a narrow one,” Coleman wrote, “whether the ‘filed-rate’ doctrine prevents the Court from awarding plaintiffs damages.”
Coleman said the doctrine applies to companies, like insurance carriers and public utilities, that must file rates with regulators. She explained rate regulation is a legislative branch function, and that while that was “originally a federal common law doctrine,” many states have incorporated some version of the concept, either through written law or judicial interpretation.
In Illinois, personal automobile insurance underwriters file rates with the state Department of Insurance. However, she continued, “The Illinois legislature has largely deregulated the private automobile insurance market, and the Department apparently has no authority to set, approve or disapprove these rates; it merely publishes filed rates.”
Geico said the legal requirement to file with a state regulatory agency alone triggers exemption from the Thomases’ complaint, but the couple argued the department’s lack of authority means the doctrine isn’t applicable. Coleman said the dispute has another layer: Geico cited precedent from a 2022 U.S. Seventh Circuit Court of Appeals opinion, while the Thomases said a 2019 Illinois Fifth District Appellate Court opinion controls.
Coleman noted the Illinois Supreme Court has not answered the question of whether the filed rate doctrine applies to personal car insurance, meaning the federal appeals panel’s rulings hold sway. But rather than the 2022 case, South Branch v. Commonwealth Edison, she looked at a 2013 Seventh Circuit opinion, Cohen v. American Security Insurance, which held the doctrine “protects public utilities and other regulated entities from civil actions attacking their rates if the rates must be filed with the governing regulatory agency and the agency has the authority to set, approve or disapprove them.”
Coleman said the Cohen opinion didn’t rest on the filed-rate doctrine, but the panel raised the possibility it didn’t apply to that lawsuit’s property insurance rate dispute. The Department of Insurance’s role hasn’t changed since that context, with Coleman adding reference to various Illinois Supreme Court writings suggesting a decision over whether the doctrine applies is reliant on an agency’s role in rate approval.
The South Branch litigation, which stems from the bribery investigation against former Illinois House Speaker Michael Madigan, “concerned a public utility, which is regulated by the Illinois Commerce Commission, a state agency with different authorities and responsibilities than" the Department of Insurance, Coleman wrote, adding “the underlying claim was under federal, not state, law.”
Coleman concluded by saying she would “not abdicate the responsibility to assess” whether Geico’s rates were unfair or deceptive.