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STRAWN v. FARMERS INSURANCE COMPANY OF OREGON

2010-01-28T08:49:00.000-08:00

STRAWN v. FARMERS INSURANCE COMPANY OF OREGON

MARK STRAWN, on his own behalf and as representative of a class of similarly situated persons, Plaintiff-Respondent,
v.
FARMERS INSURANCE COMPANY OF OREGON, an Oregon stock insurance company; MID-CENTURY INSURANCE COMPANY, a foreign corporation; and TRUCK INSURANCE EXCHANGE, a foreign corporation, Defendants-Appellants, and
FARMERS INSURANCE GROUP INC., a foreign corporation, Defendant.

990809080, A131605.

Court of Appeals of Oregon.

Filed: January 27, 2010.

Richard S. Yugler and Landye Bennett Blumstein LLP for petition and supplemental petition. With them on the reply was David N. Goulder.

James N. Westwood, P.K. Runkles-Pearson, and Stoel Rives LLP for response.

Before WOLLHEIM, Presiding Judge, and BREWER, Chief Judge,[ 1 ] and SERCOMBE, Judge.

SERCOMBE, J.

Petitions for attorney fees allowed in amount of $595,647.

SERCOMBE, J.

In Strawn v. Farmers Ins. Co., 228 Or App 454, 457, 209 P3d 357, rev allowed, 347 Or 258 (2009) (Strawn II), defendants Farmers Insurance Company of Oregon, Mid-Century Insurance Company, and Truck Insurance Exchange (collectively "Farmers") appealed a class action judgment awarding plaintiffs $898,323.80 in compensatory damages and prejudgment interest, $8 million in punitive damages, and more than $2.6 million in attorney fees, and a supplemental judgment awarding plaintiffs additional attorney fees. On appeal, we vacated both judgments with instructions to grant Farmers' motion for a new trial limited to punitive damages, unless plaintiffs agreed to remittitur of punitive damages to four times their compensatory damages and prejudgment interest. Otherwise, we affirmed. Id. at 488. Plaintiffs, who prevailed on appeal, now petition for attorney fees arising from and related to Strawn II and request that we make findings pursuant to ORAP 13.10(7) in support of our decision.

For the reasons explained below, we allow plaintiffs' petitions for attorney fees in part and order an attorney fee award of $542,469 for plaintiffs' "fee-shifting" claims under ORS 742.061(1), an attorney fee award of $41,136 for the common fund claims portion of the appeal, and an attorney fee award of $12,042 for plaintiffs' time litigating their initial attorney fee petition.[ 2 ] We deny plaintiffs' request for an additional incentive award to class representative Strawn.

Plaintiffs' class action claims arose out of Farmers' claims handling process with respect to the payment of personal injury protection benefits to its insureds. Plaintiffs brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and declaratory relief. The first three of those claims were tried to a jury. The jury found in plaintiffs' favor and awarded $1.5 million in compensatory damages and prejudgment interest and $8 million in punitive damages on the fraud claim. The court granted declaratory relief. After a post-verdict claims administration process, the judgments noted above were entered. Strawn II, 228 Or App at 457.

On appeal, Farmers raised eight assignments of error "spanning nearly every stage of the case—from the court's order granting class certification, through trial and post-verdict proceedings, to the award of attorney fees." Id. at 461-62. We affirmed in all respects except for the amount of the punitive damages award. We concluded that" a punitive damages award that is four times plaintiffs' actual or potential harm is all that due process will bear." Id. at 485. Accordingly, we vacated the judgment for punitive damages with instructions to grant Farmers' motion for a new trial on punitive damages, unless plaintiffs were to agree to remittitur of punitive damages to four times their compensatory damages and prejudgment interest. Id.

Thus, plaintiffs successfully defended the parts of the judgments relating to their contractual claims, the fraud claim, and a portion of the punitive damages. As noted above, plaintiffs rely on two different bases for an allowance of attorney fees on appeal, depending on whether the fees were incurred to defend the judgment on the contractual claims or to defend the parts of the judgment that pertained to the fraud claim and the punitive damages award. Plaintiffs rely on ORS 742.061 for a fee-shifting award arising from their contractual claims against Farmers;[ 3 ] they rely on the equitable common fund doctrine for an award to compensate class counsel for defending the verdict on their fraud claim and punitive damages recovery on appeal; they also depend on the common fund doctrine in support of their request for an incentive award for Strawn, the class representative. Lastly, plaintiffs petition for supplemental attorney fees for the time and effort they have spent seeking their fees on appeal.[ 4 ]

"[W]hen an attorney fees petition comports with the requirements of ORAP 13.10(5), * * * our inquiry into the request generally will be limited to the objections that are filed by the party opposing the petition." Kahn v. Canfield, 330 Or 10, 13-14, 998 P2d 651 (2000); see also Dockins v. State Farm Ins. Co., 330 Or 1, 6, 997 P2d 859 (2000) (Dockins II). Here, Farmers objects to both petitions for attorney fees on various grounds. Although Farmers does not object to plaintiffs' entitlement to some award of attorney fees under ORS 742.061(1), it argues that the amount of fees that plaintiffs initially requested is unreasonable. Farmers likewise contends that the amount of fees requested in the supplemental petition is unreasonable. Lastly, Farmers asserts that plaintiffs are not entitled to any award of attorney fees as compensation for work done in defense of the verdict on plaintiffs' fraud claim and the punitive damages recovery or as an incentive award for the class representative.

I. FEE SHIFTING AWARD
In their initial petition for attorney fees, plaintiffs seek $1,065,560 for their fee shifting claims under ORS 742.061(1), itemized as $969,256.80 in fees and $96,303.38 in costs and expenses. Plaintiffs' itemized fee request results from (1) the determination of the total number hours spent on plaintiffs' appeal and the multiplication of those hours by class counsel's hourly rates, resulting in a" lodestar" amount of fees; (2) the allocation of hours to distinguish time spent on plaintiffs' fee-shifting claims from time spent defending plaintiffs' common-law fraud claim and punitive damages recovery, and a reduction of the lodestar based on that allocation; (3) the application of a fee enhancement or multiplier to that reduced lodestar; and (4) a request for costs and expenses not included in that reduced lodestar. We begin our analysis of plaintiffs' fee-shifting request by noting the standard that applies to such an award. We then address each of the four steps in plaintiffs' calculation method, taking into consideration Farmers' objections.

A. Standard
ORS 742.061(1) provides for an award of a "reasonable amount" of attorney fees for work done on appeal in an action" upon any policy of insurance." In determining a reasonable attorney fee award under ORS 742.061, we consider the factors enumerated in ORS 20.075. See also Dockins II, 330 Or at 5-6 (citing those same factors as stated in DR 2-106). ORS 20.075 provides:

"(1) A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees:
"(a) The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal.
"(b) The objective reasonableness of the claims and defenses asserted by the parties.
"(c) The extent to which an award of an attorney fee in the case would deter others from asserting good faith claims or defenses in similar cases.
"(d) The extent to which an award of an attorney fee in the case would deter others from asserting meritless claims and defenses.
"(e) The objective reasonableness of the parties and the diligence of the parties and their attorneys during the proceedings.
"(f) The objective reasonableness of the parties and the diligence of the parties in pursuing settlement of the dispute.
"(g) The amount that the court has awarded as a prevailing party fee under ORS 20.190.
"(h) Such other factors as the court may consider appropriate under the circumstances of the case.
"(2) A court shall consider the factors specified in subsection (1) of this section in determining the amount of an award of attorney fees in any case in which an award of attorney fees is authorized or required by statute. In addition, the court shall consider the following factors in determining the amount of an award of attorney fees in those cases:
"(a) The time and labor required in the proceeding, the novelty and difficulty of the questions involved in the proceeding and the skill needed to properly perform the legal services.
"(b) The likelihood, if apparent to the client, that the acceptance of the particular employment by the attorney would preclude the attorney from taking other cases.
"(c) The fee customarily charged in the locality for similar legal services.
"(d) The amount involved in the controversy and the results obtained.
"(e) The time limitations imposed by the client or by the circumstances of the case.
"(f) The nature and length of the attorney's professional relationship with the client.
"(g) The experience, reputation and ability of the attorney performing the services.
"(h) Whether the fee of the attorney is fixed or contingent."
We do not find that the factors set out in ORS 20.075(1) affect the amount of the fee-shifting award. The criteria in ORS 20.075(2), however, are material, and we now turn to the application of those factors.

B. Reasonableness of Total Hours
Plaintiffs assert that the time spent by class counsel on plaintiffs' appeal was reasonable, and plaintiffs have submitted declarations by class counsel and an outside expert in support of that assertion. Plaintiffs base their fee-shifting request on 1,537 hours of appellate time and 94.4 hours of class administration time. Included within plaintiffs' 1,537 hours of appellate time are 61.55 hours that arose from and relate to a prior appeal initiated by Farmers that occurred during the course of this litigation. See Strawn v. Farmers Ins. Co., 195 Or App 679, 98 P2d 1158 (2004) (Strawn I). The 94.4 hours of class administration time represent time that plaintiffs assert counsel spent working on certain post-judgment proceedings in the trial court, communications with class members after November 23, 2005, and expenses for claims administration after December 9, 2005, necessary to the pendency of the appeal.

Farmers objects to the total number of hours spent by class counsel on appeal as excessive because the appeal involved the preparation of only a single brief and oral argument and class counsel's hours included duplicative work.Farmers argues, based on the submitted declaration of an outside expert, that class counsel's total appellate hours should be reduced to, at most, 700 hours of appellate time. Furthermore, Farmers argues that, in any event, we should refuse plaintiffs' request for fees related to Strawn I, where Farmers was designated as the prevailing party and no costs were allowed.

Plaintiffs respond that their overall time is reasonable given (1) the procedural and substantive complexity of the underlying case and the appeal and (2) the approach undertaken by Farmers on appeal. Plaintiffs note that, on appeal, Farmers had advanced eight assignments of error spanning nearly every stage of the case, it combined assignments of error that should have been separately stated, and it raised issues that it had failed to preserve. See Strawn II, 228 Or App at 461-62, 466-69, 473-75. Finally, plaintiffs reassert that time related to Strawn I is properly part of their recovery.

We agree with Farmers that the overall amount of time plaintiffs seek for litigating the appeal is excessive. Farmers has made a sufficient showing that the amount of time plaintiffs expended in this case lies outside the reasonable range for an appeal, even for a complex class action of this magnitude. We conclude that some of the time spent on preparation of the appellate brief was excessive and reduce the fees in the amount of $64,500. We also reduce plaintiffs' appellate time to eliminate the 61.55 hours that plaintiffs spent on Strawn I. Plaintiffs may only recover the fees incurred in Strawn II, where they are the prevailing party and are entitled to costs; they may not now recover the fees incurred in Strawn I, where they were not the prevailing party and were not entitled to costs. In addition, we deny plaintiffs' request for fees attributable to the 94.4 hours of class administration time. The class must instead seek a supplemental judgment in the trial court for that time. We calculate the value of plaintiffs' attorney fees on the appeal to be $373,966.

C. Allocation of Hours to Fee-Shifting Claims
Plaintiffs have made an allocation to distinguish the hours that class counsel spent on an action "upon any policy of insurance" under ORS 742.061(1)—i.e., the hours spent on their fee-shifting claims—from the hours incurred solely in connection with their claim for common-law fraud and punitive damages recovery. Plaintiffs contend that roughly 11 percent of their time was spent defending their verdict on the fraud claim and their punitive damages recovery.

Farmers objects to the allocation as made by plaintiffs and argues that 20 percent of plaintiffs' appellate time should be allocated to the nonfee-shifting claims. One of Farmers' experts contends that the allocation made by plaintiffs was unreasonable, in part, because the work necessary to defend the verdict on the fraud claim and punitive damages recovery was substantial, as demonstrated by the amount of briefing provided on those matters by plaintiffs. Farmers also contends that, in addition to the hours devoted to the fraud claim and punitive damages recovery, the hours that class counsel spent on the assignment of error concerning the mootness of the declaratory judgment claim is also not compensable under ORS 742.061(1). With respect to the declaratory judgment claim, Farmers asserts that (1) the work class counsel "performed on appeal [was] essentially procedural and so far removed from the direct object of obtaining a money judgment," as required under McGraw v. Gwinner, 282 Or 393, 578 P2d 1250 (1978), and (2) the work was unique and not duplicative of any work that advanced the actual fee-shifting claims.

In response, plaintiffs contend that Farmers' expert inflated the amount of briefing time required on the fraud claim and punitive damages recovery. In addition, plaintiffs assert that the assignment of error regarding punitive damages was one of the most straightforward assignments to respond to because the principal cases were well known, the factors to be considered were established, and one of plaintiffs' attorneys was active in participating in many recent punitive damages cases in Oregon. Thus, plaintiffs argue that despite the magnitude of the punitive damages recovery, the 11 percent allocation is reasonable. As to Farmers' objection to the inclusion of time spent on the declaratory judgment claim, plaintiffs respond that Farmers made no such argument below and that the trial court's attorney fee award included time spent on the declaratory judgment claim. Plaintiffs also assert that McGraw is inapposite.

We agree with plaintiffs that an allocation of 11 percent of plaintiffs' attorneys' time to the fraud claim and punitive damages recovery is reasonable. We also conclude that the declaratory judgment claim was related to the contractual claim and that the attorney time incurred regarding that claim was compensable under ORS 742.061. Our conclusion on the allocation issue results from the broad range of complex legal issues presented in the appeal related to the class action and the contractual claim and the relatively narrow legal issues presented with respect to the fraud claim and punitive damages recovery. The size of the respective claims does not drive the amount of legal effort necessary for their defense on appeal. Accordingly, we will allocate 11 percent of plaintiffs' appellate time—a value of $41,136—to plaintiffs' nonfee-shifting claims. Thus, plaintiffs are entitled to recover $332,830 in fees under ORS 742.061.

D. Fee Enhancement
Plaintiffs seek a fee enhancement for the services rendered by class counsel on appeal by a factor of 2.25. Plaintiffs argue that a substantial fee enhancement is reasonable given (1) the high risk and contingent nature of the case; (2) the time and effort involved; (3) the novelty and difficulty of the questions involved and the magnitude, complexity, and uniqueness of the litigation; and (4) the results achieved. They note that a factor of 2.25 was used by the trial court to enhance their award of attorney fees for services rendered at trial—an award we affirmed in Strawn II.

Farmers objects to the use of a multiplier and argues that, pursuant ORS 742.061(1), plaintiffs are entitled on appeal only to a "reasonable" fee and not the "astronomical" fees that they have requested. Farmers asserts that Oregon courts have rejected the federal lodestar and multiplier approach requested by plaintiffs. One of Farmers' experts recognizes, however, that Oregon law does support compensating counsel who take on contingent fee cases at rates exceeding their standard billing rates. Farmers' expert nonetheless contends that Oregon courts have not used that proposition as a springboard to apply a "multiplier." Despite that contention, Farmers' expert also notes that in Strunk v. PERB, 343 Or 226, 169 P3d 1242 (2007) (Strunk III), the court did apply a multiplier to calculate the fee award. Farmers' expert distinguishes Strunk III on the ground that that case involved the common fund doctrine and not a fee-9shifting statute as the basis for an award of appellate fees. Farmers' expert states that an enhancement of plaintiffs' fees is not appropriate because (1) the need to incentivize plaintiffs' counsel on appeal was less; (2) the complexity of the case was compensated by the staffing choices and hours spent by class counsel on the appeal; and (3) the risk that class counsel faced on appeal was less than the risk that they faced initially at trial. Farmers suggests that if an enhancement is allowed on the appellate fee award, it should be less than the enhancement allowed on the fees at trial.

In response, plaintiffs assert that the term "reasonable" in ORS 742.061 does not preclude the use of a multiplier or other fee enhancement. They argue that enhanced fees are available, whether reached by application of a lodestar and multiplier approach or through the increase of standard hourly rates to "reasonable rates" based on market rates and an enhancement for contingent risks. They assert that the approval of multipliers in Strunk III is not restricted to common fund cases and refer us to the award of fees, which included a multiplier, in Dockins II. Further, they argue that enhancement remains appropriate here because the case remained a" no offer" case throughout the pendency of the appeal, and, therefore, the risks remained the same on appeal.

In light of the issues framed by the parties, we first determine whether we are precluded from using a multiplier or other fee enhancement in determining plaintiffs' fee-shifting award for appellate work. If we are not so precluded, we must then determine whether application of a multiplier or enhancement is appropriate in this case. Lastly, if use of a multiplier or enhancement is appropriate, we must determine what that multiplier or enhancement should be. We begin by examining the cases relied on by the parties.

In Wattenbarger v. Boise Cascade Corp., 301 Or 12, 16, 717 P2d 1175 (1986), the claimant argued that the court should recognize that the contingent nature of attorney fees in all workers compensation claims justified a "multiplier" in representing claimants generally, regardless of the circumstances in an individual case. The court disagreed and held:

"The statute does not support a general `multiplier' for the statistical risk, but it does not foreclose a court from allowing a fee exceeding the attorney's usual hourly rate when the court finds that, in the specific case, success is sufficiently in doubt and the risk that the services will go uncompensated is so high that a higher attorney fee is reasonable."
Id.

In Griffin v. Tri-Met, 112 Or App 575, 584-85, 831 P2d 42 (1992), rev'd on other grounds, 318 Or 500, 870 P2d 808 (1994), the trial court had awarded plaintiff attorney fees at twice counsel's standard rate. Tri-Met, the defendant, argued that that award was in error and relied on federal cases where use of a "multiplier" was at issue. On appeal, we stated: "Most of that reported litigation is unhelpful and the formulas used are unduly cumbersome. Instead, we continue to review the reasonableness of attorney fee awards by using the [traditional] factors * * *." We then examined the circumstances of the case: (1) there were a limited number of attorneys willing and able to take on complex, controversial, and high risk employment cases like the one at issue; (2) the evidence showed that the plaintiffs had experienced difficulty in obtaining qualified counsel; and (3) the evidence also showed that counsel who successfully undertook such cases for a contingency fee were generally compensated at rates greatly exceeding standard billing rates for general legal services. Thus, we concluded "that there was substantial evidence supporting the attorney fees award and [held] that, under the circumstances of [the] case, the court did not abuse its discretion in awarding fees at twice counsel's standard rate." Id.

In Dockins II, the petitioners requested an attorney fee award for appellate work done in Dockins v. State Farm Ins. Co., 329 Or 20, 985 P2d 796 (1999) (Dockins I). They explained that request as follows:

"For each lawyer and legal assistant who worked on petitioners' appeal, petitioners have multiplied the number of hours they billed by a `reasonable hourly rate,' which is based on the respective lawyer's or assistant's standard rate for the work at issue. When the total fees for each lawyer and legal assistant are added, the result is the amount requested."
330 Or at 4 (footnote omitted). The "reasonable hourly rate" represented the petitioners' attorneys' standard rates multiplied by a factor that they stated represented the increased risk inherent in taking a case on a contingent fee basis. Id. at 4 n 3. The use of that factor was not objected to by the respondent, although the respondent did object to the reasonableness of the petitioners' underlying standard rates. Id. at 8, 8 n 10. The court was not persuaded by the respondent's objection and the awarded the petitioners the fees as they had been requested. Id. at 8-9.

Most recently, in Strunk v. PERB, 341 Or 175, 179, 139 P3d 956 (2006) (Strunk II), attorneys for public employees who had successfully challenged various statutory enactments revising the terms of the employees' pension plans petitioned the Oregon Supreme Court for attorney fees and costs related to the litigation that had culminated in Strunk v. PERB, 338 Or 145, 108 P3d 1058 (2005) (Strunk I). Strunk I was before the Oregon Supreme Court on six original jurisdiction petitions; it was not a case that had come to the court on appeal. 338 Or at 150. The court in Strunk II held that the petitioners' attorneys were entitled to" an award of reasonable fees" under the equitable common fund doctrine and referred the matter to a special master for findings and recommendations with respect to the fees to be awarded. 341 Or at 184-85.

In Strunk III, the court reviewed the findings and recommendations of the special master, considered the objections and responses made by the parties, and ultimately determined the "reasonable attorney fees and costs" that should be awarded. 343 Or at 247. One of the issues considered by the court in Strunk III was the respondents' assertion that "the special master erred in awarding the fee multipliers requested by petitioners' lawyers in this case." Id. at 245. The petitioners' attorneys had requested respective multipliers of 1.5 and 2.0. Id. at 233. The respondents argued that, under the common fund doctrine, "such multipliers are generally appropriate only in the face of `exceptional success.'" Id. at 245. They contended that, because the petitioners failed to prevail on all of their claims in Strunk I, they had failed to achieve "exceptional success." Id.

The court disagreed and recognized that, in common fund cases, the preserved fund itself was a primary measure of success—the preserved fund at issue in the case exceeded $1 billion. In addition, the court noted that other factors—such as the difficulty and complexity in the case, the value of the interests at stake, and the skill and professional standing of the lawyers involved—also supported an enhancement of fees. The court therefore allowed the fee awards to be enhanced by applying the respective multipliers requested by the petitioners' lawyers. Id. at 246.

Based on the above case law, it is apparent that an award of "reasonable" attorney fees does not preclude the use of a multiplier or other fee enhancement for (1) work done at trial (Griffin); (2) work done before an appellate court sitting pursuant to its original jurisdiction (Strunk III); or (3) work done on appeal (Dockins II). Such an enhancement may be applied at the beginning of the calculation process by increasing counsel's standard or basic hourly rate to a "reasonable hourly rate" for the work done given the nature of the case, as occurred in Dockins II, or the enhancement may be applied later in the calculation process by increasing a lodestar amount of fees, as occurred in Strunk III.

Regardless of the arithmetic used, what remains constant are the factors that a court will consider in determining whether a fee enhancement should be applied in calculating a reasonable fee award. Those criteria are set out ORS 20.075(2). The factors relevant to this case are: (1) the novelty and difficulty of the questions involved in the proceeding and the skill needed to properly perform the legal service; (2) the amount involved in the controversy and the results obtained; (3) the experience, reputation, and ability of the attorney performing the service; and (4) whether the fee of the attorney is contingent. We construe the last of those circumstances to include consideration of the risks undertaken by the attorney in litigating the case.

Several circumstances support an enhanced award for plaintiffs' fee-shifting claims in this case. First, and primarily, because this case remained a "no offer" case throughout the pendency of the appeal—i.e., a case where Farmers did not attempt to settle the dispute and made no tender to the class—class counsel continued to face a very significant risk that they would be left uncompensated given the contingent nature of their right to attorney fees. Second, this case presented novel and difficult questions in the context of a complex and large class action litigation. That factor is of less importance in the enhanced fee analysis because the complexity of the case is already accounted for in the number of hours spent in defending the appeal. Third, class counsel on appeal preserved in whole plaintiffs' award of compensatory damages and interest. Thus, we hold that plaintiffs are entitled to an enhanced fee award on their fee-shifting claims.

We next determine what that enhanced fee award should be. Plaintiffs have argued that we should apply a multiplier of 2.25 because that multiplier was used to enhance their fees for work done at trial. Farmers, on the other hand, urges us to evaluate the overall reasonableness of the award and asserts that the use of the multiplier requested results in astronomically unreasonable fees.

We do not agree with plaintiffs that a multiplier of 2.25 is appropriate simply because that multiplier was used by the trial court in awarding fees for the work done at trial. Appellate work is not identical to trial work. As the prevailing party at trial and the respondent on appeal, plaintiffs were entitled to certain favorable standards of review. The prosecution of the case at trial was more risky than the defense of the judgments on appeal. In addition, plaintiffs' efforts in arguing from a closed record on appeal cannot be equated with their efforts in creating that record at trial.

In Strunk III, the court approved the use of multipliers of 1.5 and 2.0 for work done in the Strunk I litigation. 343 Or at 233, 246. As noted above, those enhancements resulted from consideration of the result achieved, the difficulty and complexity of the issues involved, the value of the interests at stake, and the skill and professional standing of the lawyers involved. Id. at 246. Because some of those same factors support an enhancement in this case, we conclude that a similar enhancement factor is appropriate. In choosing an enhancement factor, we are sensitive to the declarations of class counsel regarding their standard billing rates as compared to the rates of their peers. Plaintiffs' lead attorney notes that class counsel's standard billing rates in this case are below the rates of many attorneys of similar training, experience, and skill. Specifically, the rates for plaintiffs' attorneys range from $200 to $400 per hour. Plaintiffs' lead attorney notes that standard billing rates of his peers can range from $450 to $590 per hour.

The ORS 20.075(2) factors in this case, however, suggest a lower multiplier than the one allowed in Strunk III. Strunk III involved the recovery of a substantially greater sum of money for the plaintiffs, the creation of a new record before the special master, and issues that were somewhat more complex than this case. For those reasons, we hold that an enhancement factor of 1.6 is appropriate for the appellate work done in this case. Thus, plaintiffs' enhanced lodestar amounts to $532,528 in fees.

E. Costs and Expenses
Plaintiffs request additional costs and expenses that are not included in their hourly rates. Included in their cost and expense request were unpaid invoices for class action administration services since November 23, 2005, in the amount of $23,526.50, as well as future expenses for class administration services in the amount of $62,836. In Willamette Prod. Credit v. Borg-Warner Acceptance, 75 Or App 154, 159, 706 P2d 577 (1985), rev den, 300 Or 477 (1986), we stated:

"In setting a reasonable attorney fee for the prevailing party, it is appropriate for the court to take into consideration the actual billing practices of the party's attorney. Traditionally, courts simply have determined fees based on the hourly charge for the attorney working on the case with the assumption that the hourly rate was set to recoup overhead and realize a profit. Modern electric accounting methods allow a more specialized billing for attorney fees. Courts should recognize the reality of modern legal business practices and include expenses specially billed to the client in the attorney fees award when they are properly documented and are reasonable."
We therefore will partially allow plaintiffs' request for costs and expenses as part of their attorney fees award in the amount of $9,941. We deny plaintiffs' requested costs and expenses in the amount of $86,362, the extent to which they relate to class administration. As with the hours related to class administration, the class must seek a supplemental judgment in the trial court for those expenses.

II. COMMON FUND AWARD
Plaintiffs also request an increase in the amount of the allocation to class counsel from the punitive damages recovery under the equitable common fund doctrine. They assert that this common fund award would compensate class counsel for their efforts in defending on appeal the award on plaintiffs' fraud claim and the punitive damages recovery. Plaintiffs request that we enhance such a common fund award by a factor of 2.25, for the same reasons that support enhancement of their fee-shifting award.

Farmers objects to plaintiffs' request for a common fund award. Farmers argues that it should be denied because class counsel's effort on appeal did not preserve the punitive damages recovery in its entirety. Rather, the recovery was reduced on appeal by more than half.

Plaintiffs respond that they clearly "preserved" a common fund on appeal. They note that Farmers sought to eliminate the fund entirely or, in the alternative, to reduce the fund to an amount equal to the compensatory damages recovery. Instead, both challenges were rejected in Strawn II and a fund four times the amount of the compensatory damages was preserved.

Whether plaintiffs here are entitled to attorney fees on appeal under the equitable common fund doctrine where their class counsel partially preserved a fund after its creation at trial is a question of first impression. The common fund doctrine under Oregon law was discussed in State Farm Mut. Auto. Ins. v. Clinton, 267 Or 653, 657, 518 P2d 645 (1974), where the court recognized:" It is * * * a well-established rule in Oregon that an attorney whose efforts result in the recovery of a fund payable to various persons is entitled to payment of reasonable attorney fees from that fund." More recently, in Strunk II, the court concisely summarized the principles supporting the common fund doctrine. The court stated:

"Under the common fund doctrine, plaintiffs whose legal efforts create, discover, increase, or preserve a fund of money to which others also have a claim, may recover the costs of litigation, including their attorney fees, from the created or preserved fund. As commentators have noted, the doctrine is primarily `employed to realize the broadly defined purpose of recapturing unjust enrichment.' In other words, the doctrine is used to spread litigation expenses among all beneficiaries of a preserved fund so that litigant-beneficiaries are not required to bear the entire financial burden of the litigation while inactive beneficiaries receive the benefits at no cost."
341 Or at 181 (citation omitted).

Although Oregon courts have not spoken on the issue of when a party is entitled to attorney fees on appeal under the common fund doctrine where the fund is created below and preserved on appeal, other courts have addressed the issue. The Washington Supreme Court in Bowles v. Wash. Dept. of Ret. Systems, 121 Wash 2d 52, 75, 847 P2d 440 (1993), declined to award such fees. In that case, a class action, the plaintiffs' attorneys requested attorney fees for their work on appeal under the common fund doctrine. The court stated:

"Under the percentage of recovery approach, the attorneys are to be compensated according to the size of the judgment recovered, not the actual hours expended. The plaintiffs have not increased the size of their recovery on appeal, thus we have no basis to increase their fees."
Id. Similarly, in Okeson v. City of Seattle, 130 Wash App 814, 828, 125 P3d 172 (2005), the plaintiff asked for attorney fees on appeal under the common fund doctrine. There too, the court denied the request and relied on the reasoning in Bowles. The court declined to award additional fees from the common fund because the trial court had awarded attorney fees on a "percentage of recovery" basis and the plaintiff had not increased the size of the recovery on appeal. Id. We find that reasoning helpful, and it informs our analysis below.

At this point, it is worth noting that, in the context of fee awards made under the common fund doctrine, concerns arise that (1) class counsel may be acting in conflict with the interests of the class in requesting an award from the recovered or preserved fund and (2) the parties may lack adversity where the prevailing party's award comes from a fixed fund and is not separately taxed on the opposing party. The Alaska Supreme Court most recently recognized these dual concerns in State Dept. of Health v. Okuley, 214 P3d 247 (Alaska 2009). There, the court stated:

"We have recognized the `potential lack of adversity when class counsel asks the trial court to impose fees on the benefitted class members under the common fund doctrine.' Because of this potential lack of adversity, as well as the potential for conflicts of interest between the class and class counsel, we have explained that `[c]ourts should * * * closely scrutinize applications for attorney's fees from a fixed fund.'"
Id. at 252 (footnotes omitted). Because those same dual concerns are present here, we likewise closely scrutinize plaintiffs' request for additional fees from the punitive damages recovery.

We begin our scrutiny of plaintiffs' request by examining the award of attorney fees below. The initial opinion and order of the trial court regarding attorney fees indicates that the court initially awarded class counsel attorney fees for work done at trial on a percentage of recovery basis. Specifically, the court awarded class counsel 20 percent of the $8 million punitive damages recovery, amounting to $1.6 million, and 38 percent of the nonpunitive damages recovery, amounting to $1.575 million. The trial court, in explaining the total award of $3.175 million, also stated: "Viewed from another perspective, this award is essentially equivalent to the attorneys receiving the entire Fee-Shifting Award of $2,670,000 plus another $505,000 from the common fund for a total of $3,175,000."

Subsequently, the trial court entered an order regarding the reallocation of punitive damages. That subsequent order, in part, modified the initial opinion and order regarding attorney fees. First, the trial court vacated the last two pages of its initial opinion that had determined the specific percentages—20 percent and 38 percent—of the punitive damages and nonpunitive damages recoveries to be awarded as fees. Second, it ordered that class counsel was to receive the entire statutory fee award of $2,670,000. Third, it ordered that, from the $3,200,000 in punitive damages available to the prevailing party, class counsel was to receive $505,000 in addition to the statutory fee award.

Were we to construe the award of attorney fees made by the trial court as a fee award made on a percentage of recovery basis, we would decline to award plaintiffs an additional award from the punitive damages recovery because plaintiffs have not increased their punitive damages recovery on appeal. However, given the procedural history of the trial court's attorney fee award, we conclude that the trial court's award was not based on a percentage of the recovered punitive damages. We conclude that plaintiffs are entitled to attorney fees for preserving a significant portion of the punitive damages common fund. The amount of fees incurred, 11 percent of the fees calculated earlier for the fee-shifting award, is $41,136. Given the reduction in the amount of allowed punitive damages as a result of the appeal, and the lack of complexity of the legal issues involved, we decline to enhance those fees under ORS 20.075(2)(a) and (d).

III. INCENTIVE AWARD
Plaintiffs have also requested that an incentive award of $5,000 be made to the class representative, Strawn. Plaintiffs argue that an incentive award of this type is usually viewed as an extension of the common fund doctrine and has been described as a litigation expense.Plaintiffs propose that the award be made from the interest accrued on the compensatory damages portion of the underlying judgment. Plaintiffs argue that Strawn should receive such an incentive award because he (1) participated in numerous status conferences, meetings, and strategy sessions regarding the appeal over the four years the case has been pending on appeal; (2) attended the oral arguments on behalf of the class members; (3) was directly involved in making significant decisions affecting the interests of class members; and (4) remained exposed to substantial personal financial risk for Farmers' appellate costs and disbursements if the class had not prevailed on the appeal. Plaintiffs also contend that, although Strawn did not agree to serve as class representative for the purpose of receiving an incentive award, he is nonetheless entitled to such an award for his time, effort, and personal risk.

Farmers objects to plaintiffs' request for an incentive award on the ground that there is no authority in Oregon for providing Strawn with such an award. Further, Farmers argues that, even if there were a basis for such an award in the abstract, plaintiffs have failed to present sufficient evidence, such as a record of the amount of time that Strawn spent on the appeal, to support allowing an award in this case. Farmers contends that inferences drawn from class counsel's billing records show that class counsel communicated with Strawn only briefly about the appeal process and that there is no evidence that his participation was at all necessary to the appeal.

Plaintiffs respond that an incentive award was allowed at trial and that Farmers did not challenge that award in Strawn II. Plaintiffs state that incentive awards have been made in numerous class actions and that the lack of Oregon case law authorizing such awards is explained by the fact that no other class actions have been fully litigated in Oregon state court. Lastly, plaintiffs contend that Farmers "speciously denigrates risk of a judgment against * * * Strawn personally for Farmers' appellate costs, as well as Farmers' trial costs, had the judgment been reversed."

It is correct that Oregon case law has not addressed the circumstances in which an incentive award may be granted to a class representative. And, the issue presented here—whether an incentive award may be granted to the class representative following an appeal in which the class prevails, as opposed to following a trial or settlement in which the class prevails—is specifically an unanswered question. For helpful guidance on those issues, we turn to how other courts have addressed incentive awards.

The Ninth Circuit, in Rodriguez v. West Publishing Corp., 563 F3d 948, 958-59 (9th Cir 2009) (emphasis omitted), summed up the circumstances in support of granting an incentive award as follows:

"Incentive awards are fairly typical in class action cases. See 4 William B. Rubenstein et al., Newberg on Class Actions § 11:38 (4th ed. 2008); Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to Class Action Plaintiffs: An Empirical Study, 53 U.C.L.A. L. Rev. 1303 (2006) (finding twenty-eight percent of settled class actions between 1993 and 2002 included an incentive award to class representatives). Such awards are discretionary, see In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000), and are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general. Awards are generally sought after a settlement or verdict has been achieved."
In addition, the Seventh Circuit, in matter of Continental Illinois Securities Litigation, 962 F2d 566, 571 (7th Cir 1992), addressed the rationale behind incentive awards by stating that, "[s]ince without a named plaintiff there can be no class action, such compensation as may be necessary to induce him to participate in the suit could be thought the equivalent of the lawyers' nonlegal but essential case-specific expenses, such as long-distance phone calls, which are reimbursable."

Bearing in mind that understanding of the purposes of incentive awards, we now decline to grant such an incentive award to class representative Strawn in this case. First, as noted by the Ninth Circuit in Rodriguez, incentive awards are generally sought—and thus awarded—after a settlement or verdict has been achieved in the class's favor. We therefore question the propriety of granting plaintiffs' request for an incentive award following an appellate judgment in the class's favor. Second, even if we were to assume that the common fund doctrine would authorize such an incentive award in the abstract following an appellate judgment, we agree with Farmers that plaintiffs have failed to present sufficient evidence to support their requested award in this case. Besides the bare assertions in the fee petition regarding Strawn's participation in the appeal, class counsel's billing records indicate that, at most, only 23.8 hours of their efforts may have involved consultation with Strawn and his attendance at oral argument. Furthermore, it is far from evident that any degree of participation by Strawn was necessary to the appeal, unlike the responsibilities of the class representative during the trial phase of the litigation. For those reasons, we decline to award Strawn the requested incentive award.

IV. SUPPLEMENTAL FEES AWARD
Lastly, plaintiffs have submitted a supplemental petition for an additional award of $32,597.48, itemized as $32,332.50 in fees and $264.98 in costs and expenses. Plaintiffs contend that they are entitled to fees for the time and effort that they have spent litigating their initial fee petition—so called "fees on fees"—and they cite Crandon Capital Partners v. Shelk, 219 Or App 16, 42-43, 181 P3d 773, rev den, 345 Or 158 (2008), and Emerald PUD v. Pacificorp, 104 Or App 504, 507, 801 P2d 141 (1990), rev den, 311 Or 222 (1991) as precedent for such an award. Plaintiffs argue that they have amassed a combined lodestar amount of $14,370 in fees as part of the fee application and litigation process, $2,590.50 of which represents additional class administration time. Plaintiffs have requested that we enhance their supplemental fees by a factor of 2.25.

Farmers objects to the supplemental petition and argues that plaintiffs are not entitled to a multiplier of 2.25 for the reasons expressed in its objections to the fee-shifting award. Lastly, Farmers suggests that, when ruling on the supplemental petition, we should consider "the overstatement and duplication of fees" in plaintiffs' initial petition.

As an initial matter, we note that the cases cited by plaintiffs in support of their supplemental petition themselves rely on ORCP 68 as the authority for "fees on fees." In those cases, we reasoned that the process of recovering fees was properly considered part of the "prosecution of an action" for purposes of a fee petition under ORCP 68. Crandon Capital Partners, 219 Or App at 42-43 (quoting Johnson v. Jeppe, 77 Or App 685, 688, 713 P2d 1090 (1986)); Emerald PUD, 104 Or App at 507 (also quoting Johnson). Thus, the precedent cited by plaintiffs, which addresses "fees on fees" at the trial level, is not directly applicable in determining their supplemental fee request on appeal. Authority for such fees must be found elsewhere.

Here, plaintiffs' supplemental fee request is based on ORS 742.061(1), which provides that "a reasonable amount * * * as attorney fees shall be taxed as part of the costs of the action and any appeal thereon." The question we are therefore presented with is whether the process of recovering fees for appellate work may properly be considered part of the "appeal" for purpose of a fee petition authorized by ORS 742.061(1). We now hold that such "fees on fees" are available because the process of litigating the fee petition for appellate work is properly considered part of the appeal.

We therefore allow plaintiffs' supplemental petition for fees in part, in the amount of $11,777. We deny the request for fees attributable to class administration time; plaintiffs must instead seek a supplemental judgment in the trial court for that time. We also decline to enhance plaintiffs' fees for the relatively routine work of litigating a fee petition. Lastly, we allow plaintiffs' supplemental request for costs and expenses not included in their hourly rates in the amount of $265.

Petitions for attorney fees allowed in amount of $595,647.

Source: leagle.com

Class Action: We are looking for individuals who were wrongfully charged deductibles

2010-01-21T08:00:00.000-08:00

Wrongful Application of Deductibles

My name is Joseph Watkins. I am an attorney specializing in bad faith in Tucson, Arizona. I am currently handling a class action lawsuit in federal district court titled Rodriquez vs, Farmers Insurance. The lawsuit involves cases where deductibles were charged wrongfully. Specifically, in any claim or any policy limit was exceeded by an amount greater than the total deductible, the deductible must be refunded. For instance, if you have a contents loss of $20,000 with $50,000 in total coverage, Farmers will normally charge your full deductible against the loss. However, if there was a sub limit of, for example, $2500 for furs and the loss involved $5000 in damage to fur coats, Farmers must absorb or refund the deductible up to $2500 even though the loss was under the total contents limit for coverage.

The deductible is usually charged on the first check issued. If any policy limit is exceeded after that point in time the deductible must be refunded. This is true of any limit not just the larger limits.

Please contact:
Joseph W. Watkins
6303 E. Tanque Verde, #210
Tucson, AZ 85715
520-882-9115
JoeWLaw@Cox.net

Has Farmers Insurance lost its integrity and ethics in claims handling and treatment of employees?

2010-01-14T08:29:00.000-08:00

A now-former Farmers insurance adjuster who became increasingly agitated over a company mandate to specify aftermarket parts and require discounted body shop pricing in his estimates – eventually taking allegations of wrongdoing to the state’s insurance department – has been denied whistleblower status by a California appeals court, which ruled that his dismissal was justified and he is now liable for Farmers’ legal expenses.

After losing a wrongful termination lawsuit at the trial court level, Beau Yeakel argued his contentions before a Second Appellant District panel.

Testimony in the case centered around a series of escalating verbal confrontations that Yeakel had with his supervisors, culminating in a sexually graphic telephone message left on a manager’s voice mail. Yeakel said he made the remark thinking that his attempted call had been disconnected. It had not been, and the offending language was recorded and shared up the chain of command.

Farmers’ executives testified that Yeakel had been repeatedly “counseled” about his behavior, yet objectionable incidents continued.

Working in Ventura and Santa Barbara counties, Yeakel’s supervisors were Gabe Snyder Barbara Mann.

According to case transcripts, Yeakel objected to Farmers’ practices that he said involved using alternative or aftermarket parts in the repairs where possible, to include a discounted price for the use of original equipment manufacturer parts, and to include a discounted labor rate that was less than the prevailing rate charged by the local repair shops.

Neither Yeakel nor his lawyer was available for comment. A phone listing for Yeakel rings into a fax machine; his lawyer did not respond to repeated messages.

At various times between 2003 and 2005, according to the court documents, Yeakel complained to Snyder and Mann that none of the shops in his assigned territory would agree to the parts and labor discounts sought by Farmers. Yeakel believed that the inclusion of such discounts in his estimates eroded his credibility with the repair shops and created additional work for him when he had to rewrite the estimates to eliminate the discounts.

In his complaints to his supervisors, Yeakel also expressed frustration that Farmers’ discount practices were adversely affecting his performance evaluations. As described by Yeakel, the discounts were considered in Farmers’ “key performance indicators,” which was a compilation of the criteria against which a claims representative’s performance was measured and upon which performance reviews and pay raises were based.

Yeakel had several heated discussions with Snyder about his performance reviews because Yeakel felt that he was being unfairly rated based on discounts that no repair shop would accept. Yeakel also voiced his opinion that aftermarket parts did not fit properly in the repaired vehicles and that Farmers’ parts discount was “unethical.”

In response to Yeakel’s complaints, Snyder advised him that these were the company’s orders and that Yeakel was required to comply with them.

In late 2004 or early 2005, Yeakel also complained to Rosanna Ortiz, Farmers’ human resources operations specialist, about the parts and labor discounts as they related to his performance ratings. Among other issues, Yeakel indicated that the parts discount was making his workload insurmountable. In response, Ortiz told Yeakel that Farmers reserved the right to do business in any way it decided.

Yeakel raised additional concerns about Farmers’ business practices when he was counseled by his supervisors for various performance and behavioral issues, according to the court’s documentation.

For example, in July of 2004 Snyder issued a written warning to Yeakel for his poor performance in failing to timely process claims and his inappropriate behavior during a discussion with Snyder about performance concerns. Upon receiving the written warning, Yeakel remarked to Snyder that Farmers had “lost its integrity and ethics in claims handling and treatment of employees.”

In January of 2005, Mann held a unit meeting in the Ventura office during which she asked employees in attendance to provide referrals for an open position at Farmers. Yeakel replied that he would not refer anyone to the company because he had too much integrity and did not feel the workload was manageable.

Mann later met privately with Yeakel and counseled him that his comment at the meeting was not appropriate. Yeakel in turn voiced his frustration with Farmers, telling Mann “when you start affecting people’s performance reviews because they can’t get parts discounts in an area where they can’t get discounts offered, how can you improve on that?”

In addition to his internal complaints to management, Yeakel also contacted the Department of Insurance about Farmers’ business practices. Specifically, in 2001, Yeakel called the Department of Insurance to inquire about the process involved in investigating Farmers’ parts and labor discounts. During that call, Yeakel communicated his belief that Farmers was using an improper parts discount and a labor rate that was less than the prevailing rate.

However, Yeakel decided not to file a formal complaint with the agency because an agency representative advised him that his complaint could not be kept anonymous. Yeakel never told anyone at Farmers that he had contacted the Department of Insurance, and he has no knowledge that anyone at Farmers was aware of his call, according to testimony in the case.

Things came to head in February of 2005, when Yeakel left the ill-fated accidental voice mail message after attempting to reach Snyder three times. ABRN will not publish the content of the voice mail; suffice to say it was rude and crude.

When Snyder retrieved his messages, he heard Yeakel’s recorded insult. Snyder then shared the recording with Mann, who was offended by Yeakel’s words and believed them to have a sexual meaning.

A few days later, Mann met privately with Yeakel and played the voice mail message for him. Yeakel was shocked to discover that his statement had been recorded. He admitted to Mann that he inadvertently had left the message on Snyder’s voice mail system and apologized for doing so. He also offered to resign rather than have the matter written up in his file.

Mann, however, told Yeakel that resignation was not necessary. She indicated that she would have to report the matter to Farmers, but said to Yeakel, “‘give me some time, and I’ll see what we can do about it.’” Yeakel later apologized to Snyder for his actions in leaving the message. Snyder assured him that he was not offended.

Due to the nature of the voice mail message, Mann referred the matter to Farmers’ human resources department. Mann also directed Snyder to prepare a memo documenting Yeakel’s various performance and behavioral problems since 2004.

The subsequent memo from Snyder in March of 2005 included a reference to the written warning issued to Yeakel in July of 2004, and to Yeakel’s oral statement in response to that warning that the company had “lost its integrity and ethics in claims handling and treatment of employees.”

After reviewing a draft of Snyder’s memo, Mann approved it for distribution to the human resources department, where it was determined that the message had a sexual meaning in violation of the company’s harassment policy and code of business ethics.

The wheels of dismissal were thus set in motion.

In March of 2006, Yeakel filed the wrongful termination lawsuit. In an amended complaint, Yeakel alleged that Farmers had policies that prohibited him from disclosing perceived unlawful conduct by the company to government agencies. He also alleged that Farmers wrongfully terminated his employment in retaliation for his refusal to participate in Farmers’ estimating practices because he reasonably believed that such practices violated state law.

The trail court judge granted a summary judgment in favor of Farmers and against Yeakel, who appealed the ruling.

The appellate panel denied his claims. “We conclude that the trial court properly granted summary judgment because Yeakel could not identify any policy of Farmers that prohibited disclosures of perceived unlawful activity to government agencies, nor could Yeakel demonstrate that he had a reasonable belief that Farmers’ business practices were unlawful.”

Source abrn.search-autoparts.com

Farmers Insurance Fined $10,000

2009-12-04T12:13:00.000-08:00

Farmers Insurance fined for rerating policies using credit scores
By Brent Hunsberger, The Oregonian
December 03, 2009, 1:51PM
The Oregon Insurance Division has fined Farmers Insurance Co. of Oregon $10,000 for altering consumers' insurance premiums based on their credit scores.

The penalty, handed down late last month, stems from Farmers' three-year practice of using a consumer's credit history to re-rate their auto and homeowners' insurance policies when they renewed. In more than 1,000 cases, the re-ratings resulted in higher premiums, the state's final order says.

Oregon law allows insurers to use credit scores as part of its criteria for refusing initial coverage or determine your rate. But it bars insurers from using credit history or an insurance score at renewal to re-rate a personal insurance policy, unless the consumer asks.

Farmers' spokesman Jerry Davies said via e-mail that a programming change in early 2006 "caused an undetected system issue. Unfortunately, the system issue caused our
mechanical system to stop working correctly.

The case stems from a consumer complaint the division received in July 2008 about poor service. In the process of investigating, state officials discovered Farmers' practice, said Ron Fredrickson, manager of the division's consumer advocacy team.

The improper reratings took place between January 2006 and Feb. 13, 2009 on 8,385 instances, state officials said. In 1,050 of those cases, the re-rating resulted in an increase in premiums.

Farmers has refunded consumers a total of $64,840, division spokeswoman Cheryl Martinis said. Customers with policies still in force were issued credits, Davies said. Farmers also is making changes to its computer system, state officials say.

To see other actions taken this year against insurers in Oregon, visit the insurance division's Web site.

-- Brent Hunsberger

Farmers Insurance Company of Oregon Final Order

Source: oregonlive.com

Farmers Insurance Clients' Info Hacked

2009-11-25T14:33:00.000-08:00

NASHVILLE, Tenn. -- A big insurance company has a problem with its computers. Federal agents searched two middle Tennessee homes after someone hacked into Farmers Insurance customers' records.

Farmers Insurance is trying to get word out to policy holders, and the Secret Service is trying to figure out how it happened.

According to a statement sent to the Channel 4 I-Team from Farmers Insurance, someone obtained unauthorized computer access to some of their customers' information in Nashville.

Given that the information is so sensitive, Farmers became concerned and contacted the Secret Service, which investigates cyber crime along with protecting the president and other heads of state.

In the statement to the I-Team, Farmers Insurance said a former insurance agent of theirs may have accessed the information, and it is in the process of notifying potentially affected customers.

The I-Team has learned investigators want to know if an insurance agent shared that information.

On Nov. 18, Channel 4 received an e-mail from a man named Michael Brown, who runs Endless Sphere Technology, an Internet provider.

In the e-mail, Brown said a few months ago he discovered a flaw in the agent page for Farmers Insurance that allows someone to extract all the information from its database, such as insurance policies, names, addresses and Social Security numbers.

He said he tried to warn Farmers about the glitch but was ignored.

"I warned them many times that I would go to the media with this if they continued to ignore me," Brown said in the e-mail.

This week, Secret Service agents showed up at Brown's house, serving a search warrant.

Brown said he was hired by the insurance agent to extract people's personal information from the Web site. He said that when he realized it was people's Social Security numbers, he contacted Farmers but was vague with it and the Secret Service about how he obtained the information.

"I think the outcome would've been the same," said Brown when asked if he regretted not being more open from the beginning.

No one has been arrested or charged.

Along with the search warrant at Brown's house, Secret Service agents also served a warrant Tuesday at the new office of their former insurance agent.

The Secret Service would not say where that agent now works or what his name is.

Source: wsmv.com

Appeals court upholds certification of class-action suit against Farmers Insurance

2009-10-26T09:16:00.000-07:00

OKLAHOMA CITY – The Oklahoma Court of Civil Appeals has upheld certification of a class-action lawsuit against Farmers Insurance Company Inc. and related companies over the way Farmers processed, reviewed and denied medical-pay claims for some policyholders.

According to the court’s opinion, in late 2000 Farmers started having such claims reviewed by Zurich Services Corp., a claims management company owned by Farmers that maintains a large database of charges billed by medical providers.“ZSC compares each incoming Farmers’ policyholder’s medical bill against the database, and ‘flags’ a charge as potentially unreasonable whenever it exceeds the 80th percentile of all charges in the database for the relevant PSRO (Professional Standards Review Organization) service,” the court said.
Farmers contended that Zurich individually reviews flagged charges, finding some unreasonable and notifying the provider or policyholder it is reducing or denying payment.
In their lawsuit, the plaintiffs allege that Farmers systemically uses the 80th percentile audit/review process to wrongfully deny payment or reimbursement of policyholders’ medical expenses in a predetermined way, regardless of whether a particular expense is unreasonable, mainly to reduce Farmers’ costs.
The plaintiffs sought class certification only on a breach of contract claim, although they have alleged causes of action for bad faith, unjust enrichment, fraud, deceit and conspiracy to commit a tortuous act.
The trial court’s order, which granted class certification, stated that Farmers writes the policy in 14 states, including Oklahoma. The trial judge found that, in Oklahoma alone, thousands of claims were adjusted annually using the 80th-percentile method.
That court also found that each claim was small and costly to litigate individually and that such litigation would be burdensome to the courts.
Writing for the court, Presiding Judge Doug Gabbard said the record supports that finding.
“Having considered all the facts and circumstances, we find that the core issues of the case present common factual and legal questions, and also find that a class action is superior to other forms of adjudication,” the appeals court concluded.
A Farmers attorney declined to discuss the court’s opinion.
Farmers could seek a rehearing before the civil appeals court or ask the Oklahoma Supreme Court to hear the case. The certification order could also be modified by the district court.
A plaintiff’s attorney did not return a phone call seeking comment.

Source: journalrecord.com

Consumer Reports Survey: Most Problems with Claims were with Farmer’s Insurance and Others

2009-09-15T20:15:00.000-07:00

Many people don’t have reliable insurance for their home. That’s the finding of a Consumer Reports National Research Center survey on insuring your home. The problems included delayed payments, payouts that were smaller-than expected, and some claims that were denied entirely.

Those who reported the most problems with claims were with—Farmer’s Insurance, Allstate, and Traveler’s—all major insurance carriers.

And Consumer Reports finds many insurance companies are cutting back coverage. Some are imposing high deductibles for windstorm damage. You might not be covered any longer for mold or dog bites.

Most important is checking what coverage you’ll have if your house is destroyed. Consumer Reports says Insurers are cutting back here, too. “Guaranteed replacement cost coverage,“ which pays the total bill to rebuild regardless of the price, is very hard to get, and where it’s available it’s very expensive.

Consumer Reports recommends comparison shopping for insurance every five years. Some good sites—netquote.com and insweb.com.

And to be sure you’re protected in the future, check that the policy includes adjustments for inflation.

Consumer Reports says be aware that flood damage is never covered by private homeowners insurance. But you can get flood coverage through the federal government. For details, go to http://www.floodsmart.gov.

Source: tricities.com

Republican Mike Duvall, the legislator caught boasting about his sexual escapades with his lobbyist mistresses is a Farmers Insurance Agent

2009-09-11T20:56:00.000-07:00

SACRAMENTO, Calif. — A scandal involving a family-values legislator caught boasting about his sexual escapades with his lobbyist mistresses created an embarrassing distraction for lawmakers Thursday, further diverting attention from California's major policy issues in the crucial final days of their session.

Republican Mike Duvall resigned Wednesday after a videotape surfaced in which he described to a colleague in lurid detail his sexual conquests, including a spanking fetish, the skimpy underwear of one mistress and his carrying on two affairs simultaneously. He sought to deny the affairs on Thursday.

The fallout from the scandal began to emerge, with calls for an outside investigation in addition to the internal ethics probe to determine whether the alleged affairs might have influenced his votes.

California lawmakers, who face growing public distrust and few accomplishments for the year, were hoping for a flourish of activity on major issues such as water and prison reform as their regular session drew to a close this week.

But the scandal filled the Capitol with gossip and distracted many legislative staffers from the more important business at hand, while further tarnishing the image of an institution that is seen as increasingly ineffective.

"This is a real black eye," said Derek Cressman, regional director for the government watchdog group Common Cause. "I think it's imperative that the leadership of both parties take this very seriously and address it in a fast and strong way."

The videotape shows Duvall during a break from a July 8 committee hearing detailing his extramarital exploits to fellow Republican Assemblyman Jeff Miller of Corona. He is overheard on an open microphone bragging that he slept with an energy industry lobbyist who wore "eye-patch underwear" and that he enjoyed spanking her when they hooked up. He told Miller, a longtime friend, that he also was sleeping with another lobbyist.

"Oh, she is hot!" Duvall said about the second woman.

The 54-year-old married father of two issued a statement denying he had affairs and saying his only offense "was engaging in inappropriate storytelling."

The lobbyist Duvall refers to in his comments reportedly works for Sempra Energy, a San Diego-based energy services company. The allegation that Duvall slept with a lobbyist who does business before his chief committee prompted calls for an outside investigation and tougher rules of conduct for lobbyists.

Duvall was the vice chairman and ranking Republican member of the Assembly Utilities Committee. Duvall, a Farmers Insurance agent in Yorba Linda, also was a member of the Assembly Rules Committee, whose responsibilities include overseeing lawmaker ethics and ensuring sexual harassment laws are followed within the Legislature.

Assembly Speaker Karen Bass, D-Los Angeles, has ordered her chamber's ethics committee to investigate. On Thursday, she removed Miller from his seat on the ethics committee, saying it posed an obvious conflict for him to have a role in investigating the scandal.

Campaign finance records show only relatively small donations to Duvall from Sempra, including $1,500 to his re-election campaign in March and $1,300 to his officeholder account in 2007 and 2008. He appears to have authored only one bill on electricity rates, which never received a committee hearing.

California law requires lobbyists to register with the state, complete an ethics course and report the money and time they spend lobbying lawmakers. It does not require that they disclose how much they are paid or prohibit personal relationships with the people they are lobbying.

The liberal watchdog group Courage Campaign called on Attorney General Jerry Brown to investigate Duvall's behavior, saying an examination of a lawmaker's conduct should not be left to other lawmakers. Brown's spokesman, Scott Gerber, said the attorney general will wait for the ethics committee's conclusions before deciding whether to get involved.

While the videotape and subsequent resignation remained the talk of the Capitol, longtime observers of California's political culture were not surprised about the allegation of an affair between a lawmaker and a lobbyist. But rarely do affairs emerge in such public — and juicy — fashion and become broadcast to the world on YouTube.

"I hate to be the one to break the news, but relationships between lawmakers and lobbyists are neither uncommon nor unknown," Bill Cavala, a Democrat who worked in the Assembly speaker's office for more than 30 years, wrote in a blog Thursday. "The capitol community is like, in many ways, a combat fraternity. It is not surprising that the men and women involved in the political trenches together should be attracted on another level as well."

The scandal comes at a time of the year when politicians hop from fundraiser to fundraiser at restaurants and bars around the state Capitol, partying with lobbyists, staffers and other lawmakers. The timing of the fundraisers has raised questions in the past because it is at the end of the legislative session when lawmakers are voting on the most important bills, raising the specter of pay-to-play politics — or worse.

The public perception of a Legislature that operates like an insider's club and produces little in the way of meaningful change for California's 38 million residents has prompted several proposals for reform-oriented ballot initiatives for 2010.

Among them are measures to make the Legislature a part-time body, require that lawmakers actually understand the legislation they vote on and force lawmakers to undergo periodic drug and alcohol testing. Another movement seeks to call a constitutional convention to rewrite California's governing document.

With just one day to go in this year's session, lawmakers have left the most important parts of their agenda unfinished — on issues such as water, prisons and alternative energy.

Bass, the Assembly Speaker, tried to temper the scandal-fueled gossip and put a positive spin on the Legislature's final days in regular session.

"The Assembly has some very important policy work to complete in the next couple of days and we will not allow this situation to become a distraction," she said.

Copyright © 2009 The Associated Press. All rights reserved.

Source: google.com

Farmers Insurance and others may be shorting Texas homeowners

2009-09-10T21:29:00.000-07:00

HOUSTON --Three new proposed class action lawsuits in Texas allege insurance companies are shorting their consumers. The lawsuits say as much as 20 percent is often missing from what their homeowners insurance should provide in a pay out.

The allegations center around the alleged non-payment of something the insurance industry refers to as “overhead and profit” to consumers, which is money insurance companies pay so consumers can afford to hire a professional general contractor when needed to oversee repairs. The money is supposed to provide enough funds to pay for a general contractor’s overhead expenses such as licensing and bonding fees, and also enough to allow the general contractor to make a living.

The Texas Department of Insurance has issued two separate bulletins informing insurance companies that not paying overhead and profit where a general contractor is needed would be “unfair to the insureds,” and could subject the insurance company to possible disciplinary action.

Cheryl Guerra says she’s one of the homeowners who got shorted on her Hurricane Ike claim by Travelers Insurance.

“It makes me very angry,” she asked. “Why aren’t we getting what we deserved?”

Guerra is suing Travelers now as a representative of the proposed class of consumers.

She alleges Ike caused roof damage, a downed fence, moisture damage in her walls, and other problems that needed repairs. She says Travelers Insurance did not pay her overhead and profit, leaving her without enough money to hire a general contractor.

“There really wasn't enough money to get everything done,” she said. “Trying to make up the difference to fix the damage is really impossible.”

Guerra says her family had no choice but to repair the roof over her family’s home on their own.

As a result, she says, her family of amateurs was forced to take on what she felt were dangerous repairs they were untrained to do, such as repairing their roof.

“We went and bought the material and did it ourselves,” she said. “My husband got up there.”

Guerra says she was petrified about the possible impact on her family, both physically and financially.

“What if my husband got hurt? He’d lose work.”

Alex Winslow of Texas Watch, a consumer and insurance watchdog group based in Austin, says insurance companies leave overhead and profit off claims far too often.

“Most customers don't even know their policy should be paying it,” he said. “It could be hundreds, (or even) thousands of dollars.”

Winslow says most consumers don’t know they are being shorted when it happens, which is why he says the number of complaints the Texas Department of Insurance has received on the issue should raise red flags.

KHOU discovered at least 60 overhead and profit related complaints made to the Department of Insurance, some dating back to 1997. However, after Ike struck, the number of complaints suddenly accelerated, with 26 of those 60 complaints coming during 2009 alone.

The Texas Department of Insurance felt the issue was important enough to issue a new bulletin in late 2008 about, reminding insurance companies to pay overhead and profit or face penalties. However, to date, department spokesman Jerry Hagins says they have yet to take any enforcement action on the issue.

“Unless an insurance company gets their cage rattled, they're going to continue to try to take advantage of consumers,” said Winslow.

State spokesman Hagins says the Department of Insurance has an open inquiry into many of the ways various insurance companies have been handling Ike-related claims. He says the overhead and profit issue is something they are examining as part of that wider inquiry.

Attorney Javier Delgado, who is filing suit in Texas against five insurance companies on this issue, says many Texans have been taken advantage of and probably have no idea.

“It's so systemic. It's so rampant,” he said. Delgado says insurance companies have good reason to leave overhead and profit off of many of their estimates to consumers.

“If you’re saving 2-thousand dollars on average per claim, that turns out to be a lot of money.”

He points to how a jury in Oklahoma issued a $130 million verdict against Farmers insurance for not paying overhead and profit to consumers in that state. The case was called Burgess Vs. Farmers and does not affect Texas consumers. Many Oklahoma homeowners will now be eligible to receive up to 20 percent more money than they had previously been paid on their claims. Delgado says his review of Farmers cases in Texas reveals what he alleges are some of the same problems here.

“Over 90 percent of the cases the clients we have that came to us, on the initial estimate Farmers did not pay overhead and profit.”

Delgado says Farmers has since paid the overhead and profit to many of those consumers, but only after he got involved as an attorney. Delgado says you shouldn’t have to hire an attorney to be treated fairly.

He also believes the problem with nonpayment of overhead and profit has accelerated in Texas after Ike struck, which is one of the costliest storms to insurance companies in American history.

“I was missing the overhead and profit, which comes to about two grand,” said homeowner Mike Barrera, who is suing Texas Windstorm for nonpayment of overhead and profit.

Barrera says he too was forced to fix his Ike-damaged house by himself, along with help from non-professionals he knew.

“Basically I had to solicit friends, family, we did the majority of it ourselves,” he said.

Barrera says he would have preferred to not put his friends and family at risk on the job, but says he could not hire a general contractor after Texas Windstorm didn’t include overhead and profit on his estimate.

“It's a rip off. Bottom line,” said Barrera. “I’m probably one of thousands of people.

We asked the top executive at Texas Windstorm, Jim Oliver, if and when Texas Windstorm pays overhead and profit to its consumers.

“We’re perfectly willing to pay profit and overhead if it's incurred, but we can't put it in the estimate,” he said.

KHOU showed Oliver dozens of examples where Texas Windstorm appears to have never included overhead and profit in estimates to consumers. Oliver says there is a way for those consumers, or others, to get paid overhead and profit from Texas Windstorm: they have to go out and hire a general contractor first, and then come back to Texas Windstorm and ask for the money later.

KHOU: I need to have the work completed and get a bill from my general contractor before I get overhead and profit from you?

Jim Oliver: Correct.

Texas Windstorm’s policy may have been affecting consumers for quite some time. Why? Nearly ten years ago, Texas Windstorm executive Reggie Warren wrote a memo describing similar policies as to what Oliver told KHOU about, saying: "Overhead and profit is considered if and when a contractor does the work and the expense is incurred."

KHOU showed Oliver that memo and asked him about it and its impact on current Texas Windstorm policy. “We're not gonna pay it, unless we understand a general contractor was used, as Mr. Warren has indicated here,” Oliver said.

The problem? A year before that memo, in 1998, the Texas Department of Insurance’s Commissioner issued an industry-wide bulletin specifically telling insurance companies that making consumers “incur” expenses first, is not proper and "would be contrary to purposes of the subject insurance policy."

The current insurance commissioner in Texas, Mike Geeslin, reinforced the point in December of 2008 by saying in a new bulletin "The Department's position has not changed."

The 2008 bulletin from Commissioner Geeslin concludes the Department of Insurance “will take appropriate enforcement action when evidence of unfair claim settlement practices is apparent.”

Oliver also told KHOU during the interview that if consumers hire a general contractor, it must be one who is “licensed” by the State of Texas. He also said a consumer could not be paid overhead and profit, if he or she acted as their own general contractor.

“A contractor needs to have a license to be paid overhead and profit,” he said.

Jim Oliver: The law says you have to have a license as a general contractor.

KHOU: To get overhead and profit?

Jim Oliver: Yes, because otherwise you’re not entitled to it.

KHOU informed Oliver we could locate no such law. We did find a federal court decision from Texas, Ghoman Vs. New Hampshire Insurance, which found under Texas insurance code a consumer who rebuilt his own house was still entitled to overhead and profit. The decision reads in part, in a decision not related to a Texas Windstorm claim:

“(The insurance company) points out that plaintiff did not actually incur some of these costs because he completed some of the repairs himself. While this may be true, it is legally irrelevant. See Gilderman, 649 A.2d at 945 (“All repair and replacement costs are, in theory, ‘contingent’ prior to being incurred.”) …His recovery is not tied to the repair or replacement of his property.”

Soon after KHOU’s on camera interview, we received the following note from Oliver:

“I checked on issues related to profit and overhead and found the following:

1. Reconfirmed that our claims people pay profit and overhead for all contractors whether licensed or not.

2. If a policyholder wants to be his/her own contractor TWIA will pay profit and overhead

3. When an independent adjusting firm fails to include the profit and overhead on an estimate, a sample of our files reviews that we pay profit and overhead.”

Homeowner Cheryl Guerra says it is important regulators protect consumers.

“Somebody has to take care of the people here,” she said, citing her fence that is still down, along with water spots inside her home, that she says are there because her insurance company never gave her enough money to pay for all her repairs.

“If they’re not going to take care of me, what am I paying my premiums for?”

Travelers Insurance did not make a statement on Guerra’s lawsuit after multiple attempts to reach a public relations representative.

We asked Farmers Insurance spokesman Jerry Davies about the jury verdict against Farmer’s in Oklahoma, as well as the new proposed class action lawsuit in Texas, spearheaded by a homeowner named Manuel Quezada.

"We are aware of the Quezada lawsuit which was recently filed, and we have filed an answer to the plaintiffs' complaint. Our general practice is not to comment publicly about pending litigation."

After our interview with Jim Oliver, he sent a follow-up written statement that seems to reverse at least one of his comments made during that meeting. In the written statement he says:

“Profit and Overhead is not shown as a line item on these estimates because we have included it in the "unit pricing" for each item to be repaired to be sure that adjusters did not omit it as part of the claim. By taking this approach, the policyholder can get Profit and Overhead or he/she can hire someone to supervise the repair work. As stated previously, we pay Profit and Overhead for the policyholder and both licensed and unlicensed contractors. We have had very few complaints about our unit pricing so we believe that our methodology is working as expected.”

Oliver also wrote a separate a note to KHOU management about a story we aired last week involving Texas Windstorm's alleged non-payment of claims related to wind-lifted shingles. Oliver called the story “unfair, inaccurate, incomplete, and deceptive” and gave a list of 17 “facts” he felt should have been included in the story. To read his points and the full letter, click here.

Recent lawsuit settlements in other states for non payment of overhead and profit by companies such as Nationwide Insurance have resulted in the agreement to pay consumers that money on claims where three or more “trades” were necessary for a general contractor to oversee. The settlement documents in that case describe a trade as “an occupation of a skilled craftsman, e.g., electrician, drywall installer, carpenter, etc.” A notice to Nationwide homeowners in that state says eligible consumers can now receive up to 20 percent of the amount previously paid to them to complete repairs.

Consumers in Texas who want to know if their claim included this money can look on their “proof of loss” statements and their estimates to see if there is a line included for overhead and profit. If you do not see it, and believe you had enough repair work to need a general contractor, you may file a complaint by contacting the Texas Department of Insurance here: http://www.tdi.state.tx.us/consumer/complfrm.html.

KHOU is collecting stories from consumers on this issue. If you have one to share you can email investigative reporter Mark Greenblatt at mgreenblatt@khou.com.

Source: khou.com

Zurich Net Income Drops 53% As Recession Takes Toll

2009-09-02T12:00:00.000-07:00

NU Online News Service, Sept. 2, 3:30 p.m. EDT

Zurich Financial Services Group reported a net income drop of 53 percent for the first half of the year as the recession continued to take a toll on the company’s earnings.

Despite the drop, James J. Schiro, Zurich’s chief executive officer, emphasized that the company still managed a profit even with the challenges it faced.

“We are effectively managing our way through this crisis,” Mr. Schiro said during an analyst’s discussion of the results today.

The Zurich-based insurer of property and casualty and life products reported net income dropped $1.43 billion to $1.24 billion for the first half of the year.

General insurance reported an operating profit of $1.7 billion, compared to $2.24 billion for the same period last year, a drop of 23 percent. The combined ratio for the segment remained flat at 96.2.

Mr. Schiro called the company’s results “outstanding” and said Zurich is in a position of strength to take advantage of the economic turnaround that lies ahead.

Such a turnaround, he noted, would not happen quickly, and the improvement in the investment markets has only brought the company’s investment portfolios back to “pre-crisis” levels.

He said many companies are struggling with the current recession, declaring it the “greatest economic dislocation in a generation.”

He said the insurer is taking a disciplined approach to risk, refusing to chase volume and pushing for increased rates, which have risen by 4 percent in the past quarter.

The company continues to push efficiency, he said, with $900 million in improvement under its Zurich Way plan and an additional $400 million in expense reductions.

He said Farmers’ Insurance, the insurance exchange the company does not own but manages, is well on its way to growth as it integrates its purchase of American International Group’s Personal Auto Group into its operations.

Zurich plans to make acquisitions, he said, so long as they make economic sense.

Zurich Chief Financial Officer Dieter Wemmer noted that despite the economic downturn, the company’s solvency was never threatened. During the conference, he displayed a graph illustrating the sharp downturn in profitability the company took between the second- and third quarter of 2008 and the steady increase in profitability it has seen since. Net income has increased from $154 million in the third quarter of 2008 to $892 million for the second quarter of this year.

“We stayed the course,” Mr. Schiro told analysts. “Let’s not lose site of the fact that we reported a profit when others reported losses.”

NU Online News Service, Sept. 2, 3:30 p.m. EDT

Zurich Financial Services Group reported a net income drop of 53 percent for the first half of the year as the recession continued to take a toll on the company’s earnings.

Despite the drop, James J. Schiro, Zurich’s chief executive officer, emphasized that the company still managed a profit even with the challenges it faced.

“We are effectively managing our way through this crisis,” Mr. Schiro said during an analyst’s discussion of the results today.

The Zurich-based insurer of property and casualty and life products reported net income dropped $1.43 billion to $1.24 billion for the first half of the year.

General insurance reported an operating profit of $1.7 billion, compared to $2.24 billion for the same period last year, a drop of 23 percent. The combined ratio for the segment remained flat at 96.2.

Mr. Schiro called the company’s results “outstanding” and said Zurich is in a position of strength to take advantage of the economic turnaround that lies ahead.

Such a turnaround, he noted, would not happen quickly, and the improvement in the investment markets has only brought the company’s investment portfolios back to “pre-crisis” levels.

He said many companies are struggling with the current recession, declaring it the “greatest economic dislocation in a generation.”

He said the insurer is taking a disciplined approach to risk, refusing to chase volume and pushing for increased rates, which have risen by 4 percent in the past quarter.

The company continues to push efficiency, he said, with $900 million in improvement under its Zurich Way plan and an additional $400 million in expense reductions.

He said Farmers’ Insurance, the insurance exchange the company does not own but manages, is well on its way to growth as it integrates its purchase of American International Group’s Personal Auto Group into its operations.

Zurich plans to make acquisitions, he said, so long as they make economic sense.

Zurich Chief Financial Officer Dieter Wemmer noted that despite the economic downturn, the company’s solvency was never threatened. During the conference, he displayed a graph illustrating the sharp downturn in profitability the company took between the second- and third quarter of 2008 and the steady increase in profitability it has seen since. Net income has increased from $154 million in the third quarter of 2008 to $892 million for the second quarter of this year.

“We stayed the course,” Mr. Schiro told analysts. “Let’s not lose site of the fact that we reported a profit when others reported losses.”

Source: property-casualty.com

Farmers Insurance Group One of the Lowest Rated Companies Based on Employee Satisfaction

2009-08-27T21:19:00.000-07:00

According to Glassdoor.com, Farmers Insurance is in the one of the LOWEST RATED companies based on employee satisfaction, it is ranked number 4 and it's "Over All" rating is tied with second and third.

Comments from reviewers include:
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The workload cannot be properly managed in a 45 hour work week. You have to remember that 75% of the people you talk to are already pissed off and don't trust you (plus, most of them are lying or seriously stretching the truth, especially about their injury).
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* Management is clueless, and most of them have never even worked at the lower level positions so they have no sympathy for what you have to go through when their expectations are completely unreasonable!!
* They only care about making money, so they try and get away with paying as little as possible even if they ow more
* They say they have lots of job opportunities and you can promote in 6 months, but then they dont ever let you leave your department!
* High turnover so obviously some unsatisfied employees! It's hard to find someone at that company that has been there for more than 5 yrs, which says ALOT!
* They don't promote job development, never once had encouragement for continuing education
* If you are doing a good job then they will assume you much be cheating them somehow
* Treat their best employees like crap
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Workload, Culture of Management, Harsh Treatment, Unreachable Quantitative Expectationsm Vague Qualitative Expectations. You are expected to pressure people into settling early, and you have to make settlement offers you don't agree with. The negatives FAR outweigh any positives.
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As an agent, be prepared to make little or no money for the first couple of years until you get your book of business established. Also be wary of life production requirements as that's really all that the company cares about.
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As a reserve agent if you fail you are required to pay back all subsidy you recieved, so basically the company has no real investment in you. Their outlay is paid back if you fail and realized in agency profit if you succeed.
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Over the past two years the company has done nothing but take and take. The pension plan, long an attractant for top talent, was cut off, even for those already vested. Those with 10 years or greater of tenure were 'grandfathered' in, but in looking at when they ramped up hiring, and the fact that employees vested after 5 years, it is easy to see the company was merely looking to shirk its financial responsibility in that regard. Profit sharing, the company's fully funded version of a 401(k), is also gone after this year, replaced with a 401(k) matching 100% up to 6%. Sounds good, until you realize that under profit sharing the company put an additional 15% of your base salary into the same type of account and employees contributed nothing - there was also the possibility of up to 5% bonus in cash. Vacation/sick time have been converted into 'PTO' - good for some but not others. Overall amount of time has declined drastically, but everyone got a couple of extra days they could call 'vacation' (vs sick). Health insurance is a joke - prices shot up quite a bit, and even the $1000 'seed money' for an HSA (only available under the high deductible plan) charges $3 a month in maintenance fees.

Some of you may say that times are tough, so it doesn't seem so bad, but these changes were set in stone BEFORE the economy came crashing down. And the management has the gall to tell us that these lesser benefits are costing the company MORE. If that's they case, the person that made that decision needs to be canned, but under the good ole boy system that exists they won't. Speaking of the good ole boy system, the company has also proven at every turn it's not what you know but who you know when it comes to promotions.

The company is definitely milking the downturn for all it's worth, underrating employees on reviews to avoid higher raises, overworking salaried employees so that they don't have to pay for more (note: salaried does not equal slavery), knowing that folks won't leave until they get something else lined up. One person in upper management even had the gall to send out an email telling employees that they should just be happy they have a job and stop complaining about the way they are being treated. Not the type of company I'd like to stay with, in my opinion.
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Management who micro manage you like youre in grade school. Incompetent supervisors. Its all about popularity and who's kissing butts in the office...doesnt make any sense. YOu can be a rockstar CR but once they find something wrong with you they'll do everything in their power to hack you and make sure you're out the door by the next quarter. ITs a shame for those who put so much of their life on hold for this company. Farmers does not know how to take care of their employees. We are overworked, underpaid....no wonder there's such a high turnover in teh office!
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Management expects you to be a robot and just pump work out - but your work product must be perfect or your supervisor will be riding your ass until you get it right. They want you to be super quick - handle as much as you can in the least amount of time. But again, it must be perfect. No room for mistakes.

Everyone works off the clock (undocumented overtime) in order to finish all of the work that is put before them. Management then thinks that these adjusters have too little work and gives us more work with no overtime.

Farmers' goal is to distinguish between the highest performing and lowest performing employee. This is listed as one of their goals on a banner at the training facility.
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Source: glassdoor.com

See all Farmers Insurance Review Comments

Farmers Group administrative policies have introduced fear, paranoia, frustration, intimidation, anger, despair, and extreme tension

2009-08-27T20:48:00.000-07:00

July 21, 2009

An open letter to whom it may concern:

My name is Charles Abernathy. I am a ventilator-dependent quadriplegic. I am writing this while laying in bed, speaking to my computer by means of voice-activated software, and receiving mechanical ventilation at one breath every six seconds. Prior to today, I have asked Farmers Group twice to reconsider their actions.

According to papers filed with different state governments, Zürich Financial Services owns Farmers Group Inc. Counsel for the insurance carrier, Farmers Insurance of California/Truck Insurance Exchange, Simi Valley, asserts (Abernathy V. Whittwood Baptist Church):

"Perhaps it is best for the both of us to just have Judge P. review everything and issue a determination on whether my client [insurance carrier] or the applicant [Charles] controls the course of medical treatment/nursing" (e-mail, June 11, 2009.)

In reality, whoever controls the course of medical treatment/nursing of Charles Abernathy, a citizen of Oregon and a ventilator-dependent paralyzed quadriplegic as a result of a California work-related C2/C3 spinal cord injury in 1981, controls every aspect of his life. Whoever controls the healthcare of Charles is able to decide:

When, where, and what Charles eats; When Charles goes to sleep and when he wakes up;
Whether or not he goes to church; Who invades his body and with what;
Whether or not he sleeps with his wife; What his form of entertainment will be;
Who will come into his home to provide care or visit; Whether he lives or dies!

The catastrophic injured are dependent upon others to provide them with care. This implies giving consent for the invasive actions and nature of the medical situation. By the above statement, the insurance carrier is claiming control of the personal rights of Charles Abernathy under California workers compensation laws. Personal rights are the rights of a person over their own body. Associated rights include the right to protect and safeguard the body or person, a woman's right to her body, and the privacy of personal noncriminal actions.

With a work-related catastrophic injury, Charles has fewer rights than those who are slaves, under involuntary servitude, prisoners, or prisoners of war. Slaves can run away; Charles cannot run away from his physical condition. Involuntary servitude is the compulsion to act against one's will in the form of labor for another; Charles has spent hours having to justify in writing every decision in every aspect of his life and take ambulance trips by order, not request, from the insurance carrier. Prisoners have been convicted of a crime within due process of law; Charles committed no crime, he just got catastrophically injured. Prisoners of war have the right to their own bodies; the insurance carrier wants to control every aspect of Charles' body and life. Charles has no debt to the insurance carrier. Because of his unplanned work-related injury and not his volition or overt agreement the insurance carrier declares the right to dominate or control Charles. However, it took the insurance carrier 2 months to grant approval for replacement of a corroded and obsolete humidifier for his ventilator and it has taken more than three weeks for them to decide which one of four billing forms to use.

In the opinion of Charles, the insurance carrier considers catastrophic injury as an excuse for them to violate several sections of article 1 of the California Constitution. Article 1, section 1 states "enjoying and defending life and liberty, pursuing and obtaining, safety, happiness, and privacy." Section 3 states "the people have the right to petition the government for redress of grievances." Section 4 states "Free exercise and enjoyment of religion without discrimination or preference are guaranteed." Section 6 states "slavery is prohibited. Involuntary servitude is prohibited except to punish crime." Section 7 states "a person may not be deprived of life, liberty, or property without due process of law or denied equal protection of laws." Section 9 states "a bill of attainder, ex post facto Law, or Law impairing the obligation of contracts may not be passed." Section 20 of article 1 of the California Constitution states "noncitizens have the same property rights as citizens."

In 1982, an attorney for the insurance carrier called the future rehabilitation counselor for Charles as a witness against Charles. The attorney also claimed Charles could use public transportation, the bus, within Los Angeles County to go to and from school following rehabilitation. The same attorney later solicited Charles in writing to violate both state and federal labor laws by encouraging him to settle his case and hire illegals. Another 1982 tactic by the insurance carrier was to attempt to force 27-year-old Charles into a nursing home.

In January 1993, after experiencing 2 nursing registries and moving to Oregon, Charles negotiated with Farmers Insurance of Oregon to begin self-care management including a pay package with benefits for his caregivers. For the next 14 1/2 years, Charles managed and administered his four paid caregiver positions. Without any follow-up, audit, or management assistance in over 14 years, Charles made some administrative errors. However, Farmers Insurance of Oregon treated Charles with both dignity and respect by honoring verbal promises to an injured individual.

On July 3, 2007, Farmers Group Inc. purchased Bristol West Holdings for $813.5 million. At the end of July, the case management for Charles was transferred from Oregon back to California. In August, he received his first billing claim denial in 14 1/2 years. The denial was for a $1,000 dental bill. Even though peer-reviewed, published research shows poor dental care is one of the leading causes for Ventilator-Assisted Pneumonia, the leading cause of death for ventilator-assisted individuals.

The insurance carrier has attempted to force Charles to replace his current caregiver management with another nursing registry. After Charles refused, his caregivers were subjected to slander, pay package cuts, humiliation, loss of privacy, and lies. The attorney for the insurance carrier has referred to the caregivers in e-mails as "alleged" fulfilling "supposed roles" or even "purported" positions. Without any warning the insurance carrier refused to honor the verbal agreement between Charles and Farmers Insurance of Oregon providing pay benefits to his caregivers. Currently, private medical information in a format of daily caregiver nurses notes must be submitted to an accounting firm to prove care was provided! In addition, Farmers Group Inc. is requiring Charles to provide the account numbers and the banking institution names of his caregivers/employees. Recently, at the very minute the attorney for Farmers Group and for Charles were scheduled to meet a judge, the claims representative called the home of Charles and talked to the caregiver saying the judge had already authorized the call. The judge had done no such thing. The caregiver, who lost approximately $5,000 in 2008 from the loss of the agreed pay package, gave the claims representative an opinion of the insurance carrier during the conversation.

Charles has no doctor/patient privacy. All medical reports must be sent to Farmers Group. If Charles does not want them to know something, he has to tell the medical provider not to include it in the report. California Labor Code requires Charles to submit to being seen by two different doctors. In June, 2009 Charles took two trips to Portland from Salem, approximately 50 miles one way, by nonemergency ambulance at a cost of approximately $3,000 per round-trip charged to Farmers Group by the ambulance company alone. Both trips were ordered by Farmers Group with no input from Charles as to date or time. Both trips also involved five separate companies, two attorneys, and a claims representative. The doctor for the second trip didn't even know Charles was coming by stretcher and did the examination in his lobby.

A judge has been overseeing this case for the past eight months. The only determination, though Charles has not seen the paperwork, is that Charles is competent. This determination was made without even seeing or talking to Charles. The question was asked because of his disability and his desire to continue to manage his own care. The judge and opposing counsel have never seen him. Charles has not yet had the opportunity to confront his accusers, the insurance carrier and their counsels.

Since August, 2007, Farmers Group administrative policies have introduced fear, paranoia, frustration, intimidation, anger, despair, and extreme tension into the home of Charles. According to Standard & Poor's, on April 16, 2009, Farmers Group Inc. purchased the AIG U.S. personal auto group for $1.9 billion. The day before, April 15, Charles had to write the United States Internal Revenue Service explaining he could not pay his total tax bill because the insurance carrier providing reimbursement for expenses was in arrears to him. He explained their current practices were placing him in a position of choosing between paying for his medical treatment or paying his federal taxes. It started a year ago when the primary care nurse for Charles who was also his nurse practitioner care provider, gave his contractual 60 day notice of departure. One of the reasons for his departure was the "craziness within your life, Charlie, because of Farmers." Charles immediately notified his attorney and Farmers Group of the impending departure. Farmers Group failed to provide a replacement physician or medical provider, so Charles entered into a contractual agreement with the trust and hope Farmers Group would honor its commitment to provide medical treatment.

Farmers Group reminds Charles of their agenda both in e-mails every two weeks and in correspondence when they mention "minimum." This term has never been defined to Charles, so he did some local research. Minimum care in Oregon is a bare mattress in a warm room in a skilled nursing facility with a "companion" for $250,000 a year. Included in this package is no food, no laundry, no medical procedures whatsoever, no supplies, and no equipment. Any concept of minimum in relationship to the complex medical population should be reconsidered.

The state of California has determined within California Labor Code that Medicare is the standard for medical reimbursements. Charles does not fit the Medicare model for post-acute care as expressed in a 2006 Medicare reform policy paper. Charles has unskilled workers (trained and supervised by an RN, FNP) doing skilled nursing tasks. Medicare does not provide for this scenario, but the Oregon State Board of Nursing does.

California Labor Code, §3209.3 says Charles must have a "licensed by California" physician, but Charles lives 250 miles from the California border.

After 16 years of honoring claims, the insurance carrier has declined payments due to "billing inappropriately", however, they have not stated how appropriate is defined. Case in point, even though they still request the paperwork from, they have refused to pay for, Charles' Oregon bookkeeper, yet they're willing to pay an Oregon accounting firm to review her work.

Recently, they have stopped paying for Charles' California workers compensation attorney, yet they tell the Oregon and California insurance commissioners they have hundreds of millions of dollars in available funds.

California Labor Code has various requirements for the insurance carrier to provide Charles with information concerning his rights and responsibilities, yet they have failed to advise him of these requirements. His knowledge comes from personally reading the code or talking to his attorney.

One of the possible killers of a ventilator-assisted person is stress-induced ulcers causing acid reflux and aspiration (breathing a solid into the lungs.) Two doctors have referred to Charles as "remarkable" receiving excellent care. A testament to this is Charles has never been readmitted overnight to any medical facility for medical complications in over 27 years since his release from the original rehabilitation hospital. However, California Labor Code gives one of the previously mentioned two doctors the power to deny Charles his ability to choose his own medical provider.

After considering all the above, Charles asked the consumer protection division of the Oregon Insurance Commission for help and was told they had no jurisdiction over the situation. Charles then notified by e-mail, but was ignored by, national Senators and Representatives from both Oregon (Merkley and Schrader) and California (Boxer, Feinstein, and Waxman.) Representative Schrader did refer Charles to a state representative whose sympathetic person said they had no jurisdiction. Another sympathetic person was found in the Seattle office of the Medicare regional administrator.

During the week of 16-20 February, 2009, in a confidential meeting of Farmers Group Inc. management personnel at the Sheraton Downtown in Phoenix, Arizona, his case was declared too "expensive" and the target case for the writing of future catastrophic injury coverage policies. It was the type of meeting in which notes are not usually taken. However, according to documents submitted to the Insurance Commissioner of California, the workers compensation case risk per occurrence is covered by Lloyds of London, Endurance Specialty Insurance Ltd., Aspen Insurance UK Ltd., AXA RE, and Flagstone Reinsurance Ltd. with the percentage of risk dependent upon risk layer. Therefore, Charles isn't even covered by Farmers Group Inc. February 16-20, 2009 was the same week they promoted their Hispanic and March of Dimes support. The president of Farmers Group Inc. is on the board of trustees for the March of Dimes. Also, Farmers Group Inc. is the official sponsor of the LA Sparks WNBA team (check out WNBA, Store, LA Sparks website.)

The leadership of Farmers Group Inc. and opposing counsel have seen or heard about a previous e-mail containing most of the above information. With knowledge of his finances (they subpoenaed them) and his physical condition (they have two medical reports from the last seven weeks), the insurance carrier has:

1. Continued to refuse to pay their bills in the case of Charles;
2. Expressed interest in his sources of information. Charles has friends and family and other contacts in 15 states;
3. Complained to his still unpaid attorney about Charles creating problems; and
4. During the first two weeks of July, 2009 upper level management of Farmers Group Inc. threatened other management personnel with job loss for revealing company business discussed in confidential meetings.
5. Become confused as to who his attorney is and who speaks for Charles. Charles' currently unpaid attorney represents Charles.

I, Charles Abernathy, a non-service-connected, medically-retired United States Marine Corps Captain and a currently nationally-certified rehabilitation counselor, certify the above is true in its original sent e-mail form to the best of my knowledge.

Charles Abernathy
4886 Chan Street South
Salem, Oregon 97306
503-585-9326
Wheelsojoy@aol.com

Farmers Insurance offers $5,000+ for Bad Faith

2009-08-27T20:32:00.000-07:00

In 2000, an employee of Menards drove a truck into the home of Edley and Lurline Stewart, causing property damage and personal injuries.

The Stewarts had homeowners and automobile insurance through Farmers Insurance Group. Farmers tendered the Stewarts $805.97 as settlement of their personal property claims, but the Stewarts returned it as unreasonable.

The Stewarts then filed suit against both Menards and Farmers. They settled with Menards for $57,000, reserving the right to pursue more damages against Farmers.

An arbitrator found that, except for the $805.97 previously tendered, the Stewarts’ property damage claim against Farmers was barred by the statute of limitations; and that they were entitled to nothing for personal injury because their damages did not exceed $57,000.

The bad faith claim remained, however. Farmers made an offer of judgment of $5,000, plus taxable costs, which the Stewarts accepted.

Source: wislawjournal.com

Stewart v. Farmers Insurance Group

Farmers Insurance to Slash 754 Jobs

2009-08-27T20:18:00.000-07:00

Another blow to the San Fernando Valley economy: Jobs will be slashed at the Woodland Hills office of low-cost auto insurer 21st Century as the company’s operations are consolidated with its new parent, L.A.-based Farmers Insurance Group.

Farmers says it expects to cut 554 of 979 jobs at the Woodland Hills location by the end of this year, and 200 more by the end of 2010, my colleague Marc Lifsher reports.

Full story at latimes.com

Is Farmers Insurance Giving Large Campaign Donations for Favorable Rulings in Lawsuits?

2009-04-10T07:01:00.000-07:00

In the Texas Supreme Court race, Rove helped Owen amass a war chest of over $926,000 in campaign contributions from Big Business and the ranks of the Texas GOP. Owen then obliged some of her biggest donors by ruling favorably on their lawsuits with amazing consistency. The watchdog group Texans For Public Justice reported "more than $500,000 (37 percent) of the $1.4 million that Owen raised for her two Supreme Court campaigns came from lawyers and litigants who had cases in her courtroom... Owen's 11 biggest litigant-donors (including Enron Corp., Farmers Insurance and Dow Chemical) appeared in her courtroom 26 times. While these big docket donors prevailed an enviable 77 percent of the time before the court as a whole, Owen was even kinder - favoring them 85 percent of the time."

Full Article: huffingtonpost.com

Farmers Insurance customers are STILL waiting for their money

2009-03-09T07:04:00.000-07:00

$117 million in Farmers refunds for Texas policyholders has been in limbo 7 years

By TERRENCE STUTZ / The Dallas Morning News
tstutz@dallasnews.com

AUSTIN – It's becoming known as the case of the missing insurance refunds.

Back in the fall of 2002, Farmers Insurance and state regulators agreed to resolve allegations that the company had overcharged customers with a $117 million settlement that included refunds and lower rates for nearly half a million policyholders.

Shortly after the agreement was announced, it was challenged by a group of Farmers policyholders, who insisted it was a bad deal for them. Although a state judge upheld the settlement, his decision was overturned by an appeals court and then taken to the Texas Supreme Court – which sent the legal dispute back down for further deliberations.

And so the case sits unresolved – going on seven years – and Farmers customers are still waiting for their money.

"Farmers has worked closely with the Texas Department of Insurance and remained ready to implement the agreed-on settlement for several years," said Michelle Levy, a spokeswoman for Farmers in Texas. "We're ready to take action, but there's nothing we can do until the courts have decided this."

'No longer viable'

Joe Longley, attorney for the Farmers policyholders, said the amount is a slap at policyholders.

"The settlement amount was a fraction of what Farmers took from their customers in Texas and what they are continuing to take. Refunds should be as much as 10 times" the $117 million settlement, he insisted.

The case was sent back to the 3rd Texas Court of Appeals in Austin in April 2007 and has been sitting there since.

Longley said he believes the case should be sent back to trial court because all the deadlines and conditions of the original settlement have long passed.

For a lot of reasons, he said, the settlement is "no longer viable" and must be redone.

The attorney general's office, meanwhile, is trying to have the settlement certified as a class action representing all Farmers customers in the state. Such a certification could invalidate other claims against the company.

Mold beginnings

The agreement came after the company had threatened to pull out of the Texas home insurance market because of massive mold losses. Company officials also were stinging from repeated attacks by Gov. Rick Perry, who made Farmers his favorite target in his 2002 race for governor.

Perry's appointed insurance commissioner at the time, Jose Montemayor, hammered out the agreement with Farmers, apparently without consulting the governor, who was unhappy with the terms.

In the years since, Farmers has stayed on the good side of the insurance department, even winning approval from current Commissioner Mike Geeslin last month to increase rates by double-digit percentages for hundreds of thousands of customers.

Farmers is now the third-largest property insurer in Texas behind State Farm and Allstate, providing coverage to about 714,000 homeowners.

Alex Winslow of Texas Watch, a consumer group active in insurance issues, said the stalled Farmers settlement is an example of the flawed system of regulation in Texas.

"Due process is a right for everybody, including insurance companies. But seven years is too long," Winslow said.

He compared the Farmers settlement to the "sweet deal" that Allstate received from the state last year when it settled allegations of overcharges in homeowners insurance. Allstate agreed to refund $51.6 million to its customers but was let off the hook for another $19.2 million by Geeslin, who defended the settlement as a "positive step" for ratepayers and the Texas insurance market.

Texas Watch is backing legislation filed by Democrats in the Senate and House that would require prior state approval of insurance rate increases. Currently, companies can raise rates once they notify the insurance department, which has the right to review those rates and decide whether they are justified.

Industry's stance

The insurance industry opposes prior government approval of rate increases.

"Instead of chasing the short-sighted goal of artificial price fixing, we should stick with the goal of creating a well-regulated competitive marketplace that can handle our state's tough climate efficiently and still attract companies and capital," said Beaman Floyd of the Texas Coalition for Affordable Insurance Solutions, an industry group.

Levy of Farmers emphasized that her company agreed to pay refunds to its customers and has been blocked from doing so by the class action intervention filed by Longley, an Austin attorney.

"They have left Farmers unable to implement the settlement, including retrospectively reducing rates and adjusting certain rating factors," she said.

Longley contends that the company's rates are still too high, which Levy disputed.

Longley also has a separate class action case against Farmers pending in federal court in Oklahoma City. That suit centers on management fees charged by Farmers that are reflected in premiums paid by customers in Texas and several other states.

The state's other long-running dispute over insurance rates, involving State Farm, is scheduled to go before the insurance commissioner at a March 30 hearing.

State Farm was accused by the state of overcharging customers and ordered to lower rates by 12 percent in the fall of 2003. The case has been in the courts since then, and State Farm has won some key victories. But the company is on the hook for more than $650 million in overcharges and penalty interest dating back nearly six years.

Source: dallasnews.com

Farmers Insurance seeks 27.5% homeowners’ rate increase

2009-03-02T07:02:00.000-08:00

Property insurance increases expected

By TED GRIGGS
Advocate business writer

Louisiana homeowners and businesses will see property insurance rates rise more this year than they have since 2006, in large part because of the financial meltdown, Insurance Commissioner Jim Donelon said.

“I do not anticipate that it will result in double-digit increases,” Donelon said.

In 2008, Louisiana homeowners’ rates rose an average of less than 1 percent, Donelon said. In 2007, the rates were up by just over 3 percent.

This year the rates will rise somewhere between those low numbers and 10 percent, Donelon said. The same holds true for commercial property insurance and for automotive coverage.

Insurance companies’ ability to write coverage is affected by the amount of capital available, Donelon said. With investors dumping insurance sector stocks, those companies can’t write as much coverage.

Meanwhile, insurance companies are also seeing their investment portfolios take a beating, Donelon said. This also reduces the amount of coverage they can write.

According to the Insurance Information Institute, an industry-funded group in New York, investments are the principal source of declining profitability among insurers. During the first three quarters of 2008, the insurance industry’s investment gain was $28.3 billion. The fourth-quarter figures are not yet available, but even if the industry’s investments remained at that level, when stocks and interest rates continued to fall, the total would still be the lowest in 15 years.

Robert Hartwig, president of the institute, said bonds represent roughly two-thirds of insurance companies’ investments, with stocks accounting for 20 percent or less.

Low interest rates and returns on investments, in the United States and internationally, will ultimately affect the price of insurance, Hartwig said. That is because a certain part of the losses that insurers pay have always been financed by investment returns.

The effect varies by insurer, Hartwig said, “but there was no insurer that was not impacted by what happened on Wall Street last year.”

Still, the major factor influencing property insurance costs in Louisiana remains the threat of a major hurricane, Hartwig said. An active season is expected in 2009, and reinsurers are raising their rates to reflect that.

Donelon said that with less coverage available, the law of supply and demand kicks in and prices rise.

Already, State Farm Fire & Casualty Co., the largest insurer in Louisiana, has asked to increase homeowners’ rates an average of 14 percent statewide. Farmers Insurance Exchange, the sixth-largest firm in the state, is seeking a 27.5 percent increase in homeowners’ rates and the institution of a 5 percent hurricane deductible. Louisiana Farm Bureau, the fifth-largest company, is seeking a 10.2 percent increase.

The Insurance Department is reviewing those requests, but Donelon said his preliminary review is that neither State Farm nor Farmers will receive a double-digit increase.

Farm Bureau’s request has only recently been filed.

However, Brooke Cluse, a spokeswoman for State Farm, said the rate request is not directly related to the state of the economy or financial markets.

“We have had a tremendous amount of weather-related losses in the state over the past several years, and while many insurers have left the state, State Farm is here and committed to our policyholders in Louisiana. We have demonstrated our commitment by helping our customers recover from unexpected loss and they can expect nothing less in the future.”

Farmers Insurance officials could not be reached for comment Friday.

Source 2theadvocate.com

Farmers Insurance Company sued again

2009-03-02T07:00:00.000-08:00

Lawsuits keep coming in Burlingame landslide
Shasta Kearns Moore / The Southwest Community Connection

HILLSDALE — Two more lawsuits have been filed in Multnomah County Court by the owners of the second home destroyed in the Burlingame Place landslide. The complaints totaling more than $1.7 million name Dave and Kathei Hendrickson, Farmers Insurance Company and the family’s insurance agent, Lynette Sanders.

Dr. Yuan Chou and his wife, Siukee Tong, barely escaped their home in the early morning on Oct. 8 when the house owned by the Hendricksons slid down the hillside and shoved their house off its foundation.

Both houses were destroyed — along with five other homes that were damaged — and the resulting debris has since been removed from the site.

Chou and Tong’s attorney, Jim Martin, said his clients are suing Farmers’ Insurance Company for not covering the damage to the home. Farmers’ Insurance has refused to pay, saying the policy does not cover earth movement.

But Martin argues that the damage to the home was not directly caused by earth movement.

“It is our position that the Hendricksons’ house is a flying object that landed on my client’s house, which is covered in the policy,” he said, adding that photographs show no mud on the Chou home. “So my client’s house was not damaged by land movement, it was damaged by a house falling on it.”

The family is also suing the Hendricksons for trespass, private nuisance and strict liability.

The complaint lists several remodels and landscaping projects that the Hendricksons undertook before the slide and argues that their negligence in performing these projects contributed to the landslide.

As stated in the complaint: “Upon information and belief, homes such as the Defendants’ home, do not slide down hillsides that has been there for 80 years without Defendants’ negligence in the care of their home, remodeling of their home and most importantly their landscaping as well as water management (sic).”

Farmers’ Insurance, who is also the Hendricksons’ insurer, has agreed to defend the them against this suit, according to their private attorney.

Burlingame Place remains closed
The section of Burlingame Place where Dave and Kathei Hendrickson’s home once stood will be closed until the shoulder can be rebuilt, say city officials.

Now a steep drop off to Terwilliger Boulevard, Bureau of Environmental Services spokesman Ross Caron said it would be too dangerous to open the street and risk damage to the road.

City engineer Doug Morgan said tests have shown the slope to be stable so far, but that it would be too risky to allow traffic on that section of road without the lateral support of a shoulder.

“Because of the steepness of the scarp, it’s not considered safe to reopen Burlingame,” Morgan said.

It is the responsibility of the homeowners to rebuild the shoulder, which could cost anywhere from $100,000 to $300,000, Caron estimated.

Caron said officials can eventually use city code to force the property owners to rebuild the hillside, but because the road closure is no longer impacting a major thoroughfare, they can afford to give the Hendricksons more time.

“It’s a delicate balancing act between being patient and compassionate and moving the process along quickly,” Caron said, adding city officials are trying to “treat them as they would like to be treated.”

Source swcommconnection.com

Farmers Insurance sued over Hurricane Ike claim

2009-02-18T07:19:00.000-08:00

A Jefferson County man has filed suit against Farmers Insurance Exchange, alleging he was not paid money to which he was entitled after Hurricane Ike destroyed sections of his home.

When Pete Zavala's property at 9336 FM 365 in Beaumont sustained dwelling and contents damages on Sept. 13 during Hurricane Ike, he submitted a claim to Farmers, which had insured his property, according to the complaint filed Feb. 10 in Jefferson County District Court.

Zavala requested Farmers cover the cost of repairs, the suit states.

However, Farmers improperly adjusted Zavala's claim for the repairs of his property, even though the policy provided coverage for losses, he claims.

Farmers told Zavala it would not pay the full proceeds of the policy, although demand was made for it, which constitutes a breach of the insurance contract, the suit states.

"Defendant misrepresented to Plaintiff that the damage to the property was not in excess to the amount paid, even though the damage was caused by a covered occurrence," the suit states.

Farmers also failed to make an attempt to settle Zavala's claim in a fair manner, a violation of the Texas Insurance Code, unfair settlement practices, he claims.

The company failed to explain the reason for its offer of an inadequate settlement, another violation of the Texas Insurance Code, according to the complaint.

Farmers failed to affirm or deny coverage of the claim within a reasonable time frame, the suit states.

It refused to fully compensate Zavala, even though it did not conduct a reasonable investigation, which constitutes another violation of the Texas Unfair Competition and Unfair Practices Act, he alleges.

Farmers breached its contract with Zavala by refusing to pay the policy, according to the suit.

Zavala is seeking three times his actual damages, plus 18 percent post-judgment interest per annum and exemplary damages.

Jason M. Byrd of Snider and Byrd in Beaumont will be representing him.

The case has been assigned to Judge Milton Shuffield, 136th District Court.

Case No. D183-249
Source: setexasrecord.com

Texas Farmers Insurance Co. is suing the state to block the release of documents

2009-02-16T12:32:00.000-08:00

By RYAN McNEILL / The Dallas Morning News

Texas Farmers Insurance Co. is suing the state to block the release of documents to The Dallas Morning News that could give insight into how it charges consumers for its homeowners policies.

The lawsuit, filed Feb. 3 in Travis County, followed a decision by the state attorney general's office ordering the Texas Department of Insurance to release the documents. The insurance department was also ordered to release similar documents filed by Allstate Fire and Casualty Co., which did not sue to block the action.

The News requested rate filings and supporting documentation for the three major homeowners insurance companies in Texas – State Farm Lloyds Co., Allstate and Farmers. The insurance department released only parts of Allstate's and Farmers' filings that had not been marked "confidential" by the companies; it released all of State Farm's filings, none of which had been marked "confidential."

At issue is how much insurance companies can use trade-secrets exemptions in Texas' open-records laws to keep information from the public. The requested documents show mathematical formulas and other information the companies use as a model to determine what to charge customers.

Farmers argued that release of the documents, provided to the insurance department as agency officials sought to determine whether insurance rates were proper, would cause irreparable financial harm by making "valuable trade secrets" available to competitors.

"Essentially what we're being asked to do is like the University of Texas having to share its football playbook with Texas A&M," said Michelle Levy, a Farmers spokeswoman.

Pushing transparency?

Consumer advocates worry that transparency is at stake.

"What are they hiding here?" asked Alex Winslow, executive director of the consumer advocacy group Texas Watch. "What is it they don't want the public to know about how they're setting their rates?"

The Texas Department of Insurance initially refused to release any part of Allstate and Farmers filings that were marked "confidential" without a ruling from the Texas attorney general's office.

Winslow said his consumer watchdog group has found that "insurance companies will stamp everything they file with the Department of Insurance as proprietary and confidential, even if it's explicit in the statute as being subject to open records."

On Jan. 15, the attorney general ordered the records' release, ruling that the Legislature intended for the public to have access to the documents because they were part of the insurance department's review of insurance premiums under the state's file-and-use system.

State insurance officials insist that they release what is allowable, while upholding the law.

"When it comes to transparency, we push as much information out there as we possibly can," said Texas Insurance Commissioner Mike Geeslin.

But the executive director of the Center for Economic Justice, an Austin-based advocacy group, disagreed.

"Insurers are hiding what they're doing, and regulators are being complicit," said Birny Birnbaum.
Source: dallasnews.com

Farmers Insurance rate hike to hit many Texas homeowners

2009-02-14T22:14:00.000-08:00

By TERRENCE STUTZ / The Dallas Morning News
tstutz@dallasnews.com

AUSTIN – Hundreds of thousands of homeowners in North Texas and across the state will see their insurance rates increase by double digits beginning Monday after state regulators decided not to object to the rate hikes by Farmers Insurance.

The higher rates affect policyholders for two of the company's largest subsidiaries – Farmers Insurance Exchange and Fire Insurance Exchange – which will boost their premiums nearly 10 percent and 12.6 percent respectively, starting with policies renewed on Monday.

Farmers is the third-largest home insurer in Texas.

"We are not planning to take any action on it, so the effective date stands," Jerry Hagins of the Texas Department of Insurance said Friday. The agency reviewed the proposal after it was filed late last year and could have objected if officials had found the increase unjustified.

A spokeswoman for Farmers said the increase for customers of the two subsidiaries is across the board with no variations by region of the state.

Michelle Levy of Farmers, who cited higher costs for labor and materials as one reason for the increases, noted that the rate proposals were being developed even before Hurricanes Ike and Dolly struck the Texas coast last year.

"It was part of our annual review of rates in 2008," she said.

Rates for Farmers' other home insurance subsidiary in the state – Texas Farmers Insurance – went up 7.9 percent last year, an increase that was reflected in annual premium notices beginning in May. Farmers provides coverage for about 714,000 Texas homeowners.

Consumer groups on Friday criticized the insurance department for allowing the increases to go through.

"These kinds of double-digit rate hikes should provide the Legislature with the evidence they need to move forward with real insurance reforms this year," said Alex Winslow of Texas Watch.

"Enough is enough. How many of these rates hikes do we have to have before lawmakers and the insurance commissioner recognize that insurance companies are taking advantage of the system?" he asked.

Regarding the massive losses that companies suffered in 2008 because of the hurricanes, Winslow said, "Certainly we want rates to be sufficient, but given the overcharges that Farmers and other companies have imposed on customers for years, I have no doubt the insurance industry in our state has ample resources to protect themselves against weather-related losses."

Source: dallasnews.com

Farmers Insurance is one of the 10 Worst Insurance Companies for Consumers

2009-02-14T13:35:00.000-08:00

The American Association for Justice has recently released a report entitled The Ten Worst Insurance Companies in America. You can read it here (pdf). The Alabama Association for Justice has prepared a statement on the report, which appears below:

10 Worst Insurance Companies for Consumers Ranked; No. 1, 3, 4 and 7 Sell Policies in AL

Insurance Industry Employs "Deny, Delay, Defend" Strategy, Puts Profits Over Policyholders

MONTGOMERY - In recent years, Alabama homeowners have seen sharp increases in their insurance premiums. A new study put out by the American Association for Justice ranks the 10 worst insurance companies in the U.S. for consumers and explains the overall rise in premium costs to an industry-wide strategy of denying claims, delaying payments and defending those positions as long as possible in hopes that weary claimants will settle for less than their claim is worth.

"Nationally, we've seen insurance companies continue to put profits over the best interest of their policyholders," Gibson Vance, president of the Alabama Association for Justice (ALAJ), formerly the Alabama Trial Lawyers Association, said, adding that "in Alabama it's no different."

In Alabama, State Farm (#4 on the 10 Worst Insurance Companies List) is the leading insurer of property and casualty insurance, followed by Allstate, AIG and Farmers (#'s 1, 3 and 7 on the 10 Worst Insurance Companies List). Alabamians pay the ninth-highest average homeowners premiums in the nation, which insurers say is because of hurricane risk, but interestingly only 12 percent of the state is coastal. In addition, property and casualty insurers took in $6.6 billion in premiums from Alabama policyholders in 2006 but only paid out $3.5 billion in losses.

Thousands of court documents, materials uncovered from litigation and discovery, testimony, complaints filed with state insurance departments, SEC and FBI records, and news accounts were reviewed to compile the rankings and statistics of the study. Financial documents also revealed extravagant profits and executive compensation while policyholders' claims were routinely delayed and denied. Over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion. The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries. The CEOs of the top 10 property / casualty firms earned an average of $8.9 million in 2007. The CEOs of the top 10 life / health insurance earned an average of $9.1 million. The median insurance CEO's cash compensation is $1.6 million per year, leading all industries.

"The 10 worst insurance companies that made the list did so because of their shameful treatment of policyholders. As the study shows, Allstate's Your in Good Hands' motto only applies if you don't make a claim," Vance said.

10 Worst Insurance Companies for Consumers

1. Allstate (NYSE: ALL) set the standard for insurance company greed and placing profits over policyholders. Allstate contracted with consulting giant McKinsey & Co. in the mid-1990s to systematically force consumers to accept lowball claims or face its "boxing gloves," an aggressive strategy designed to deny claims at any cost. One Allstate employee reported that supervisors told agents to lie and blame fires on arson, and in turn, were rewarded with portable fridges.

2. Unum (NYSE: UNM) - Unum's actions are even more shameful considering the type of insurance it sells: disability. Unum's behavior was epitomized when it denied the claim of a woman with multiple sclerosis for three years, stating her conditions were "self-reported," contrary to doctors' evaluations. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their practices.

3. AIG (NYSE: AIG) - The world's biggest insurer, AIG's slogan was "we know money." AIG, described by commentators as "the new Enron," has engaged in massive corporate fraud and claims abuses. In 2006, the company paid $1.6 billion to settle a host of charges.

4. State Farm - State Farm is notorious for its deny and delay tactics, and like Allstate, hired McKinsey consultants. State Farm's true motives became apparent during Hurricane Katrina; for example, it employed multiple engineering firms until they could deny the claims of the Nguyen family of Mississippi. In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims.

5. Conseco (NYSE: CNO) - Conseco sells long-term care policies, typically to the elderly. Amongst its egregious behavior, the insurer "made it so hard to make a claim that people either died or gave up," said a former Conseco-subsidiary agent. Former Conseco executives were fined when they admitted to filing misleading financial statements with regulators.

6. WellPoint (NYSE: WLP) - Health insurer WellPoint has a long history of putting profits ahead of policyholders. For instance, California fined a WellPoint subsidiary in March 2007 after an investigation revealed that the insurer routinely canceled policies of pregnant women and chronically ill patients.

7. Farmers - Swiss-owned Farmers Insurance Group consistently ranks at or near the bottom of homeowner satisfaction surveys, and for good reason. For example, Farmers had an incentive program called "Quest for Gold" that offered pizza parties to its adjusters that met low claims payments goals. Like Allstate, it also hired the McKinsey consultants.

8. UnitedHealth (NYSE: UNH) - The SEC opened an investigation into former UnitedHealth CEO William McGuire for stock backdating, which ultimately led to his ouster in 2006 and returning $620 million in stock gains and retirement compensation. Physicians have also reported that their reimbursements are so low and delayed by the company that patient health is being compromised.

9. Torchmark (NYSE: TMK) - According to Hoover's In-Depth Company Records, Torchmark's very origins were little more than a scam devised to enrich its founder, Frank Samford. Torchmark has preyed on low-income Southern residents and charged minority policyholders more than whites on burial policies.

10. Liberty Mutual - Like Allstate and State Farm, Liberty Mutual hired consulting giant McKinsey to adopt aggressive tactics. Liberty's tactics were highlighted when a New York couple's insurance was "nonrenewed" by Liberty, even though they lived 12 miles from the coast and never experienced weather-related flooding.

To see how consumers can hold the insurance industry accountable and view a full copy of the study, visit www.justice.org
Source: whnt.com

Farmers Mutual Insurance Company Sued for Claim Denial

2009-02-13T07:33:00.000-08:00

Montgomery County residents file hurricane insurance suit in Jefferson County
By Kelly Holleran

Two residents of The Woodlands have filed suit against Ranchers and Farmers Mutual Insurance Company and Southeast Surplus Underwriters General Agency, alleging they were not paid money to which they were entitled after Hurricane Ike destroyed sections of their home.

When Michelle Weishiemer's and David Aguilar's property at 19 Shimmer Pond Place in The Woodlands sustained roof and water damages on Sept. 13 during Hurricane Ike, they submitted a claim to Ranchers and Farmers, which had insured their property, according to the complaint filed Jan. 30 in Jefferson County District Court.

Weishiemer and Aguilar requested Ranchers and Farmers cover the cost of repairs, the suit states.

However, Ranchers and Farmers denied a portion of Weishiemer's and Aguilar's claim for the repairs of their property, even though the policy provided coverage for losses, she claims.

It denied the claim after assigning an adjuster from Southeast Surplus to adjust the claim, according to the complaint.

"Plaintiffs' claim(s) still remain unpaid and the Plaintiffs still have not been able to properly repair the Property," the suit states. "Plaintiffs cannot live in their house in its current condition. They have been forced to lease another house at their own expense because Defendants have not even properly paid Plaintiffs under their Loss of Use coverage under their policy."

Ranchers and Farmers told Reed it would not pay the full proceeds of the policy, although demand was made for it, which constitutes a breach of the insurance contract, the suit states.

"Defendants misrepresented to Plaintiffs that the damage to the Property was not covered under the Policy, even though the damage was caused by a covered occurrence," the suit states.

Ranchers and Farmers and Southeast Surplus also failed to make an attempt to settle Weishiemer's and Aguilar's claim in a fair manner, a violation of the Texas Insurance Code, unfair settlement practices, they claim.

The companies failed to explain the reason for their offer of an inadequate settlement, another violation of the Texas Insurance Code, according to the complaint.

Ranchers and Farmers and Southeast Surplus failed to affirm or deny coverage of the claim within a reasonable time frame, the suit states.

They refused to fully compensate Weishiemer and Aguilar, even though they did not conduct a reasonable investigation, which constitutes another violation of the Texas Unfair Competition and Unfair Practices Act, Weishiemer and Aguilar allege.

Ranchers and Farmers and Southeast Surplus breached their contract with Weishiemer and Aguilar by refusing to pay the policy, according to the complaint.

Ranchers and Farmers and Southeast Surplus violated the Deceptive Trade Practices Act by an unreasonable delay in the investigation, adjustment and resolution of the Weishiemer's and Aguilar's claim, by their failure to give Weishiemer and Aguilar the benefit of the doubt and by their failure to pay for the proper repair of Weishiemer's and Aguilar's home, the suit states.

Ranchers and Farmers and Southeast Surplus engaged in false, misleading and deceptive acts or practices in the business of insurance, according to the complaint.

The companies also engaged in unfair claims settlement practices, the suit states.

Weishiemer and Aguilar are seeking unspecified actual, consequential, treble, punitive and exemplary damages, plus attorney's fees, costs, pre- and post-judgment interest and other relief to which they may be entitled.

Jason D. Speights of Speights Law Firm in San Antonio will be representing them.

The case has been assigned to Judge Milton Shuffield, 136th District Court.

Case No. D183-165
Source: setexasrecord.com

Farmers Insurance, Claim Denied and Breach of Contract?

2009-01-29T09:52:00.000-08:00

The lawsuits keep rolling in over the Oct. 8 landslide in Southwest Portland that destroyed two homes and damaged another.

On Wednesday, Yuan Chou and his wife, Siukee Tong Chou, filed two suits: one against their insurance company for breach of contract and intentional infliction of emotional distress; and another for liability against David and Kathleen Hendrickson, the couple whose home slid down the hillside, crashing into the Chou's home.

The Hendricksons' 1930 home at 6438 S.W. Burlingame Place damaged one home as it ripped the Chou's home off its foundation. The Chous have been living in a rented apartment since narrowly escaping the sliding debris of earth, cars and building materials.

The Chous' suit against Farmers Insurance seeks payment of unspecified damages to their home, its contents and attorney's fees. Farmers issued them a letter last month saying their policy does not cover landslides.

The city of Portland has issued permits for cleanup and some slope stabilization. That work is being paid for by Farmers, which also insured the Hendrickson home. The cleanup falls under the couple's liability policy, but they also are suing Farmers for breach of contract after Farmers denied their property claim.

The city has not found a definitive reason why the home slid, and an exact cause may never be known because the slide erased the evidence. But a preliminary investigation led officials to believe that a leak in the Hendricksons' backyard sprinklers may have saturated the soil.

The homeowners installed a sprinkler system on the property in March 2005, according to city records. Last September, they installed a new back-flow device and shut-off valve. Water use at the property was unusually high just before the slide, officials have said, suggesting a leak or a malfunction. But it's unclear whether the sprinklers were overused or a pipe broke.

The Hendricksons' suit against Farmers cites "an accidental discharge of water" that may have caused the damage. Farmers hired a consultant who concluded, among other things, that the slide was triggered by slope instability "due to the presence of water" and that the water was not likely from rain or natural seepage.

Lawyers in the case expect that homeowners and their insurance companies and the Hendricksons' contractors and their insurance companies likely will come together later this year for settlement talks.

Source: oregonlive.com

Farmers New World Life Insurance and HIV

2009-01-29T07:00:00.000-08:00

The Spokane Spokesman-Review on Wednesday examined a case in Washington state in which an HIV-positive man was denied life insurance by Farmers New World Life Insurance. Some advocates had hoped that the discrimination case would "open doors" for people living with the virus who are denied life insurance, the Spokesman-Review reports, adding that those hopes were "dashed" by a ruling that said Gerald Hebert -- an employee with the state's Human Rights Commission who issued a complaint with the insurance commissioner's office in 2006 -- was not illegally discriminated against because of his HIV-positive status.

Although the issue of HIV/AIDS-related discrimination is not new, advocates said this case illustrates that the insurance industry fails to recognize the increased life expectancies of HIV-positive people because of advances in antiretroviral therapy. Sid Wolinsky of the San Francisco not-for-profit legal center Disability Rights Advocates said that the "problem" with insurance companies is that they "routinely use grossly outdated statistical material," rarely keep their own data and rely on manuals reinsurance companies provide. Wolinsky said, "That is not to say there is not an increased mortality or morbidity risk for somebody with HIV than for somebody without it. But the risk is such that it can be covered."

According to the Spokesman-Review, insurance companies can deny coverage to a person only if there is sound statistical data that show the person is too risky to insure. Documents show that the Washington state Insurance Commissioner's Office, which led the investigation, had difficulty obtaining such information from Farmers. The Spokesman-Review reports that a Swiss study of people living with HIV found that "successfully treated HIV-positive and hepatitis C-negative patients have a short-term mortality as low as or lower than that of patients with cancer who have been successfully treated -- a group that is able to obtain life insurance."

Marc Brenman -- former executive director of the state's Human Rights Commission -- said that there is reason to believe Farmers routinely violated a state law by denying insurance to people living with HIV. Brenman said that there is "an entire class of people who are not able to purchase life insurance at any price, and it is entirely and absolutely wrong." Farmers denies the claim and said that it applies underwriting grants fairly and consistently (Graman, Spokane Spokesman-Review, 1/28).