Ed Rust, Jr., State Farm’s Chief Executive Officer, must not have liked reading the headlines following a defamation verdict in favor of an Indianapolis restoration contractor that State Farm accused of fraud.

The Indianapolis Business Journal reported that:

A…jury has awarded a local contractor $14.5 million in his prolonged legal battle with State Farm Insurance following a 2006 hailstorm that caused severe damage in central Indiana.

Joseph Radcliff, owner of CPM Construction…received the verdict on Wednesday after he countersued the Bloomington, Ill.-based insurer in March 2009.

The countersuit responded to an October 2008 complaint from State Farm claiming Radcliff committed fraud to obtain funds from the insurer by inflicting intentional damage to roofs of its clients to simulate hail and wind damage.

State Farm said Radcliff committed fraud on at least 10 occasions by intentionally damaging property in Indianapolis, Carmel, Fishers and Noblesville.

According to a former CPM employee, Radcliff commonly told workers that “the only way to make any money is to create your own damage,” State Farm’s complaint said.

Through its investigation, State Farm provided information about Radcliff to the National Insurance Crime Bureau, which forwarded it to the Indianapolis Metropolitan Police Department. The Marion County Prosecutor’s Office brought 14 felony counts against him in September 2008, which were later dropped.

Radcliff countersued, charging that State Farm slandered and defamed him with its allegations. He further said the former employee who made the damaging comments to State Farm did so because he was terminated for non-performance.

This result was preceded by an Indiana news report that indicated:

Radcliffe’s employees, who made most of the claims, have since backed off their original statements, as well as a key witness who said he saw Radcliffe damage roofs, prosecutors said.

Radcliffe was accused of engaging in what is known as dime spinning, a practice in which dimes are used to damage shingles, in an effort to reap large settlements on houses insured by State Farm.

Officials said at the time that the fraudulent activities cost the company $1.75 million.
Radcliffe has always contended that he would beat the charges. He told Sanchez that he will break his silence soon in an effort to rebuild his reputation.

It appears that Radcliffe has been pretty successful in clearing his reputation.

  • Mike Rump

    Congrats to the contractor. It’s always nice to see someone stand up for themselves and come out a winner.

    Next we need to see someone stand up to QBE and fight the constant fraud accusations they spew.

  • John Merchant

    A few years ago I saw an article about the OK State Atty filing bad faith charges against State Farm for using HAAG Engineering to deny and “low ball” claims.

    A jury awarded $12 million to State Farm’s victims.

  • Steven Thomas

    I have seen this type of accusation thrown around by carriers and their experts for years. Although I have personally seen self-inflicted damage to roofs, these types of occurances are rare.

    I was recently involved in a large claim in Palm Beach County Fl. where the carriers expert stated that the roof was damaged by human manipulation. He observed one hand print on one tile of the 50 roofs in the complex and came to that ridiculous conclusion. The scary part is that Citizen Insurance believed him!!

  • Meena Lopez

    Are there any exceptions from the general rule which would disallow State Farm from having the right to subrogate payments it made for med pay against insured’s bodily injury recovery. Thanks.

    Also, State Farm defamed my clients stating the accident was faked up and this went on for several months. They finally paid for the car and the rental. However, even this was an issue as they lied and stated the ACV was lower than it should have been as the car had about 50k miles when the car only had about 18k miles, which was proved by the maintenance records shortly prior to the accident. Now they are still not paying for the clients’ UM plate.

    What do you suggest?

  • Roger Carter

    I was involved in the Joe Radcliff versus State Farm case since I witnessed Mr. Radcliff doing nothing to our roof and State Farm actually came to me (and some other homeowners) and said that if I agreed to testify against Joe Radcliff, they would replace our roof at no charge under a vandalism clause. Of course I refused to do that and they refused to replace our roof. I then testified against State Farm in court (they also tried to get me to say Mr. Radcliff shoved one of their adjusters, that didnt happen either) and I was extremely happy when State Farm was found guilty of defamation and Mr. Radcliff was awarded $14.5 million dollars. I would suggest that EVERYONE should boycott State Farm Insurance!

  • Former Adjuster

    This kind of ugly confrontation between greedy hail chasers and hapless insurance carriers is the every day environment adjusters find themselves in, and it’s not fun. It’s why I left property adjusting. The source of the problem is that roofs are insured for hail at full replacement cost, which provides incentive to replace roofs that are perfectly fine …and leads to the ridiculous practice of looking at shingles and soft metal flashings gutters and vents for almost imperceptible cosmetic dings aka bruises that can somehow justify claiming the entire cost of a new roof. It becomes a battle of the engineers. Homeowners want a new roof because their neighbors got one …and some idiot hail chaser promises to bury the deductible …even though the hail had to stop somewhere. Until carriers refuse to continue this practice and instead offer only depreciated actual cash value coverage, the carriers will be forced to pay everything or risk these types of lawsuits and bad press.

  • Rachel Conroy

    I currently am part owner in a water damage restoration construction company. For over 10 years we have been working in our area with insurance claims. State Farm field adjuster 2 in our area repeatedly slander our company to our clients at ever job we have with them. There are only these 2 in our area. It causes major turmoil for us and puts fear in to our clients head. We have even tried to talk to the adjust but it gets us nowhere it’s like clock work. He goes to the claim and bad mouths my company. We do quality work and understand the whole process. We understand and are certified in water damage restoration and mold remediation. We never demo a whole house and trash everything prior to and adjuster arrival. Basically. My question is what does a contractor do to stop slander.