Major Insurance Company Acts in Bad Faith, Settles in a Major Class-Action Lawsuit

A class-action lawsuit filed in 2012 has finally been settled with a big name in the insurance industry having to pay out those they have wronged.

State Farm has gathered the attention of the public eye recently when they settled a class-action lawsuit for $250 million. It was claimed that the company tried to defraud 4.7 million past and current customers out of $1.05 billion that was rightfully owed to them.

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Details About the Class-Action Lawsuit

The alleged debacle originally began more than 20 years ago, specifically, in 1997. The lawsuit at that time claimed that State Farm did not pay for original parts when vehicles insured by them were repaired.

In 1999, a Williamson County jury and judge ruled in favor of the plaintiffs, awarding them $456.6 million in damages for breach of contract, another $600 million in punitive damages against State Farm for violating the Illinois Consumer Fraud Act, and disgorgement damages totaling around $130 million. Not long after, an appeals court scratched out the disgorgement damages.

State Farm insurance would go on to appeal the judge’s original ruling and the lawsuit stayed in a legislative limbo of sorts within the Illinois Supreme Court. It was then alleged that State Farm had violated the Racketeer Influenced and Corrupt Organizations Act (RICO Act) by funneling money through several advocacy groups to certain political figures within the Illinois Supreme Court with the goal of keeping their donor list anonymous.

By keeping the donor list anonymous, this allegedly enabled State Farm to funnel more than $4 million in aid to the campaign of then-candidate, Lloyd Karmeier, back in 2004, who was running for the Illinois Supreme Court.

Karmeier would go on to win, and a mere 9 months after his election, he overturned the judgment on the original class-action lawsuit from 1999.

After a U.S. Supreme Court ruling that stated that a different West Virginia judge should have recused himself in a somewhat similar situation, blood—figuratively speaking—began to churn in the legislative waters, attracting plaintiffs and lawyers alike to investigate this ordeal.

In 2012, a federal racketeering lawsuit was filed.

Details About the Class-Action Lawsuit

The amount recently awarded, $250 million, was calculated to include the costs of administering the settlement, lawyers’ fees, and other costs.

The settlement also covered those from the original class-action lawsuit that were insured by and had filed an accident claim through State Farm and were given—or paid for the value of—a non-factory authorized or original part when their vehicle was repaired between July 28, 1987, to February 24, 1998.

It is important to note, however, that even though State Farm settled, they are not admitting guilt.

Have you or someone you loved fallen victim to an insurance company’s bad faith practices? Our expert bad faith insurance attorneys in want to hear your story.

Every day, millions of people place their trust in the hands of their insurance companies, hoping that one day, should they need them, they will have their back.

The reality is, however, that sometimes insurance companies will put their profits over your best interests, and if that happens, you need the best bad faith insurance attorney. You need the expertise of Millin & Millin.

Contact us at (956) 631-5600 for your free case evaluation today.