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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Monday, October 26, 2009

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

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

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


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Tuesday, September 15, 2009

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

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

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

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

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

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

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

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


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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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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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Saturday, February 14, 2009

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

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

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

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

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

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

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

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

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

10 Worst Insurance Companies for Consumers

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

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

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

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

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

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

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

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

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

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

To see how consumers can hold the insurance industry accountable and view a full copy of the study, visit

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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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