Using credit scoring to set insurance prices could be outlawed by Supreme Court

Allstate Insurance Co. has lost its bid to squash a class action discrimination suit against it for its use of credit scoring in setting insurance prices, reported the Insurance Journal.

The U.S. Supreme Court this week denied the Northbrook , Ill.-based insurers' bid to end the suit by Texas and Florida policyholders who claim that the use of credit scoring unfairly discriminates against minorities by raising their rates and violates the U.S. Fair Housing Act.

In November, 2001, a class action was filed against Allstate in the U.S. District Court of the Western District of Texas. The suit, Jose C. DeHoyos, et al. v. Allstate Corporation, et al. alleged that Allstate raised plaintiffs' auto insurance premiums or assigned them to a higher-cost subsidiary based on race, due to Allstate's use of geographical redlining. The case alleges racial discrimination in violation of the U.S. Fair Housing Act.

Michael Trevino, an Allstate spokesman, denied any racial discrimination by the company and defended the company's use of credit scoring as a benefit to "minority and non-minority" consumers alike. He said Allstate's credit scoring tool does not know the customer's income or race. He also said credit scoring has allowed Allstate to not only write more auto and homeowners business than it might otherwise write but also has allowed it to more accurately price its policies .

But the plaintiffs' suit argued that the use of credit scoring is intentional discrimination that results in a "disparate impact" against minority policyholders.

Allstate challenged the disparate impact claims in court, arguing that the federal housing act has limited effect because insurance is regulated by the states.

"We feel it is an issue more appropriately dealt with by the states," added Trevino.

Even though this may be an issue dealt with by the states, it must be remembered that the Fair Lending Acts were dealt with by both the state and the Federal Government.  For example, the Fair Housing Act was passed in 1977; however, the State of Georgia did not introduce theirs until 2002; it became effective October 1, 2002

It was in 2002 when a federal trial judge allowed the credit scoring suit to proceed. The court rejected Allstate's argument and determined that the states at issue ( Texas and Florida ) had not yet enacted regulations governing credit scoring so plaintiffs could look to federal law and courts. In addition, this court noted that federal courts have held that the McCarran-Ferguson Act does not preclude racial discrimination suits, even where states have enacted insurance and anti-discrimination statutes.

In September, 2003, the U.S. Court of Appeals for the Fifth Circuit in New Orleans affirmed the decision to deny Allstate's motion to dismiss.

With this latest Supreme Court affirmation, the case now proceeds to trial on its merits.

Outlawing credit scoring could be apparent by the Supreme Court.  However, regardless of the outcome of the lawsuit, it is quite obvious that the credit scoring is aimed primarily at minorities, specifically African Americans, since they are the poorest.

Title VI of the Civil Rights Act of 1964 prohibits the use of federal funds to promote discrimination.  Obviously, Federal funds have been and still are being used to promote discrimination.  The fact that (1) credit scoring is being litigated and (2) the US Fair Housing Act was passed and (3) State and Federal Fair Lending Acts were passed, are just 3-prime examples of racial discrimination.

Historically, African Americans have been denied equal use of Federal funds.  Federal funds are used for just about everything; purchasing homes, education, banking (savings and loans companies), transportation, businesses, economic development, etc.  

Tennessee State University: Education, Race and Politics
[Special to all TSU Alumni across the nation]

By Bobby L. Lovett
Tennessee Tribune
Originally posted 4/14/2004

Since the institution opened its doors in June 1912; Tennessee State University has continuously endured racial storms and external pressures no other state institution has had to bear.

Historically, the culprit of the whole mess was state-sanctioned Jim Crow practices designed to protect an exclusive “white” society and negate the “separate but equal” principle of Plessy v. Ferguson (1896).

These racial practices no governor dared risk his career to stop.
The Negro’s third Civil Rights Movement since 1864 began in the 1930s during the New Deal.

A Tennessee A. & I. State College graduate of 1936, William B. Redmond of Franklin filed a suit to enter the UT School of Pharmacy.

The Redmond case (1937; 1939) was argued by NAACP lawyers Charles H. Houston, Z. Alexander Looby ( Nashville ), and Carl A. Cowan ( Knoxville ).

State courts denied the Redmond petitions, and also denied the Michaels v. Tennessee (1942) suit by six Negro students who wanted to enter law school at UT.

However, the NAACP won Clarence B. Robinson [an A. & I. graduate] v. Chattanooga (1941) and Harold Thomas v. Nashville (1942) that forced equalization of pay for Negro teachers.

The NAACP campaign frightened State Board of Education (SBOE) officials and legislators enough to cause them to issue out-of-state fellowships for Negro graduate students (1937-1962), implement a Negro graduate school (1942), and forge ahead with SACS approval of A. & I. College (1946).

When President William J. Hale failed to reveal a $337,000 reserve fund and finance the Jim Crow graduate school from institutional funds, state officials launched an audit.

The results were so petty that even the Tennessee Attorney General warned that it was best not to pursue them. The problem really was that Hale had refused to agree to save Tennessee ’s other Jim Crow institutions at the expense of Tennessee State .

A set of state officials, therefore, became determined that “Hale must go.” They fired the bursar (finance head) at A. & I.

They placed a state official in an office on the campus to speed up implementation of the graduate school before the NAACP could afford to petition the federal court. In 1942, this man, along with two “friendly Negroes,” and the Commissioner of Education met (without President Hale), and decided that A. & I. would not get a law school; instead, they would oppose the NAACP’s meddling in southern affairs, and they would increase the $200 out-of-state fellowships by taking the money from A. & I. funds.

When Hale attended the next meeting and suggested that UT and A. & I. should agree to offer certain non-duplicative programs, the Commissioner exploded and told Hale he would not present anything to the board without permission.

In August 1943, with the governor’s approval, they released W.J. Hale after 32 years of devoted service.

Walter S. Davis, who succeeded Hale on September 1, 1943 , received a directive from his boss: “make Tennessee A. & I. State College equivalent to UT for the white students.”

State officials allowed Davis to take the Negro college into debt to build facilities, create an engineering school, and convert to university status (1951). And on his facilities master plan, the faithful Walter Davis planned a “law school and medical school at Tennessee A. & I. State .”

But state officials soon had no reason to hurry up and honor Plessy v. Ferguson (1896). Avon N. Williams, Jr. won the Gray v. Tennessee case in 1951, forcing UT to accept six Negro graduate students.

Brown v. Board of Education (1954) nullified Plessy and indicated that Jim Crow education should soon end. Students from Tennessee State and other local colleges began confronting Jim Crow through sit-ins beginning in 1959-60, the Freedom Ride (May-June 1961), and street violence when Stokely Carmichael, head of SNCC, visited the city in April 1967.

The new governor allowed SBOE officials to pressure Davis to expel any students involved in civil rights activities; but they all were named in a federal suit that forced reinstatement of the students.

When Tennessee ’s governor (a native of Mississippi ) had had enough, Tennessee launched an audit in May of 1967.

The results again were petty findings, but state officials again fired the finance head, secretly recruited a head from Alabama , took over A. & I.’s finances, and imposed a 15 percent maximum on out-of-state student enrollment.

Davis took sick leave in December 1967, and resigned in May 1968, effective September 1, 1968 . The Banner, whose editor claimed to be Davis ’s friend, simply said: “Best wishes, Dr. Davis.”

Andrew P. Torrence assumed office in November 1968, but found himself under attack because of the recently filed Geier v. Ellington (May 1968) case to desegregate higher education.

Torrence dared complain that Tennessee State was being strangled by lack of adequate state funding, facilities yet to be built, and a 40 percent drop in out-of-state enrollment that further constrained the budget.

State officials had no intention of allowing Torrence to move ahead in expanding the institution; but Torrence was defiant.

As part of his agreement to take the job, he regained direct control of the institution’s finances [he had to keep the director of finance].

The NAACP sued the federal government in Adams v. Richardson (1970), to enforce Title VI of the Civil Rights Act (1964) so that the Department of Health, Education and Welfare would develop guidelines to compel statewide plans for the desegregation of higher education.

This action speeded up desegregation in higher education by 1977, and persuaded the U.S. Supreme Court to issue more definitive standards in U.S. v. Fordice (1992).

Meanwhile, Torrence flat out refused to go along with Tennessee ’s plans for Geier. The chancellor of UTN began feeding the daily newspapers, saying TSU was too black, must change to attract white students, or it would die.

Torrence rejected these racial remarks, ignored UT’s suggestions to curtail TSU’s engineering programs, and instituted recruitment of more whites.

Torrence wrote a memo to the faculty, saying “We have to do something [more].” The TSU senate passed resolution (1972), calling for a plan to merge UT-Nashville into TSU.

Although the Geier case had been filed by TSU history instructor Rita Sanders (Geier) and others, with assistance from attorney George Barrett, young blacks did not trust him.

After Sanders and original plaintiffs left Tennessee , this attorney was running the plaintiffs’ case. Blacks feared he could be working with fellow local white leaders behind the scenes to come up with a plan to feed the TSU Tiger to the lion; he was dictating “what was best for black people,” said Avon N. Williams, Jr.

This racial distrust grew out of the SNCC movement; infiltrators and saboteurs within the civil rights organizations were working for intelligence agencies and anti-civil rights groups, like the racist Mississippi Sovereignty Commission.—see release of FBI files.

In 1972, the federal judge, Frank T. Gray Jr., allowed Sterlin N. Adams, Raymond Richardson (two black TSU professors of mathematics) and nearly 100 other black citizens from across Tennessee to enter the Geier case as plaintiffs.

They formed Tennesseans for Justice in Higher Education, hired the best civil rights attorney in the state, Avon N. Williams, Jr., and developed a plan for merger of UT-Nashville into Tennessee State University .

The UT side blamed Torrence for the faculty’s militancy. Torrence was further discouraged when he came under public attack by a black state legislator.

In April 1974, Torrence called a faculty meeting, explained his position, and resigned, effective September.

President Frederick S. Humphries arrived January 1975. Four of eleven Regents had voted against his selection, and the new head of the Regents seemed to devote his daylight hours to writing Humphries one worrisome memo after another.

Humphries courageously testified in federal court how TSU was deprived of state resources and kept inferior while UTN, MTSU, and other public universities were allowed to thrive while including as few black students and faculty as possible.

Judge Gray ordered a merger in January 1977, to take place by July 1, 1979 .

It was rumored that Gov. Ray Blanton and the Board of Regents intended to fire Humphries.

The Meter, the student newspaper at TSU, called it “an assassination.” Black community forces formed a motor caravan to the Regents meeting.

At the meeting, Avon Williams recalled “they took [Humphries] into a bathroom and tongue-lashed him like a slave.”

Supporters instituted a letter-writing campaign in Humphries’ behalf. Blanton even was forced to write a series of hurried letters in response to the SACS director’s inquiry about these bizarre educational politics in Tennessee—several times since 1923, northern philanthropic agencies and outside educational reform groups had come to the Negro’s aid in Jim Crow Tennessee.

Gov. Blanton was thrown out of office in January 1979, and later sent to federal prison for corruption.

Another audit-like weapon was used to impound $475,000 from the TSU budget, claiming the institution had padded enrollment by admitting 912 students that should have been on academic suspension.

TSU was forced to suffer budget deficits and cut 20 percent of the staff. Humphries recalled he welcomed the opportunity to build an outstanding institution when going to Nashville , but the board ignored his recommendations:

“We never got judged on what we did; we got judged by what [students] we took in.” Humphries served until June 30, 1985 .

The governor and state education officials borrowed a black educator from Kentucky , and made him interim president of TSU. But the community and the Student Government Association energetically opposed him.

Peterson sided with the recent Geier Settlement (1985) which to blacks seemed no more than a vindictive racial edict: a 50 percent white ratio for TSU; no serious ratio for UT; a white majority even for Memphis State .

The U.S. Attorney General’s office filed objections. Avon Williams and staff met with NAACP lawyers in New York , and used nearby Columbia University Law School to practice their appeal to the 6th Circuit Court.

State officials sent the controversial Peterson back to Kentucky on July 1, 1986 . Sen. Williams and students remained angry at the man for squandering the recent special appropriations for TSU, and giving construction contracts exclusively to “young white firms that needed the experience.”

Some believed the funds were stolen through bogus work on dormitories in collusion with officials; at a black community meeting an official almost admitted as much.

They rushed to find another interim president, bringing a man in from MTSU, who could be trusted. But student leaders met Interim President Otis L. Floyd at the door, complaining about physical conditions on the campus.

Students had a sit-in at the governor’s offices, and evidently brought him to the campus to see the miserable campus conditions.

The state developed a Master Plan to renovate and build new facilities. Floyd, too, suffered several student sit-ins. He served from fall 1986 until June 1990, when the governor appointed him to head the Regents office.

James A. Hefner was appointed sixth president of Tennessee State University on April 11, 1991 . The campus quieted down. And the Geier case allegedly was settled in 2001; or was it?

By 2003, some leaders, with support from some friendly black and Hispanic officials, ignored the re-segregation of higher education in Tennessee while diverting attention to Tennessee State University .

Some 62 percent of African American students in Tennessee attended community colleges and the seven HBCUs.

UT, since the 1937 and 1951 cases, enrolled less than 6 percent black students, employed less than 4 percent black faculty members, and had hardly any black department heads, deans, and vice presidents compared to other flagship universities in the 19 former Jim Crow states.

Barely 4 percent of the doctorates awarded in Tennessee by the late 1990s went to blacks, who comprised more than 16 percent of college students in Tennessee , but comprised only 10 percent of bachelor’s degree recipients at white institutions.

Tennessee State had a 41 percent graduation rate for black students compared to Tennessee ’s overall graduation rate of less than 50 percent for all college students.

Across America , less than 20 percent of black college students attended the nation’s HBCUs, but these 103 institutions enrolled more than 20 percent white students on average and produced 30 percent of America ’s black college graduates.
See SEF, Redeeming the American Promise (1995).

Conversely, some 80 percent of European American secondary and college students attended heavily- or all-white institutions. And some 50 years since Brown v. Board of Education, European Americans continued to designate themselves as “whites,” and increasingly re-segregated American society into preferred institutions with few if any Hispanics or African Americans.

In Miles to Go (1998), the Southern Education Foundation said this phenomenon of re-segregation was a general trend in 19 states that previously had segregated institutions.

It seemed, therefore, that until TSU had a black student minority, whites simply would not attend the institution in greater numbers, and local white leaders would not proclaim Tennessee State University as “our city’s public college.”

TSU still was not “white” enough according to white ethnic supremacy standards. Thus the black majority must be diminished in order to make highly race conscious whites feel comfortable that TSU was a quality institution worthy to represent Nashville .

In his “Reflections” in Leadership and Learning (1990): 115-120, former Tennessee State University President Frederick S. Humphries recognized the persistence of American racial preferences; he said, “Racial tensions in America will not abate until African American institutions and culture are respected and viewed as valuable by the general society.”

Tennessee State University remained an HBCU and an 1890 land-grant institution per its tormented but triumphant history—a history it could neither escape nor deny.

Nevertheless, TSU did not remain in that past, but forged ahead to become a merged, racially diversified, comprehensive, urban, land-grant institution that met the challenges of an “America Becoming.”

Indeed, as a reflection of “America Becoming,” the new Tennessee State University would be identified not by race and color but by the American qualities of high performance and great achievements.

In 2000-2002, among all of the nation’s colleges/universities, in the granting of bachelor’s degrees, Tennessee State University was listed in U.S. Department of Education statistics as 3rd in physical sciences, 11th in engineering, and 19th in mathematics.

Specifically in the State of Tennessee , by 2003, Tennessee State ranked third behind Vanderbilt and University of Tennessee in total annual research and training grant dollars.

TSU’s student enrollment included 9,024, including 22 percent non-black students. The student body originated from more than 80 of Tennessee ’s 95 counties, 43 of 50 states, and 55 countries.

The faculty was 47 percent African American, 47 percent European American (white), and six percent other ethnic and national cultures.

Only one white university (public or private) in Tennessee enrolled 20 percent or more black students. TSU became Tennessee ’s most integrated and diversified university.

*Bobby L. Lovett, Ph.D., is professor of history at TSU and author of The African American History of Nashville, Tennessee, 1780-1930 (University of Arkansas Press, 1999).

Dr. Lovett in cooperation with two colleagues at other universities in the country is engaged in a research and grant project for a study to be published about the 103 HBCUs and their roles in the 21st century.

Voting Machine Inventor Dies

( NASHVILLE TN)  NNPA – The African-American who invented a voting machine that he believed would remedy the problems that occurred during the 2000 presidential election has died only eight months before the next contest between George W. Bush and John Kerry.

Athan Gibbs Sr. of Nashville , who unveiled his invention of a computerized voting machine with paper receipts at the summer conference of the National Newspaper Publishers Association (NNPA) in Atlanta three years ago, was killed when the SUV he was driving was hit from behind by a tractor trailer as he changed lanes in the morning of March 12. He was 57 years old.

Determined to win full federal certification for the TruVote System, Gibbs, an accountant, never saw his dream come true. However, his family and associates say they will pick up where he left off.

“It’s going to go into full throttle,” says his son, Jonathan Gibbs, executive director of a marketing firm and graduate of the University of Memphis . “I’ll be one of the ball carriers.”

Jonathan, 25, recalls his father being so disheartened by the developments during the loss of more than 200,000 votes in Florida and an estimated 4 to 6 million votes nationwide during the year 2000.  He says that he repeatedly sent him to Wal-Mart for at least 20 video cassette tapes to record the daily television coverage until the US Supreme Court stopped the recounting of votes in Florida .

Ultimately, Jonathan recalls, “’He just figured out the way to fix this thing is to have an audit system.’ ‘ Whenever there’s a problem with finance or numbers, you need some kind of accounting system.’”

In short, TruVote allows voters to touch the names of their candidates on a computer screen and receive paper receipts with an exclusive validation number. Then, as a backup, they could go to a Web site, punch in the validation number, and receive confirmation that their vote was recorded.

Over three years, Gibbs established the company, TruVote International, and spent about $2 million, including thousands of his own dollars, to develop and market the TruVote system. Over the past year, Microsoft had become a marketing partner when TruVote began utilizing its software.

“My father worked so extremely hard with this project,” Jonathan says. “’My brother, my family and I have always been alongside him.’  ‘It’s like the construction worker, somebody’s handing him the hammer, somebody’s handing him the nail, you know, while he worked on it.’”

An Entrepreneur with 29 years of accounting and audit experience, including positions with the State of Tennessee , his own tax firm, and a consultant to the U. S. Department of Commerce’ Minority Business Development Center in Nashville , Gibbs was tenacious.  That was evident in a telephone message that Gibbs left for this reporter March 11 around 3 P.M. , less than 24 hours before his death.

“This paper audit trail that we pioneered almost two-and-a-half or three years ago, it is really in the forefront of the news right now,” he said in the tape-recorded message. “Many states are looking at requiring a paper audit trail. When you get this message, please give me a call so that I can follow up with you and possibly get you to do a story on the need for the paper audit trail. The voter verifiable paper audit trail is the only system that can be used that will assure that all votes have been received, recorded and counted in the manner intended.”

Within 10 minutes, he’d called back, this time speaking directly with this reporter, excited that his idea was increasingly catching on, promising to send the latest package on TruVote for a follow-up story. He was also making plans for a conference call with NNPA News Service Editor-in-Chief George E. Curry and NNPA columnist Jim Clingman to discuss further coverage.

“Jim, this thing is about to break,” Clingman recalls Gibbs saying on the eve of his death. “We’re right at a breakthrough now, but we need some national publicity on this system,” said Gibbs.

Gibbs’ daughter, Angela, 21, says her father’s consciousness about voting went back much further than the 2000 election.

“One evening last summer when I came home from work, he showed me this book and there was a picture of African-Americans and they were being beaten and he was just telling me the story of the Civil Rights Movement and how they were trying to get the right to vote and trying to get different rights and he says that’s what inspired him,” said Angela, a marketing major at the University of Tennessee in Knoxville. “’And that’s why he did what he did, because a lot of people fought to get the right to vote.’  ‘And then it really upset him that even though they did get the right to vote, that their votes were more likely not to count,’” said Angela.

Dorothy Gibbs, widowed elementary school teacher, was not yet ready to discuss her husband’s death. His daughter, Angela, says, “He had a never-give-up attitude. He was really persistent. He never believed in giving up. He wouldn’t let us quit anything.”  Gibbs’ business associates remember him in the same way.

Michael A. Grant, Gibbs’ vice president for marketing, says he has never in his life worked with a person on a project who was more dedicated.  Obviously Gibbs invention was a visionary.  He had a fantastic idea.  It was right the right idea for the right time.  “’It was a genuine concern for fixing what was broken with our democracy.’  ‘And I give him credit because the whole country is now talking about an audit trail,’” said Grant.

Adrienne Brandon, chief financial officer for TruVote, says only weeks ago Gibbs asked her: “if something happened to me, would you carry this on?” She says, “Even with him gone, we will.”

About TruVote International
TruVote International, Inc. (the Company) is a start-up company that will supply Direct Recording Electronic (DRE) election hardware, software and other services for federal, state and local elections.

The Company has developed election software (TruVote) that effectively addresses the voting irregularities experienced in the 2000 Presidential Election. State and local election authorities across the nation are currently exploring election technology to minimize or eliminate the key problems encountered during the 2000 Presidential Election.


Last Updated: April 28, 2004

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