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.
I have twice blogged about court orders coming out of the United States District of Arizona Court’s Barten v. State Farm case. Well, time to talk about another great Barten decision hot off the press. By order dated January 31, 2014,1 United States District Judge Cindy Jorgenson upheld the spirit of Federal Rule of Civil Procedure 26(c).2
State Farm was a topic of my speech yesterday at the First Party Claims Conference when an audience member, and then half the room, said State Farm was refusing to accept emails about claims. I am certain many otherwise mature State Farm claims employees must be embarrassed by this unique bad faith claims practice.
In Florida, when a policyholder reports a sinkhole loss, carriers are required to conduct a subsidence investigation. The purpose of this law is to protect Floridians’ lives and property. In this situation, policyholders are concerned damages to their properties are getting worse, and it is common for them to fear the worst, a catastrophic event.
An insurance customer who has a loss is often treated as a threat by the insurance company. Claims managers and managers of claims managers are often to blame for creating a claims culture in which their customers are treated as common criminals because the claims department wants to minimize benefits paid rather than fully indemnify its customers in accordance with policy terms. This unethical claims culture is alive and well in some insurance companies as exemplified in my post from last week, State Farm Guilty of Defamation.
The Indiana Court of Appeals affirmed a $14.5 million dollar defamation verdict against State Farm in State Farm Fire & Casualty Company v. Radcliff.1 State Farm was found guilty of defaming a roofing contractor following hail storms in Indiana in 2006. Roofers, restoration construction contractors, State Farm policyholders, and consumer advocates should study this case because it demonstrates the mindset of the largest personal lines insurance carrier.
One of the last remaining Hurricane Katrina cases is the Qui Tam litigation involving the Rigsby sisters’ allegations that State Farm fraudulently overcharged the government when handling NFIP flood claims. The Rigsby sisters alleged State Farm overpaid NFIP flood claims it adjusted to reduce the amount owed under the all risk policies State Farm issued. A jury verdict this week found that State Farm was fraudulent in its claims conduct when adjusting National Flood Insurance claims.
On September 7, 2012, Bloomberg Businessweek published an article regarding an investigation by Texas District Attorney Gregg Cox into State Farm Lloyds alleged misconduct in purposely underpaying and wrongfully denying policyholders’ Hurricane Ike claims:
Cox, whose office has state-wide jurisdiction, would not confirm the substance of the investigation or say whether it is related to claims in about 300 individual lawsuits, as well as a class-action suit, filed in Houston and Galveston over State Farm Lloyd’s handing of claims to repair "lifted shingle" damage after Hurricane Ike.
“Lifted shingle" damage occurs when high winds break the watertight seal on roof shingles and tear them partially — but not fully — away from the roof.
State Farm advertises extensively to promote an image of providing "Good Neighbor" service. Since many insurance companies have a less than sterling reputation, this marketing strategy is important. So, when ABC News has a headline that reads, State Farm Faces Criminal Investigation Over Hurricane Claims, you can bet executives at State Farm’s home office are asking its claims department, "what the heck is going on?"