The Settlement Alliance

The Rita’s Cool Alerts Settlement: Choosing the Wrong Claims Administrator Can Cost You

The Rita’s Cool Alerts Settlement: Choosing the Wrong Claims Administrator Can Cost You

Sep 25, 2017

The decision to choose a claims administrator to manage a mass tort or a class action settlement may seem routine, but as is the case with any other line of business, the service quality differs with each company. As attorneys in Pennsylvania recently discovered, choosing the wrong claims administrator can be costly to those on both sides of the settlement.

The Rita’s Cool Alerts Settlement

Earlier this month, The Legal Intelligencer reported on U.S. District Judge Timothy Savage’s ruling that claimants involved in a class action against Rita’s Water Ice would receive a larger share of the $3M settlement fund than previously anticipated. In his opinion, Judge Savage wrote that instead of 28,523 class members, there were only 10,164 class members with valid claims.

Why was the number of valid claimants almost 65% lower than originally thought? As Savage wrote, “the settlement administrator should have conducted the full review of the claims forms as soon as the claim filing deadline passed instead of waiting for the final approval order to be issued.”

Not only did the defense end up with a $3M settlement for significantly fewer claimants than anticipated, but the class counsel also took a financial hit. On March 16, Judge Savage granted class counsel’s request for $40,000 in expenses and $10,000 in incentive awards but denied their request for $1M in legal fees. Instead, Savage awarded class counsel only $651,000.

Selecting the Right Claims Administrator

The Rita’s settlement is only one of many examples in which a mistake by a claims administrator ended up costing both the defense and the plaintiff sides. To prevent your law firm from making the same costly mistake, here’s what you should look for in a claims administrator:

  • Experience: Has the potential claims administrator successfully handled complex mass tort and class action cases before? How many claimants has it administered claims for—and has it served as a Court-appointed administrator?
  • A strong back office: Does the potential claims administrator only have a few case managers in its back office, or has it built out an experienced claims administration team?
  • Services offered: While there are common tasks required of any claims administrator, most vary widely in their offerings. Make sure you choose a claims administrator that offers comprehensive claims administration services to help ensure efficient administration of the settlement.

Contact The Settlement Alliance Today

The Settlement Alliance has administered claims for hundreds of thousands of claimants, totaling more than $5.5 billion in settlement proceeds. If your law firm is interested in learning more about our claims administration services, contact us today.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential