Tod Hindin is a Los Angeles attorney that I was fortunate enough to meet in the 1990's. He was one of the most successful claims practice attorneys in the country at the time. His landmark case against State Farm secretly settled during trial.
Here are the facts of that case as reported by a recent appellate court:
In 1993, after several years of litigation and in the fourth month of a jury trial, State Farm paid $30 million to the Hindin parties’ clients—its former insureds—to settle their claims of bad faith and religious and national origin discrimination in State Farm’s handling of their uninsured motorist claims. (The four individual plaintiffs had received a $34,000 uninsured motorist arbitration award based on a February 1987 automobile-versus-automobile accident, the full amount of available coverage; State Farm petitioned the superior court to vacate the award but voluntarily dismissed the petition with prejudice before it was heard.) State Farm subsequently obtained information indicating the underlying insurance claims were, at least in part, fraudulent. After an investigation by an outside law firm and investigators it had retained, on February 14, 1996 State Farm filed a federal court fraud action against its former insureds and their attorneys, the Hindin parties, seeking both restitution of the $30 million payment and return of internal documents it had produced during the bad faith/discrimination litigation, as well as related equitable relief to prevent further dissemination of those documents, based on the Hindin parties’ alleged violation of one of the settlement agreements signed in connection with resolution of the bad faith case.
Todd Hindin settled the case confidentially with State Farm. We had no idea that his $34,000 contract claim resulted in a $30 million bad faith case settlement until State Farm made a huge blunder and filed a suit against Hindin and others asking for its $30 million back.
Those documents Hindin uncovered lead to the Campbell v. State Farm $145 million punitive damage verdict. No wonder State Farm wanted those documents back.
What was the discrimination and national origin discrimination about? Here is a description from a brief in the current litigation:
The case settled shortly before Divisional Claims Superintendent Ronald Middler was scheduled to testify at the bad faith/discrimination trial concerning STATE FARM’s use of its Special Investigation Units to discriminate based on race, religion and national origin. State Farm maintained a list of the names of predominantly Jewish lawyers (referred to at STATE FARM as the “Jewish Lawyers Lists”). The claims of the clients of the attorneys whose names appeared on the “Jewish Lawyers Lists” were automatically transferred to STATE FARM’s fraud unit simply because the lawyer’s name appeared on the “Jewish Lawyers List.” If your name was on the list of Jewish lawyers, your clients claim would be automatically referred to the fraud unit and never settled or paid. The Jewish Lawyers Lists which were produced by STATE FARM at the bad faith/discrimination trial... The Appellants retained Dr. Frank Taylor, an experienced economist with a doctorate and a former college professor of economics, insurance and finance, to investigate the religious background of the persons whose names were on the list. There were a total of 240 separate names that appear on the two Jewish Lawyers Lists provided to Dr. Taylor by Mr. HINDIN which had been produced by STATE FARM at the bad faith/discrimination trial. Of that total, Dr. Taylor was able to obtain the necessary information on one hundred ninety-three (193) of the two hundred-forty (240) listed attorneys or eighty (80%) per cent. There were a total of one hundred fifteen (115) of the total of 193 attorneys on the combined list whose information he could obtain who were Jewish. There were twenty-eight (28) non Jewish members of a racial or ethnic minority on the combined list from whom he was able to obtain the necessary information or fifteen (15%). Thus there were a total of one hundred forty-eight (148) of the one hundred ninety-three (193) attorneys on the combined list who were either Jewish or members of a racial or ethnic minority. This amounted to seventy-seven (77%) per cent. Members of the Jewish religion comprise 2.9 percent of the population of the State of California, 5.9 percent of the population of the County of Los Angeles and 2.5% of the population of Orange County. The Jewish composition of the STATE FARM attorneys lists [62% Jewish on the Combined List, 77% Jewish on the Consolidated Suit Unit List and 65% on the Select Unit List is more than ten times the percentage you would expect as a result of the Jewish composition of the general Los Angeles County population and more than 20 times what you would expect as a result of the Jewish composition of the general population of the State of California. HINDIN asked Taylor to assume that insurance claims of clients represented by attorneys whose names appear on these lists are assigned to these special claims handling units operated at STATE FARM because the attorneys names appear on one or more of these lists and experience substantial delays in the processing of their claims and receive substantially smaller offers to settle their claims than they would have received had they not been assigned one of these special units. Dr. Taylor opined that based on his investigation and assuming the facts that Mr. HINDIN has asked him to assume, there is very substantial evidence that STATE FARM discriminates against Jewish lawyers and their clients in the operation of the special units. It is unlikely that the result occurred by chance. It is likely that it occurred by design. The reason for Dr. Taylor’s opinion is that based upon his knowledge of statistics and the insurance industry, it is highly unlikely that these lists of names could be constructed with predominantly Jewish attorneys being listed by chance. Rather, it is clear that the insertion of predominantly Jewish names on these lists for special claims handling is the result of a conscious intent. It is highly unlikely such a predominately Jewish list of attorneys would be submitted to the special claims units if Jewish discrimination were not a primary factor.
Former Divisional Claim Superintendent Ron Middler, who was in the claims unit that handled the Singh Claims, was examined at length in deposition concerning the operation of the Senior Referral Unit that handled the Singh’s Claim and its use by STATE FARM to discriminate against ethnic minorities. He also testified as to the existence of the Jewish Lawyers list utilized by STATE FARM to discriminate against lawyers of the Jewish faith and their clients and how it was used. He acknowledged its existence and use in Los Angeles County.
Hindin sued State Farm for malicious prosecution and various other theories of liability. The appellate court upheld a dismissal of this lengthy litigation because Hindin failed to get the case to trial.
For those who study State Farm from a claims practice standpoint, I suggest you investigate Hindin's case. Assuming the case is not resurrected with another appeal, it is an end to 1990's era of claims practice litigation against the leading personal lines insurer.
Positive Thought for the Weekend:
We must believe that we are gifted for something, and that this thing, at whatever cost, must be attained.