Geico is being sued in a class action lawsuit for allegedly underpaying auto claims.
A class action lawsuit has been filed against Geico General Insurance Co., claiming that it has been underpaying benefits to its insureds who have been hurt in car accidents.
In federal court in Eastern New York, U.S. District Court Judge Dora L. Irizarry approved the class action claiming violation of contract against Geico General for shortchanging claimants earning more than $2,000 per month.
Mary Lanzillotta, the case’s lead plaintiff, says she was due to $55,000 in insurance coverage but was only given $51,445 by Geico General.
According to the complainant, the insurer uses an incorrect method to calculate fundamental economic loss and first party benefits, resulting in “unlawful deductions and premature policy exhaustion.” According to the complaint, the insurer has used the same incorrect formula for all policyholders in the class, who are named in part as “hundreds if not thousands” of insureds who have submitted identical claims since March 2013.
According to the the courtroom, the resulting impact proves an actual injury, and the class definition includes others who experienced this injury.
Lanzillotta applied for first-party benefits. Geico General paid her a claim payout of $51,445 and informed her that she had depleted her $55,000 basic economic loss and med pay coverages. Geico General arrived at this conclusion by accounting for $2,500 in lost earnings per month and then deducting 20% of such lost earnings ($500) from the total 55,000 dollars in basic economic loss and med pay for the seven months she received first party wage benefits, for a total deduction of $3,500.
According to the lawsuit, Geico General should have only accounted for $2,000 in missed earnings per month and not taken the 20% deduction. This reportedly incorrect calculation of first-party benefits cost her three thousand five hundred dollars in basic economic loss benefits, which she claims she was due to.
According to state legislation, fundamental economic loss is defined as the sum of coverage for medical and wage benefits up to $50,000. It also describes wages as the loss of earnings from work that the insured would have made if she had not been hurt, with a monthly limit of $2,000 in place. First-party benefits, on the other hand, are the quantity of medical and salary benefits that an individual is eligible to be repaid from the basic economic loss coverage limits for earnings that exceed the $2,000 maximum. Lanzillotta made over $2,000 per month.
The complaint claims that Geico General improperly decreased the basic economic loss coverage limits for earnings by more than $2,000, denying complete first party benefits to insureds making more than $2,000 per month due to the premature exhaustion of basic economic loss.
The lawsuit wants monetary damages, restitution, and attorney’s expenses.
In part, GEICO General claimed that the class should not be recognized because the plaintiff is unusual. The court, however, denied that argument, concluding that the claims “not only arise from the same sequence of events, but rest on similar legal arguments regarding the premature exhaustion of insurance policies via GEICO General’s basic economic loss reduction formula.”
The final court-approved definition restricts the class to GEICO General policyholders who earned gross monthly wages in excess of $2,000 per month at any point during the period in which they were covered, who submitted and received payment from GEICO General for first party benefit claims that included claims for lost wages, and who, after paying at least one month of first party wage benefits, GEICO General claimed their coverage was fully exhausted on or after March 13, 2013.
The court rejected expanding the class to violations of the New York no-fault law while certifying this class. Furthermore, she dismissed all other defendants in the GECO family for lack of standing, including Government Employees Insurance Co., GEICO Indemnity Co., GEICO Casualty Co., GEICO Advantage Insurance Co., GEICO Choice Insurance Co., GEICO Secure Insurance Co., GEICO County Mutual Insurance Co., and GEICO Insurance Agency Inc.