Monday, March 15, 2010

Farmers Insurance Loses $400K Arbitration Case

Minnesota Court Upholds $400,000 Arbitration Settlement in Alpine Glass vs. Farmers Suit

The U.S. District Court for the District of Minnesota issued an order on Friday upholding an arbitration settlement of more than $400,000 from Farmers Insurance and Mid-Century Insurance Company for more than 1,100 "short-pay" claims filed by Alpine Glass. The original suit by Alpine asked the court to rule that it be allowed to engage in arbitration with the insurers to settle the short-pay disputes; though Farmers had filed a counterclaim alleging that it was not liable to Alpine, the court had ordered that the companies should arbitrate the short-pay claims "in a single consolidated proceeding," according to the most recent opinion issued in the case. Farmers then motioned for the court "to vacate that award," according to court documents—and that motion also was denied with the most recent ruling.

Farmers had made several claims in its motion to have the award vacated. Among these claims, the insurer alleged that Alpine had violated Minnesota's anti-incentive statute, arguing that by promising customers "that if an insurer did not pay Alpine's bill in full, the customer would not be responsible for the difference." Farmers had argued that this was a form of an incentive to encourage the customer to purchase auto glass services, according to court documents. The court ruled against this claim as well.

In addition, Farmers had argued that no assignments of proceeds were made to Alpine Glass. (This is not the first time the assignment of proceeds issue has come up. However, previously an insurer had claimed that the assignment of proceeds clause could not apply to a glass shop. Last summer, the Minnesota Supreme Court ruled that it could.) (CLICK HERE for related story.)

However, the court dismissed this claim as well, as part of its denial of the motion, noting that it had reviewed the arbitration records in the case.

"Having reviewed that record, the Court finds that Alpine has established, by a preponderance of the evidence, that the 91 insureds did, in fact, assign their claims to Alpine. In every one of the 1,120 short-pay claims that were arbitrated-including every one of the 91 challenged claims-Farmers made a partial payment directly to Alpine," writes the judge.

The judge goes on to point out that Farmers national claims manager Michelle Keller testified that while an assignment specifically is not required, a work order must be signed by the policyholder before the invoice can be processed, and that Safelite Solutions, Farmers' claims administrator, must "look for a signed payment authorization … before it will send any payment directly to an auto glass shop."

Farmers also had argued against the arbitrator's ruling that "Farmers was paying a rate not based upon competitive pricing in the auto glass replacement industry in Minnesota" in its motion for the court to vacate the award.

However, the court ruled that under Minnesota's No-Fault Act, "an arbitrator's findings of fact are 'conclusive.'"

Farmers went on to argue that the arbitrator should have looked at each of the short-pay claims presented separately, but the judge writes that one reason for arbitration in the state is to "decrease the cost and complexity of litigation."

"The efficiencies inherent in the ability to present and consider generalized evidence are the primary reason why the Minnesota Supreme Court permits consolidation of no-fault claims in appropriate cases," writes Schiltz.

Alpine is represented by Chuck Lloyd of Livgard & Lloyd LLP in Minneapolis, along with Joshua P. Brotemarkle of Rabuse Law Firm P.A. Steven Kluz of Stoel Rives LLP and Diane B. Bratvold of Briggs and Morgan represented Farmers in the case.

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Thursday, February 25, 2010

Farmers seeks bond to cover discovery costs in Arkansas class action

TEXARKANA, Ark. -- Six years into a pending Arkansas class action litigation and still maintaining their innocence against the plaintiffs' allegations, defendant Farmers Insurance Co. wants to recoup the millions they have spent providing documents to the plaintiffs' attorneys.

Farmers, one of the few remaining defendants who is still refusing to pay a settlement, is asking Miller County Circuit Court Judge Kirk Johnson to enforce the Arkansas Cost Bond Statute and order the non-resident plaintiffs to pay a bond to cover the insurance company's out-of-pocket costs.

In response to the request, the plaintiff's are challenging the constitutionality of the statute with the Arkansas Attorney General.

The original class action, which was filed Sept 8, 2004, in the Circuit Court of Miller County, Ark., accuses hundreds of insurance companies of not paying the general contractors' overhead and profit or not accounting for the cost of a general contractor's services when estimating the repair costs under their homeowners' policies. Although the insurance companies paid previous their client's previous damages claims, the lawsuit argues that plaintiffs are entitled to additional payments.

The class action alleges claims of civil conspiracy, unjust enrichment, fraud, and constructive fraud

One of many insurance companies that believe this Arkansas case involves discovery abuse, Farmers has consistently asked Judge Johnson for protective orders against the plaintiff's extensive requests for production of documents.

Initially, the plaintiffs agreed to allow all the insurance companies to provide a 2,000 page-sampling of their case files, instead of producing all their claims files as previously requested.

Farmers filed numerous motions seeking protective orders and a court enforcement of the agreement to reduce the request of claim files. Many of the motions, some almost six years old, still remain undecided by Judge Johnson. The judge maintains he will not violate Arkansas law and delve into the issues of the litigation prior to class certification.

To some extent, Farmers has attempted to comply with the outrageous requests for documents, it has produced millions of pages of claim files and had the files converted to the requested format. In its most recent motion, Farmers states it has spent at least $6 million on this production and coupled with mounting defense fees and costs, it wants the plaintiffs to post that $6 million in a bond.

Farmers argues that the costs of its complying with the Court's discovery order is imposing an "undue burden and expense" and is depriving the company of its property pre-judgment in violation of the Fifth Amendment.

The plaintiffs are represented by Texarkana attorneys John Goodson and Matt Keil of the law firm Keil and Goodson; and attorneys Michael B. Angelovich, Cary Patterson, Brady Paddock and Christopher Johnson of the Texarkana law firm Nix, Patterson and Roach LLP.

Chivers v State Farm Case No 2004-294-3

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Thursday, February 11, 2010

Do you have to contact the media before Farmers Insurance will pay your claim?

Molly McClure came home to find her heavy metal patio cover collapsed under the weight of ice and snow. The attached awning brought the backside of her roof soffitt down with it.

Molly said, “From corner to corner it’s along the whole backside of the house that’s damaged.” The real split was between Molly and Farmers Insurance after the adjustor denied her claim.

Molly said, “I’m shocked it’s not covered. I can’t believe they wouldn’t cover that because it’s obvious there is damage to the house.” The denial letter implied the awning doesn’t have walls so is not considered a structure.

Faced with $6,600 in repair costs, Molly and her father Dale have argued with Farmers Insurance representatives for three weeks. Six On Your Side contacted the media Vice President for Farmers in Los Angeles Jerry Davies, and e-mailed photos of the damage to him.

Within 12 hours Dale McClure received a call from his local agent. Dale said, “Our agent said we won which is a good thing. Its what we wanted to hear.”

Molly has been told Farmers will replace her awning, repair the soffitt and even compensate her neighbor who spent three hours helping her raise the roof soffitt.

In a statement Jerry Davies of Farmers Insurance said, “Farmers claims executives visited with the agent and went to the customer’s home for a review of the claim. After further review farmers has decided the claim will be covered. We are pleased that she is fully covered.”

However the McClures say this should be a lesson to any homeowner with a covered patio or carport. Molly said they should check their homeowner’s policy regardless of the insurance company to see if those attachments to their homes are covered.

Watch the Video


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Thursday, January 14, 2010

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

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.”


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Thursday, August 27, 2009

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

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

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Farmers Insurance offers $5,000+ for Bad Faith

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.


Stewart v. Farmers Insurance Group

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Monday, March 02, 2009

Farmers Insurance Company sued again

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.”


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Wednesday, February 18, 2009

Farmers Insurance sued over Hurricane Ike claim

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

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Friday, February 13, 2009

Farmers Mutual Insurance Company Sued for Claim Denial

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

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Thursday, January 29, 2009

Farmers Insurance, Claim Denied and Breach of Contract?

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.


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Farmers New World Life Insurance and HIV

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).

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Tuesday, January 27, 2009

Farmers Insurance: “The way the policies are written are really deceitful,”

Bill’s Automotive update
Just down the hill from the slide, Bill King continues sorting through mud-covered debris at the site of his auto shop, which was destroyed by the landslide. King also hopes to find another location to continue his business.

A relief account at US Bank has accumulated approximately $525, which King said will help his efforts. King also continues to battle his insurance company, Farmers Insurance, over his losses.

King reported the company paid $30,000 to cover the cost of the vehicles damaged in the slide, but it will not cover other costs, including the six lease payments remaining on his equipment. King said he read through his policy, which specifically excluded landslides, but that it was buried in a “textbook” of endorsements.

“The way the policies are written are really deceitful,” King said. “It’s all in code.”

King, who rented the building for his business, is eligible for property tax relief from Clackamas County through an “Act of God” provision covering the storm that caused the landslide. The provision, which is available to all property owners and includes business and personal property, allows for a reduction in taxes based on the scope of the damage and the date the damage occurred.

Those who sustained property damage may receive a prorated portion of their property taxes, which is valued as of Jan. 1 of each year — the day before the landslide. The filing deadline for tax relief is the end of the tax year in which the destruction occurred or 60 days after the date the property was damaged or destroyed, whichever is later.


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Thursday, January 22, 2009

Farmers Insurance had the most complaints lodged against it during the storm season

It happens like clockwork.

Lately, it seems like every winter a storm blasts through Washington state bringing with it rain, wind and property damage.

If your roof gets swept up in hurricane-force winds, if a tree falls on your garage, are you covered by insurance?

Sometimes homeowners think they’re fully covered for things such as roofs, when they’re only really covered on the depreciated value of the roof, a decade after it was put on. Those can be hard, frustrating lessons, and sometimes, when an argument between homeowners and insurance companies gets heated, the state becomes involved.

In the last few years, countless people on the Twin Harbors have received a crash course in homeowners insurance coverage. Experiences have varied widely, but many have been frustrated by it.

The Daily World recently analyzed complaints filed with the state Insurance Commissioner’s Office resulting from a December 2006 storm and the big December 2007 storm.

A complaint registered with the Insurance Commissioner doesn’t mean an insurance company has done anything wrong, said Eric Mark, the public records manager for the state office. In fact, according to state investigator records obtained by The Daily World, most times insurance companies have not broken any regulatory rules at all.

But while many times rules may not have been broken, some policy holders feel so frustrated they still contact the Insurance Commissioner.

By the numbers

Statewide, Farmers Insurance had the most complaints lodged against it during the storm season, tying Allstate Insurance after the December 2006 storm with 11 complaints and garnering another 11 complaints from the December 2007 storm, for a total of 22.

Allstate had a total of 15 complaints from both storms. Farmers-owned Foremost Insurance had the third-most complaints filed, receiving 10 complaints from both storms.

Farmers’ top status for complaints received by the Insurance Commissioner is actually on par with the complaints the company gets year-round. For homeowner policies in 2007, Washington residents filed 101 complaints against Farmers, which had about a 13 percent market share of the state, the state agency says. In 2006, there were 72 complaints filed against Farmers. In both years, no other insurance company garnered as many complaints.

That compares, for instance, with State Farm Insurance, which had 55 complaints in 2007 and nearly 20 percent of the state’s market share — the highest share of any company. It registered only 43 complaints in 2006. During the past two December storms, just four complaints were filed against State Farm.

A spokesman for Farmers did not return phone calls seeking comment.

It was Farmers that took the Insurance Commissioner’s Office to Thurston County Superior Court in November over a couple of the case files The Daily World sought to review in a public records request for this story. Farmers initially didn’t want the state to release any of the information contained in two of the files, citing “trademark” protections. But during the court hearings, the company eventually changed its point of view and with a judge’s blessing released redacted information.

Mark, the public records manager for the Insurance Commissioner’s Office, says it’s been a couple of years since an insurance company has contested a public records request in court.

Some complaints

Complaints range from frustrated homeowners to cases that may be bound for court.

Sharon Longwith — one of the few people who allowed The Daily World to print her name for this story — said she thought she had a rock-solid policy that would have covered her house in all kinds of situations.

But she told The Daily World that Farmers partially denied a claim she and her husband filed with the insurance company following the December 2007 storm.

The storm had soaked the south side of her home, but she says the company wouldn’t pay for all of the damage “because the storm didn’t put a hole in my wall.”

That’s why she filed a complaint with the insurance commissioner’s office. When that didn’t help, she turned to FEMA for help. And when FEMA turned her down, she was able to find some financial assistance through the U.S. Department of Agriculture’s rural development program.

“Without the U.S. Department of Agriculture, I think we’d still have damage today,” Longwith said last month. “They gave us the money to hire a contractor, to repair the damage and are truly unsung heroes. I don’t think many people know they can get help through them.”

But some folks aren’t as lucky as Longwith.

A Rochester couple filed a complaint against Farmers following the December 2007 storm because the water around their home had risen to such a level that they actually had to be evacuated. The couple is named in the state documents but asked The Daily World not to identify them.

In their initial complaint letter to Insurance Commissioner Mike Kreidler, they wrote, “The flood water destroyed our insulation and heating ductwork completely, the skirting is waterlogged and will also need to be replaced. Our home has a cold-dampness inside and we have been using space heaters 24/7 to keep the cold/damp air at bay. This has resulted in a high electric bill; $191.00 for December. You can see the water in the floor ducts throughout the house.”

Their complaint wasn’t that Farmers wouldn’t cover their damage, but that the company was taking too long to respond. In the end, according to the Insurance Commissioner’s Office, the homeowners decided to get FEMA involved.

In Raymond, a homeowner called his insurance company, Foremost, while his power was still out, following the wind blasts of the 2007 storm. He wanted to set up a time for an adjuster right away because his home was soaked from so much rain.

“I asked if I could remove the closet carpet because of rain saturation and was told NOT to touch anything until the adjuster saw the damage,” wrote the complainant, whose name has been redacted from the state report. “I told her that the water will move through the area and she said this was ‘Due Process’ and that I needed to adhere to it.”

He was also concerned because when an adjuster did come out, the adjuster allegedly didn’t look under tarps on the roof or do an adequate inspection, resulting in a lower-than-expected settlement offer, according to the complaint.

Even though the state investigator didn’t find that the company did anything wrong, just the mere fact that the Raymond man complained seemed to speed up the process for him, according to the documents obtained by The Daily World.

Then there’s another incident in Raymond, which may very well end up in court.

A Raymond man, whose name has also been redacted from the state reports, complained to the Insurance Commissioner’s Office because Safeco Insurance had denied his claim. During the December 2007 storm, the rain had saturated the ground around his home to the point that the foundation shifted.

Safeco claimed that the foundation shift was caused by an “earth movement, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not,” and so the claim isn’t covered under the homeowner’s policy.

According to notes from the state investigator, “Safeco seems to think that if 50 percent or more of the damage wasn’t caused by the wind, they won’t pay on anything.”

Amid the documents released to The Daily World is a report filed by an expert hired by the insurance company saying all the damage was caused by the “earth movement” while the Raymond man has documents on file from an engineer that indicate that when the ground was softened, it was the wind that blew the foundation off, which should then be covered.

The state investigator said there was nothing she could do and recommended the man contact an attorney, which she later noted he did.

Know your policy

But the term “earth movement” is one that should be remembered by everyone seeking insurance, according to Hoquiam Mayor Jack Durney, who also owns Durney Insurance in Hoquiam, and was willing to review some of the Insurance Commissioner files with The Daily World.

“There isn’t a regular home policy out there that covers earth movements,” said Durney.

And those who are concerned that their foundation may slip because of soggy ground may just be out of luck.

“A lot of the Harbor here is built on fill,” Durney said. “And there are places where earthquake insurance coverage just won’t take.” Or, if a policy can be found, it won’t ever be affordable because of the high risk factor.

Typical homeowner’s insurance won’t cover flood damage, either, Durney notes. A number of the complaints filed with the Insurance Commissioner’s Office had to do with flooding, but nearly every time the state had to reject the complaint because there was no flood policy.

Homeowners concerned enough about flooding need to buy such a policy through the National Flood Insurance Program, independent from any other policy, Durney said.

Durney also found that one of the biggest complaints he hears is the difference between a policy that covers the “actual cash value” of, say, a damaged roof, compared to a policy that will fully cover the cost to repair a roof.

“There’s such a huge difference both in the premium the homeowner pays and the amount of coverage that results,” Durney said.

With “actual cash value,” the homeowner will only be compensated with what the roof is worth in today’s dollars. That’s often thousands of dollars less than what it will cost to get a new roof.

The homeowner is stuck with the bill for whatever the difference is. Don’t like that idea? Durney says take a look at your policy to make sure it’s not there and contact your insurance agent to change policies right away.

“I would be more inclined to say that although there can be a big difference in premium, it is well worth it because the ‘replacement’ policy will do just that — hire a contractor to repair or replace the damaged part of the home. ‘actual cash value’ is much like the collision coverage you have on a car in that depreciation is taken into consideration. So, if you have a roof that is in bad repair and is old, the insurance company will only pay you the depreciated value — much like an old car that you wreck.”

Planning on renovating the home? A new homeowner’s policy may be your best bet, Durney also advises.

“The trick with insurance policies is making sure what you want is in your policy before a disaster happens,” Durney said. “That means asking lots of questions and having an agent or someone who can actually give you answers.”

That way insurance holders won’t be on their last legs with no one else to go to but the Insurance Commissioner — or an attorney.

Want to see more complaints or file one? Visit

Got an Insurance Commissioner question? Call the Insurance Consumer Hotline at 1-800-562-6900.

By The Numbers

Complaints after Dec. 2006 & 2007 storms:

Farmers 22

Allstate 15

Foremost 10

Hartford 4

Liberty Mutual 4

State Farm 4

Safeco 3

Pemcu Mutual 3

Balboa 2

Grange 2

Metropolitan Property & Casualty 2

Mutual of Encumclaw 2

USAA Casualty 2

Zurich American 2

Amco 1

American Alternative 1

American Family 1

American Federation 1

American Security 1

American States 1

Amica Mutual 1

California Casualty 1

Canfield & Associates 1

Contractors Bonding & Insurance 1

Country Mutual 1

Esurance 1

Guideone Mutual 1

Homesite 1

Lexington 1

Mt. Hawley 1

North Pacific 1


Standard Fire 1

Truck Insurance 1


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Friday, January 02, 2009

Farmers Insurance "Not Evaluating My Daughter's Claim Appropriately"

Let me begin by saying that I have been an insurance adjuster for over 12 years. I know how to evaluate an injury claim.

My 17 year old daughter was a passenger in my car that was being driven by her boyfriend when he crashed head on into a tree totalling my car and injuring my daughter. The Farmers adjuster has been responsive to me but is not evaluating my daughter's claim appropriately. I have tried and tried to talk to him about it but he is not moving in his negotiations! I sent a letter to the WA Insurance Commissioner (copy is attached) and they responded that although they do not agree with Farmers' evaluation of my claim, they can not do anything to help me.

I met Rob Dietz while traveling last week (a little miracle). As you may recall, he played a crutial role in the lawsuit against Farmers for using Colossus bodily injury evaluation program. He told me that he had just found out that Farmers is using another evaluation program called "Claims Management." This needs to be made known to the public and I'm not sure how to do it. I can not believe that Farmers lost a law suit for using Colossus and had to pay over $60 million and now they are using ANOTHER evaluation program. This is unethical at best!

I feel like I am being forced to hire an attorney to represent my daughter against MY OWN INSURANCE POLICY!!!


Yvette Baldwin
Parent of Jacqueline Trevino

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Farmers Insurance Company of Oregon Accused of “calculatingly malicious” in its Refusal to Pay

Owners of landslide home are first to sue insurer
Hendricksons say they were told 'earth movement' would be covered
By Shasta Kearns Moore

The Southwest Community Connection, Jan 1, 2009

HILLSDALE — The owners of the four-level home that cascaded down a hill into two other houses on Oct. 8 are the first of seven affected households to file suit against their insurance company for denying coverage.

Dave and Kathei Hendrickson allege in the $2 million complaint filed Dec. 10 in Multnomah County Circuit Court that Farmers Insurance Company of Oregon had been, at times, “calculatingly malicious” in its refusal to pay for any damage resulting from the landslide — which demolished the Hendricksons’ house and nearly everything in it.

Kathei Hendrickson was home when the slide occurred in the early morning and barely escaped thanks to quick action by her neighbors. The house and several hundred tons of debris are still sitting at the bottom of the hill, where the road — a portion of Terwilliger Boulevard — has been closed indefinitely.

Many of the homeowners are still not allowed back in their houses and are living with friends or in rental units as they continue to make mortgage payments.

Landslides are generally not covered
According to insurance and landslide experts, “earth movement,” as it is called in the insurance industry, is typically not covered by homeowner’s insurance and requires an extra — and extremely rare — policy.

However, the Hendricksons claim in their suit that a Farmers Insurance agent told them when they bought a “Protector Plus Homeowners Package” in 2005 that it would cover all eventualities, including earth movement.

According to the Hendrickson’s attorney, Bob Bonaparte, the agent “essentially told them they would be covered for every risk … so they purchased the policy, and lo and behold they weren’t.”

A claim denial letter dated Dec. 2 from Farmers Insurance Company of Oregon to the Hendricksons points to language in the policy that they say specifically denies coverage of damage resulting from earth movement, and any of its possible causes.

“The policy repeatedly emphasizes that landslide is never covered under this policy, however caused — whether combined with water or the negligent acts or omissions of people,” states the letter signed by Michael D. Flynn of Farmers Insurance.

What caused the landslide?
Insurance company experts, city engineers and others have all cited an unnatural water saturation of the hillside as the most likely cause of the landslide — though, as most of the evidence was washed away in the slide, the true, specific cause will likely never be fully known.

Records from the city’s Water Bureau show an excessive use of water since the last meter reading on July 31 — about 20,000 extra gallons, according to Dr. Wesley Spang, an engineering expert hired by Farmers Insurance. However, Spang and others have not been able to determine over what period of time the water use occurred nor whether it was intentional or caused by a leak.

According to legal documents, the release of excess water could have been triggered by several contractors working on the property in recent years. Two days before the slide, Team Clean Windows and More, LLC, power-washed the house; 10 days before, Harrity Tree Specialists removed an 80-year-old cedar tree; and in recent years, an unnamed contractor broke up concrete in front of the house and another installed a sprinkler system.

Regardless, says Farmers Insurance, the Hendricksons would not be covered for any of those possible causes.

Settlement conference
In addition, the other six households affected by the catastrophe have all been denied claims against their own insurance companies and many are preparing claims against Farmers Insurance under the liability portion of the Hendricksons’ policy.

Though the Hendricksons’ complaint includes a request for a jury trial, their lawyer expects that in the middle of 2009 all of the parties to the various lawsuits — including the contractors — will sit down and negotiate who should pay what.

“Lawsuits should be flying any day,” Bonaparte said. “Ours was simply the first.”

Read the Lawsuit: Hendrickson vs Farmers Insurance Company of Oregon


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Thursday, December 18, 2008

Farmers Insurance Blames Santa Cruz County for Fire

Insurance giant says county liable for Trabing Fire
Kurtis Alexander - Sentinel Staff Writer

In claims filed with Santa Cruz County, Farmers Insurance Group contends county officials contributed to the spread of last summer's Trabing Fire by failing to keep roadsides free of flammable vegetation and harboring conditions that advanced the flames.

The county denies the charges, and on Tuesday, the Board of Supervisors dismissed a dozen requests by the insurance giant for nearly $3 million worth of property damage that resulted from the fire.

Attorneys for the county declined comment, citing the possibility of a lawsuit and a policy of not discussing litigation. The issue has yet to proceed to court.

The Trabing Fire started June 20 when a vehicle on Highway 1, at Buena Vista Drive, sprayed hot exhaust into dry grass. About 630 acres burned, including 26 homes and nearly 50 other buildings.

While the county is not responsible for maintaining the state highway, Farmers Insurance alleges that once the fire started, overgrown vegetation on nearby county roads fanned the flames and contributed to the destruction.

"The injury to plaintiff's insureds was approximately caused by this dangerous condition," the claims read.

Officials with Farmers Insurance declined to immediately comment.

Cal Fire Chief John Ferreira, the state's top fire official in Santa Cruz County, says the county's vegetation management practices probably had little to do with the fire and its advance.

"Even had the roadsides been mowed, the fire would have raced through there because of the weather conditions and dryness," he said.

Only bare ground would have stopped that fire, Ferreira said, something that is virtually impossible to provide.

This is not the first time the county's vegetation management program has drawn criticism.

In 2005, the Board of Supervisors imposed a ban on the use of herbicides to control roadside brush, which triggered concerns among the public, as well as some in the Public Works Department, that the county would not be able to keep up with its pruning responsibilities.

Mowing the vegetation, which many said was more environmentally friendly than spraying, takes longer and costs more.

Jane Amaral, a Farmers Insurance customer who lost a greenhouse to the Trabing Fire, said she took note when the county changed its clearing methods and has since seen more brush accumulate along Larkin Valley Road.

"When they sprayed it, it didn't come up as fast," she said. "The mowing doesn't seem to be as efficient."

Amaral, who has already received her insurance payment, is among those whom Farmers Insurance is trying to hold the county liable for.

Public Works Director Tom Bolich acknowledged Tuesday that the new vegetation management practices don't accomplish as much as when herbicides were used. But, he said, they meet their primary goal of ensuring safe clearance and visibility on 270 miles of county roads.

The claims submitted by Fire Insurance Exchange, a division of Farmers Insurance, convey the damages of 12 Farmers Insurance customers on Trabing Road, Larkin Valley Road and Azure Lane, and ask the county to pay losses on buildings as well as certain living expenses of fire victims.


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Friday, December 12, 2008

Farmers Insurance Engaged in Unfair Discriminatory Practices to Overcharge in Texas

Are You In Good Hands?
How home insurance companies in Texas ripped you off—and why it might not happen again.
Dave Mann | December 12, 2008 | Features
Rick Perry was talking tough. It was August 5, 2002, and the Texas governor had been joined at a news conference in Houston by John Cornyn, the state’s attorney general. They announced to the assembled reporters that the state had sued Farmers Insurance, one of Texas’ most prolific writers of home insurance policies, for deceptive trade practices. Cornyn’s office had been investigating the home insurance market, where premiums had ballooned out of control. And now the state had made its first case.

“The investigations are still ongoing, but the findings reflect that at least one company—Farmers Insurance—has engaged in unfair, discriminatory practices to charge consumers excessive and unjustified rates,” Perry told the press. The company, Cornyn added, “has put its own financial gain ahead of the well being of Texans. You don’t do that in Texas.”

But, of course, they had been doing it. In 2002, Texans were paying, on average, the nation’s highest rates for homeowners insurance. That was an impressive feat, given that prices for homes in Texas lagged far behind those in California, New York and Florida. In the previous two years, the state’s big insurers had jacked up premiums. Insurance companies said they were bleeding money from too many expensive claims. But they also had ruthlessly exploited a loophole in state law that allowed them to raise rates unfettered by regulation.

While Perry and Cornyn had ostensibly come to Houston to announce a civil court filing, the political overtones were obvious. The two Republicans were on the November ballot—Perry running for his first full term as governor and Cornyn aiming for the U.S. Senate—and with Election Day just three months off, home insurance had become the 2002 campaign season’s top issue. Texas homeowners were seething. They wanted their rates cut fast.

It was a particularly perilous issue for Perry. He was favored to win. But his Democratic opponent, Tony Sanchez, had seized on the crisis and begun a populist call for stricter regulation that would force the insurers to lower premiums. He hammered Perry for sitting idly by while rates climbed. Sanchez’s campaign was clumsy at times—he named his campaign bus the “Lower Rates Express”—but Perry clearly saw a dangerous political issue.

The governor quickly devised his own reform plan and began criticizing the industry’s greed. Perry, an avowed free-marketeer, seemed an unlikely politician to crack down on big insurance companies. Texas Republicans have long found common cause with the insurance industry against Democratic-leaning trial lawyers, and Perry had received more than $1 million in campaign contributions from insurers at that point in his career.

Yet at nearly every campaign appearance, the governor promised to re-regulate the market and slash premiums. “If the industry hasn’t figured this out, listen up,” Perry told reporters at one point in the 2002 campaign. “Texans are fed up, and I will sign legislation that prevents a handful of companies from bringing the state to its knees. I am offering solutions that put Texans first. I call on the industry to do the same.”

Six years later, Texans are still paying the highest rates for home insurance in the country. The industry has earned billions more than it would have if stricter regulation had been imposed, according to consumer groups; in 2004 alone, the added profit was $4 billion. In 2006, Texas insurers enjoyed one of their most profitable years on record.

The problem wasn’t inaction. Perry and the Legislature passed a sweeping, complicated reform bill in 2003. But the legislation was crafted largely by lobbyists for the insurance industry, imposing the lightest possible regulation. The state remains nearly powerless; insurers in Texas can raise rates by simply notifying regulators.

In January, the Legislature will once again take up home insurance. Six years after siding with the industry, lawmakers will have another chance to fix the system. While the insurance companies will almost assuredly run a similar play—wouldn’t you?—the political environment appears to have changed. Some key legislators are already talking about the need for more regulation. The 2009 session may be consumers’ best chance for meaningful reform in a very long time—assuming history doesn’t repeat itself.

On August 21, 2002, just two weeks after Perry and Cornyn filed their lawsuit, representatives of the largest insurance companies in Texas, including the big four of Farmers, Allstate, State Farm, and USAA, received a fundraising letter from Bill Hammond, president of the Texas Association of Business (TAB). The business group was stockpiling money for an ad campaign that would deliver four million mailers to aid a slate of 22 Republican candidates. The mailing campaign was part of a highly coordinated effort, fronted by then-Congressman Tom DeLay, to capture the Texas House for the GOP and elect Midland’s Tom Craddick speaker. The highly partisan Craddick was a controversial choice. His backers knew they would need a supermajority to install him. To elect that many Republicans would require a lot of campaign money. For that, they turned, in part, to the insurance industry.

Hammond’s letter made clear why big insurers should support the Republican slate: “While this program is costly, there is no doubt that this is a real opportunity to make a difference in the political climate in Austin.”

The industry responded. Insurance interests accounted for $237,000 of the $1.7 million worth of mailers attacking Democrats that TAB sent out in the months before the election, as reported by the Austin American-Statesman. (Spending corporate money on campaigns is illegal in Texas, and TAB and some of its funders would later be indicted for their actions in 2002, as would DeLay.) Farmers ($150,000) also contributed money to DeLay’s Texans for a Republican Majority. On Election Day, nearly all the candidates backed by the DeLay operation won, boosting Craddick into power at the head of a 26-seat Republican majority.

In all, big insurers in Texas spent at least $1.1 million in the 2002 election to support Republican legislators, Perry and Lt. Gov. David Dewhurst. This was highly out of character. Insurance interests have rarely played such a large role in Texas campaigns. But in 2002, the industry badly needed friendly politicians in power.

Home insurance rates in Texas had begun to rise sharply in 1999. The excuse was partly a rash of mold claims filed across the state. But the industry had also lost a bundle in the stock market when the tech bubble collapsed. Consumer advocates had seen this before: when insurance companies lose big in the stock market, they invariably try to cover the investment losses by raising rates on consumers. And in Texas at the time, the industry could gorge itself on rate hikes because of a quirk in state law known as the Lloyd’s loophole.

This gets complicated—as is often the case with insurance policy—but essentially state law at the time left a certain type of insurance policy, known as Lloyd’s policies, unregulated. These were policies originally meant for homes that had unpredictable risk, perhaps because of their high value or because of where they were located. Once the secret got out, though, nearly every insurer in Texas began shifting as many homes as possible into Lloyd’s policies to escape the reach of state regulators. By 2002, about 95 percent of home insurance policies in the state were unregulated. And like teenagers who had suddenly escaped their parent’s supervision, insurers hiked rates—in some cases doubling premiums.

With the insurance market in crisis, some level of reform was inevitable. The market would have to be re-regulated and the Lloyd’s loophole closed. The political environment demanded it. The open question was just how stringent the new regulatory structure would be. Many Democrats were touting forced rate rollbacks. They also wanted a reform package that would empower the Texas Department of Insurance to approve rates before companies could put them into effect. This approach is known as “prior approval.” For the industry, it sounded as pleasant as dental surgery.

Big insurers much preferred the plan that Perry put forth: “File-and-use.” Under this system, insurers can raise rates without approval and simply have to notify regulators of their premium increases. Proponents say file-and-use allows the market to set the rates and improves competition, which, they say, leads to lower premiums.

Not long after Election Day, it became clear that insurers would have big sway during the upcoming legislative session. In November, after Craddick claimed the speakership, he appointed a transition team, three men who would serve as gatekeepers to the speaker’s office throughout 2003. Two of those men were political consultant Bill Miller, a Craddick confidant who was a spokesman for Farmers at the time, and Bill Messer, a lobbyist for State Farm.

The insurance industry has always exerted influence at the Texas Capitol, but the past five years, beginning in 2003, have perhaps been the zenith. The handful of consumer advocates who lobbied for stricter regulation during the 2003 session recall being run over. The insurance industry had several hundred lobbyists working on its behalf, an army of influence peddlers who had little trouble winning over free-market Republicans, many of whom had been elected for the first time thanks in part to insurance money.

The GOP leadership stacked the insurance committees in the House and Senate with industry-friendly Republicans. Stringent reforms proposed by some Democrats went nowhere. Instead, the main reform legislation—known as Senate Bill 14—sailed through. The bill re-regulated the market by closing the Lloyd’s loophole but also instituted the more lenient file-and-use approach favored by Perry and the Republican leadership (not to mention the industry).

When SB 14 landed in a conference committee to reconcile it with the House version, the industry’s reps got their way even more. Several consumer protections were stripped out. (Consumer advocates say the conference committee was stacked against them. Then-Rep. Joe Nixon, a Houston Republican, was included on the committee, though he had worked little on home insurance during the session. It later came out that Nixon was negotiating with Farmers on a mold claim on his own house at the same time he served on the conference committee that was designing a regulatory framework for the company.)

“The way I think of file-and-use, you’re really playing catch-up with the insurance companies,” says Ware Wendell, an Austin lawyer who represents consumers in insurance cases and worked on insurance issues for Rep. Steve Wolens, a Dallas Democrat, during the 2003 session. Under SB 14, if the Insurance Department concludes that a company has been overcharging, it can take that company to court to win rebates for customers. The idea, says House Insurance Committee Chairman John Smithee, the Amarillo Republican who sponsored SB 14, was “to make the first line of defense the competitive market, but when that didn’t work, to have a safety valve where you’d have some adult supervision where the commissioner could step in and regulate.”

The problem is that even when regulators have challenged insurers, they have found it difficult to force companies to surrender their profits.

Since 2003, a few companies have reached settlements with the Insurance Department after regulators took them to court. Allstate, for example, settled a case in May for $51 million for overcharges in the past four years. More than 700,000 consumers will split rebates worth $37 million. That’s a whopping average of $53 each—not much, considering that the average annual premium in Texas tops $1,200. Allstate also agreed to lower rates by 3 percent. (In 2007 alone, Allstate raised rates 6 percent.) Meanwhile, Perry and Cornyn’s lawsuit against Farmers was quickly settled in 2003 for $117 million. About $82 million of that amount would be paid back to consumers.

The largest home insurer in Texas, State Farm, has never been forced to lower rates. The company and its team of lawyers have battled the Insurance Department in court for four years now. In the latest ruling this fall, State Farm won an appellate decision that sent the case back to square one. It remains in doubt whether the company, which handles 30 percent of the state’s market, will ever reduce its rates or be forced to pay back overcharges.

“If they spend a million, two million in legal fees along the way but they save 100 million in overcharges, that’s a winning economic proposition,” Wendell says.

The details of insurance policy are nearly incomprehensible to anyone but the most committed. But the end results are easy enough to judge. Did the rates drop by the 12 to 18 percent the industry promised during the debate on SB 14? No.

SB 14 did have some positive effects. More companies began writing home insurance policies in Texas, though they make up such a small percentage of the market that consumer advocates say true competition doesn’t really exist. In 2003 and 2004, many companies did reduce rates a little. The Insurance Department reported that by 2006, 35 of the 37 companies in Texas had cut rates, though some by only a few percent. But two of the biggest insurers, State Farm and Farmers, didn’t lower rates at all, and together they make up about 40 percent of the market. In all, rates dropped about 4 percent by 2006, nowhere close to the reductions promised by the industry. And in the past two years, some homeowners have seen their rates tick back up. In April 2008, State Farm announced an increase of nearly 3 percent. Farmers implemented a 10 percent increase in October.

Looking at the market as a whole, rates have roughly leveled off since 2002, says Alex Winslow, director of the consumer advocacy group Texas Watch. Premiums are just a tad below the 2002 levels that helped fuel the insurance crisis.

But Texas still leads the nation in homeowners insurance rates: The average premium is $1,200 to $1,300. The only state even close to that level is Louisiana, with average premiums of $1,100. The national average is about $800.

While it was touted as “re-regulation,” SB 14 also deregulated insurance policies. Before 2003, insurers offered only a handful of plans. Now companies sell a wide range of complex policies. The industry argued in 2003 that not everyone needed a “Cadillac” plan, and that more options in the market place would fuel competition and drive down prices. But Winslow says that the new insurance policies simply offer less. With rates remaining mostly constant, Texas consumers have continued paying high prices for less coverage.

The policies have become so complicated that most consumers don’t know what’s in their plan. The complexity makes it nearly impossible for average homeowners to comparison-shop. Even the experts have trouble.

“If you ask me what endorsements I have on my policy right now, I couldn’t tell you,” says Wendell, the consumer lawyer. “They send you one piece of paper at a time, saying your policy has been changed to endorsement E-1743, and you’re trying to ask yourself, ‘OK, what does that mean?’ I think choice is great, but you can easily become paralyzed by it.”

The industry loves it. With Texas homeowners receiving less coverage, the insurance industry has paid out less and less money in claims. Even with an occasional spike following Hurricane Rita (and presumably Ike, though the numbers aren’t public yet), Texas insurers were paying out an average of $400 worth of claims per policy in 2007, down from nearly $800 in 2001. Remember that the average premium is more than $1,200. Everything between the $400 paid out in claims and the $1,200 received in premiums is profit—which translates to roughly $800 in profit on average on each homeowners policy in Texas, minus overhead, according to calculations by Texas Watch.

So it’s no surprise that insurers want to maintain the system. Industry groups argue that the file-and-use approach is just beginning to take effect and should be given more time to work.

They also contend that high premiums are needed to cover the costs of major weather disasters in Texas. But other large states suffer weather catastrophes, and homeowners still pay much less for insurance. “Every time I turn on the TV, something apocalyptic is happening in California,” says Wendell. “You have hurricanes brutalizing Florida. And yet their rates are not what we have in Texas.” Floridians pay an average of about $1,000 per premium. In California, it’s $800 to $900. In both states the homes being insured are, on average, far more expensive than those in Texas.

For his part, Smithee, the man who carried SB 14, believes the system has created a more competitive market, but adds that insurers have clearly overcharged consumers in recent years. Smithee has tried to balance industry needs with those of consumers but sometimes finds himself outvoted by industry-friendly members on his committee. He says that Texas’ severe weather does lead to higher rates. “We’re always going to be at or near the highest in the nation,” he says. “Our losses are just so much higher than other states’.” But he concedes that the regulation laid out by SB 14 wasn’t strong enough. “We can’t just turn this whole market loose and say it will work on its own,” he says. “It will probably work most of the time. But in those times when the competition doesn’t work, the consumer is very vulnerable.”

In 2009 when the Legislature once again debates homeowners insurance, consumers will have an all-too-rare chance at genuine reform.

In the two legislative sessions since 2003, Speaker Craddick made sure that few reform bills escaped the House Insurance Committee to come up for votes in the full House.

But next year the dynamic will change for two reasons. The House is more closely divided, meaning Craddick may not be speaker, which may give Smithee more leeway. More important, the Insurance Department is undergoing sunset review, the regular process by which the Legislature examines state agencies. That ensures that an insurance bill will move through the Legislature. Many Democrats and Republicans, having heard from angry homeowners in their districts, are pushing for more stringent regulation. With foreclosures on the rise in Texas, many lawmakers realize that reducing consumers’ insurance bills may allow more folks to keep their homes.

Several lawmakers have indicated they will try to pass a prior-approval system. In September, state Sen. Juan Hinojosa tried to convince the 12 members of the Sunset Committee to recommend a prior-approval system. The measure lost, but by just one vote. The sunset panel’s recommendations will be the starting point when the Legislature convenes in January. Where the debate goes from there is anyone’s guess.

Consumer advocates would like a prior-approval system. They also want the number of available insurance policies reduced and the state’s insurance commissioner to be chosen through election instead of appointment by the governor, a change that has worked well in California.

Smithee is advocating a compromise plan. He wants to strengthen the Insurance Department’s hand but worries about the dangers of too much regulation, which, he says, could drive companies out of the market. Smithee would prefer a hybrid approach in which most companies must obtain prior approval for their rates, but the Insurance Department could shift select insurers (who have proved good actors) into a file-and-use system to spur competition.

Not surprisingly, the industry wants even more deregulation, which Smithee says would be a “big mistake.” The insurance industry’s influence hasn’t diminished. It will once again employ some of the most skilled lobbyists in the Capitol. And much will depend on who wins the House speaker’s race.

As Winslow of Texas Watch points out, this is consumers’ best chance at reform since 2003. Insurers “are always going to have pull,” he says. “But this is as good a [political] environment on this issue as consumers have seen in a long time.”


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Thursday, December 11, 2008

Portland Couple Sue Farmers Insurance Company of Oregon

Portland owners of sliding house first to sue insurance company
by Aimee Green, The Oregonian
Thursday December 11, 2008, 5:33 PM
The owners of a Southwest Portland home that slid down hill, smashing into two others Oct. 8, are suing their insurance company for at least $2 million for failing to pay up.

The suit filed by Kathleen and David Hendrickson, who lived at 6438 S.W. Burlingame Place, contends that Farmers Insurance Company of Oregon won't pay for their losses even though their insurance agent promised that their policy would provide comprehensive protection. The suit states that long before the slide the agent visited and inspected the Hendricksons' property, and told them their policy covered "earth movement." A mistake, however, was made in the written text of the policy, which said it didn't cover earth movement, the suit states.

A city investigation into the slide's cause cited backyard sprinklers and high water use as leading suspects. The suit states that the slide was caused by a "sudden discharge of water" and/or a "shaking of the earth" that happened as a stump on the property was ground up.

The Hendricksons are the first among the affected homeowners to file a lawsuit, said their attorney, Robert Bonaparte.

Two homes, including the Hendricksons', were destroyed. Another was damaged. Two others are considered too dangerous to live in.

Some of the affected homeowners have filed claims against the Hendricksons, Bonaparte said last month. The Hendricksons' insurance company has agreed to defend against those claims, he said.

-- Aimee Green;


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