Law360 reported yesterday that State Farm settled a RICO lawsuit against it for $250 Million. I previously have noted this amazing, made-for-movie case in Did State Farm Buy Its Way Out of a Billion Dollar Judgment.

As noted just last week by Law360:

Groups with ties to State Farm strategized to avoid disclosing contributions that ended up in the campaign coffers of a judge who ultimately helped knock down a $1 billion judgment against the insurer, according to a trove of documents that may serve the important role of outraging jurors in a trial starting Tuesday even if it doesn’t turn out to show illegal acts, experts say.

In a class action brought on behalf of millions of its policyholders, State Farm is accused of collaborating with advocacy groups to handpick Lloyd Karmeier to run for an Illinois Supreme Court seat because of his sympathy to tort reform, and then funneling money through interest groups to his successful 2004 campaign.

After being seated, Justice Karmeier allegedly worked to overturn a $1.06 billion award for millions of State Farm customers who said the insurer let them down by fixing their crashed cars with lower-quality aftermarket parts instead of genuine parts.

Emails and memos revealing donor strategies to fly under the radar of disclosure requirements could be a boon to plaintiffs because they are likely to anger jurors, even if the defense argues they don’t show illegal activity, experts said.

“You’re going to have to get these jurors very mad — which might not be that hard, because nobody likes insurance companies. And people like lobbyists and lawyers almost as little,” said trial lawyer Simon Bloom of Bloom Parham LLP, who teaches courses on trial tactics.

Obviously, rather than go through this very public trial and expose Staten Farm’s embarrassing methods to “fix” the outcome of a bad trial result, it settled the case. I applaud all the attorneys who have worked on this aftermarket parts case, some for over twenty years.

This case is just another addition to the rap sheet of one of America’s most iconic branded insurance companies. This is similar to the Jewish Lawyers List case I reported about in Hindin v. State Farm – The Landmark Claims Practice Case That Few Know About Finally Ends.

State Farm has many bright and well-meaning employees. Sometimes, some of them—especially in management—make horrible decisions, as exemplified in these two cases. I am certain it is embarrassing for many at State Farm and some may even gleefully applaud that the company was caught doing these misdeeds.

Sadly, many other insurance companies are engaged in similar secret claims conduct intentionally designed so that policyholders get less than what they bargained for at the point of sale. These lawsuits are important and should be encouraged because they expose what many current insurance regulators are apparently accepting as the status quo.

Merlin Law Group attorneys are routinely engaged in lawsuits exposing improper conduct by insurance companies. If you are a person with knowledge of unethical and improper actions by insurance companies or a victim of the same, we want to hear from you—especially me! So, you are welcome to call me on my cell at (813) 695-8733 or email me at cmerlin@merlinlawgroup.com with anything you would like to share.

Thought For The Day

“Never argue with someone who believes their own lies.”

  • shirley heflin

    First, your Thought for the Day is so fitting for State Farm.

    Second, a (criminal) RICO action that took over 2 DECADES to resolve is criminal in itself – in my opinion.

    Third, I read about this case on Facebook today and one of the comments said if you’re not part of finding a solution, then you’re part of the problem (helping State Farm continue it’s criminal activities).

    I responded with the following Facebook comment:

    Rest assured that I am not “….part of the problem” and have, in fact, been
    part of the solution (for 30 yrs) to bring State Farm’s – and other
    insurance companies – criminal activities to light with respective State
    Insurance Commissioners, Attorney General’s Office, etc. The Attorney
    General’s office of each State that State Farm is licensed in to market,
    sell insurance, adjust claims, etc., are the ones with authority to
    investigate the criminal aspects of State Farm’s actions. Obviously, the respective
    Attorney General’s office can investigate, indict, prosecute, etc., any insurance company for same.

    Further, private individuals (like me) and/or FAPIA (Fl. Assoc. Pub. Ins. Adj.,)
    APA Assoc.., etc.) do not have such authority. These DECADES
    OLD criminal acts, fraudulent tactics & actions used to fraudulently
    deprive Insureds of benefits rightfully due them, CANNOT be ignored any
    more.

    The organizations fighting for the insureds for the past 30 plus years have finally made it where State Farm has to deliver on it’s slogan: “JUST LIKE A GOOD NEIGHBOR, STATE FARM IS THERE”. This didn’t happen over night. It happened by Insured Advocates gathering and organizing documentation, depositions, jury trials, Insurance Commissioner investigations, etc. These activities showed the patterns utilized by State Farm to deceive and deprive their Insureds of benefits rightfully due them.

    Finally, the fact that it took 20 years to resolve State Farm’s billion dollar judgment to a million dollar judgment is criminal in itself.

    That was the end of my Facebook comment!

  • Bill Fowler

    I am anxious to see how State Farm fares in the state of Mississippi’s $522,000,000 lawsuit for “allegedly” defrauding insureds following Katrina. Attorney General Jim Hood isn’t likely to settle and allow them to cover up what they “may” have done, putting the financial responsibility for what would otherwise be theirs, on the state.

  • Bill Fowler

    I am one of the three people in Mississippi that initiated a multi district litigation that is currently languishing in Federal Court, naming a significant number of insurance companies, including State Farm, for their nefarious practices. My understanding is that, at last count, over 500 plaintiffs, comprised of collision repair shops, have joined that lawsuit.

    I have sold my business, retired and am currently 68 years old. If the travesty that has occurred in the Avery debacle is any indication, I will be long dead before the current efforts at litigation come to an end. I do know that most of the plaintiffs in our complaint have no interest in settling. Effecting change that will benefit consumers going forward is the goal and I sincerely hope to live long enough to witness it.

  • I will again bring up the 1099 scam, that no one (to my knowledge) seems to want to address, perhaps because it is just tax evasion (if I am correct), and not directly hurting consumers. Every year insurance companies send out tens or hundreds of millions, or maybe even billions of dollars worth of 1099-misc forms to PAs and who knows who else, knowing with absolute certainty, that the amounts on the 1099-misc forms are false. Every year, year after year, decade after decade, and just about every insurance company does it. Is anyone pursuing this? If not, why?

  • Lou Russo

    Shirley Heflin. Your response and comments are so meaningful and admired but I have never heard of you. When you sight those with authority, as if they would help …… let me tell you about the real world. Insurance commissioners are put in place by the insurers so they ARE the fox guarding the hen house – you know the ole saying as good as tits on a boar. The A.G.’s (laughing at disgust) are worse yet, they will use their policing power against the good guys, just ask Charlie Barone years back his A.G. went after him for helping consumers fight insurers and charged him with practicing law without a license …… costing him money to defend himself when all he was trying to do was HELP consumers and expose the injustices, fraud and poor unsafe repairs dictated by insurers. A.G. offices …….. most of them have IFU’s (Insurance Fraud Units) sitting right along side them in your state Law enforcement divisions ….. then when you try to go after the insurers look out ….. the A.G.’s offices will go after the YOU or the whistle blower NOT the insurers. I know that first hand since back in the late 90’s our crooked A.G. then: Frankie Sue Del Pappa Nevadas A.G. decades ago when I was exposing FRAUD against insurers (was sending letters and proof), while educating the vehicle owners – the insurers didn’t want that, they didn’t want the criminal acts they engaged in and will go to unfair and unjust lengths to stop that person ……. One day had an very nice and ethical independent adjuster called me at the shop I was managing at the time and told me he was approached and asked by the A.G.’s office to wear a wire into our shop to tape me. When I heard and learned this, I wrote a letter to the A.G.’s office with regard to that and INVITED them to come sit for as long as they want in our shop and that I would express all the same oral education to them that I suggest to consumers …. that I had NOTHING to hide and lots to tell and expose against the very entity and people they are shielding and protecting. But all the invitations, all the assistance I wanted to give the A.G. was not accepted and instead they used and aimed it at me, like they did with Charlie Barone so don’t think or look to them to assist or protect you. I also was the main witness in the Jafbros vs State Farm litigation back in the 80’s and I could go on and on but what I learned during all that was: The legal (contractual) POWER ……. WAS in the hands of the consumer, NOT the collision shops or anyone else. Very hard lesson to earn when I didn’t own that shop or the shop I managed after Jafbros where I learned how to apply the WC principles. I had gone to depositions 5 straight days the first time ….. 3 days the second time and testified many times in the courtroom. It was one of the most stressful times of my life but I am NOT a quitter and my mom and dad taught me to stand not to live on my knees. A small group of shops got involved with Wreck Check, a program that channeled the liability back to the insurers, educating the consumers (those who wanted to listen) and the power was reversed for a few years. I am very familiar with the Avery case and most involved, heck somewhere I still have a copy of the taped deposition of Ed Rust Jr. (CEO of SF) and believe me, it was a JOKE to watch and listen to him acting so flipping innocent (not knowing anything about AM past or how bad and inferior they were) or he is just the dumbest CEO in history but not knowing shit within or about his own company so it’s great watching with many laughing moments. Along the way many, many good collision shops were destroyed, targeted and put out of business, thinking litigation for Tortious Interference being their only attempt to hold the insurers accountable but more just didn’t learn or understand. Judges are bought and paid for, A.G.’s friends are the insurers, legislative bodies are elected, bought and paid for by insurers, those cases that may have had LOTS of evidence and standing a good chance to possible prevail the insurers at the last minute ALWAYS settled then demanding the Plaintiff litigant sign a non-disclosure agreement so a million or 2 is NOTHING to an insurer, that’s like lunch money to us. Bill Ebert in Chicago went all the way, I helped wherever I could and he got a jury award over 25 million but again, that is chump change to an insurer when they can cheat their own insureds out of HUNDRED of times that much in one year because no one holds them accountable. I could go on and on but the final thing I have to say is State Farm getting away with this does not surprise me ……. this action is NO DIFFERENT than what we as a society are witnessing in other areas of government, justice or with our elected officials. So many engaging in criminal acts, unethical behavior because NO ONE holds them ACCOUNTABLE, more effectively than monetary punishment …… no one is jailed. I am 67 years old so it won’t be much longer that this way of life even remotely affects me personally but I am sadden to think of all that which will be effected behind me. If a collision repair shop compromises themselves and the industry that puts innocent consumers back in UNSAFE vehicles then SHAME ON THEM. I can suggest shops JOIN the one and ONLY ORGANIZATION who is NOT part of the Good Ole Boy clubs of others out there, CCRE …… CCRE (Coalition for Collision Repair Excellence) who is and are the ONLY ONES who can help educate shops ….. learn the ethical ways of doing business and when I say the phrase “THE ONLY ONES” it brings some laughter to mind as I reminisce and think how back in the 80’s each time I would stand up or demand operations and procedures be paid for, or express and expose State Farm’s unethical behavior and activities, STATE FARM supervisors use to always say to me: YOU ARE THE ONLY ONES …… and I met another good friend shop owner from Arizona (Bob Isham) who I learned was also being told by SF he was the only one so he had button’s made and we ALL wore them proudly that said just that. He too may still also be affiliated with CCRE, I know he use to be and not in touch with any of them they help to educate collision repair shops and is the best investment a collision shop owner, technician can make to learn how to protect themselves and the vehicle owners …… Wreck Check principles, today ….. LIVES ON!! People need to learn how to channel the liability associated back to THOSE who ARE NOT experts but trying to interfere or control your business having YOU hurt or potentially harm the consumers. It IS the only way to conduct business without going through years or decades of litigation to only lose and be out of a lot of legal funds. Insurers should be involved in the business of selling INSURANCE only ….. as they are NOT the experts so why do other businesses and industries allow them to be in control, dictate anything without ANY liability potential or otherwise is beyond me. Insurers need to get out of the business of controlling other industries but YOU as a business owner need to learn how to make them do that and still remain profitable. MY overall final recommendation on a group effort would be – get everyone to legislate and have adopted put into law FEDERAL INSURANCE REFORM ….. legislate federal laws that not only have a GREAT fine process but also JAIL TIME that with federally enacted laws allows consumers and businesses to file charges against insurers and receive the FINES or restitution NOT going in the state agencies or D.A.’s coffers who many times are on the GOOD OLE BOY buddy list. Punishment that can be resolved or ruled upon in much less time, FINES that make a difference where after so many of the same acts, insurers lose their rights to sell policies for X amount of time, that will cost them MULTI-MILLIONS and send consumers to their competitors and then you will get the insurers attention. For each act committed and proved there is a fine paid and a warning or recommendation to local law enforcement investiagtion but do what me, the QUEEN of suggesting to people to GET IT IN WRITING …… DO NOT ORALLY communicate because he said/she said does little good. Getting it in writing can and they will pay off, the insurers do NOT want to respond in writing, it can become PROOF of the potential illegal acts alleged that they DO engage in ….. so getting it in writing can possibly offer proof. Shop litigations, for claims like T.I. (like read below that I have known of back when filed), those shops came AFTER the Jafbros vs. S.F. case and all those shops have yet to learn with all the documentation and testimony offered it still remains near impossible to hold insurer(s) accountable because insurers are powerful and legally oppose and prevail. My last effort after 4 decades of being involved or having knowledge of all this would be MAKE AN EFFORT and GET the citizens – PUBLIC involved, demand and introduce FEDERAL insurance reform adopted and voted into law BUT KEEP the insurance industry and their lobbyists OUT of the process. THEY WILL demand wording that later can be changed to render the efforts worthless like so many laws or regulations at state levels that harmed consumers and industries instead of help them. Garage keepers laws and regulations, AM parts and their usage that allows insurers to recommend or dictate them. Be careful what you wish for but put in place, on a federal level where business owner, consumer, state rep can get involved in a more rapid time and with financial and/or jail punishment. THEN and only then will insurers and those working for them LEARN and pay attention in a more serious manner. Insures are bean counters, when hundreds of thousands of cases are filed in small claims courts around the country and won against insurers, then and only then will they stop or reform. But for those who have tried in their own ways (businesses filing T.I. cases), bless em but collision shops trying to sue insurers for T.I. or any other allegation, I learned from our case, have to side with the courts …… THE CONTRACT IS BETWEEN THE CONSUMER AND THE INSURER …… those shops need to learn like I did back in the 80’s ……. YOUR LEGAL as a business and collision repair expert, your obligation is between YOU and the consumer (vehicle owner). Would you listen to the bakery owner on how to repair a vehicle? How much to charge or get paid to accept all the future potential liability? NO …… so NO ONE forces you to do the insurers bidding, YOU are the collision repair experts NOT them or the bakery owner. No one forces you to repair vehicles the way someone else tells you to, YOU are the experts so ask yourself WHY DO YOU? Once I learned that, STARTED to educate consumers everyone got what was due them, the shop was paid what they needed to accept liability to repair vehicles PROPERLY with regard to safety, function, appearance and VALUE and consumers did not have to pay any more than their deductible or in a third party situation, nothing and it worked. I was taught I can’t fight FOR the vehicle owner …. actually had NO LEGAL RIGHT to do so but I can educate and suggest to them ALL DAY LONG or say no to a job but offer to the vehicle owner an inspection after someone else (like a DRP shop) and EXPOSE THE FRAUD AND POOR REPAIRS …… I look back on how I wanted to fight for the vehicle owner, but shouldn’t and have NO legal right to ….. learned how I was my own worst enemy when doing that. Shops need to learn how to manage and EDUCATE CONSUMERS ….. again my over all suggestion for repair shops, JOIN CCRE, I am not involved with them but Tony, a GREAT man is still there, a consumer and collision repair shop advocate, BEST guy I ever worked along side of …. tell Tony Lou sent you ….. GOOD LUCK