State Farm's testimony at an Indiana House of Representatives Insurance Committee Hearing last month on Indiana Representative Lehman's HB1205 seemed a bit out of place. Why did State Farm have a dog in this fight? Was State Farm really at the hearing out of concern for the lawsuit lending consumer? Turns out State Farm failed to mention at Representative Lehman's hearing the 14.5 million reasons that prompted State Farm's testimony. As in the $14.5 million awarded to an Indiana resident who had his business and good name destroyed due to State Farm's bad acts - and who received financial assistance from a legal funding company.
When lobbyist John Zurich stepped to the microphone in a hearing before the Indiana House of Representatives Insurance Committee last month, he said that his client State Farm had a “justice interest” that was being adversely affected by legal funding. Mr. Zurich also said that his client wanted fair recoveries for consumers. Quoth Mr. Zurich, “keep in mind, there is an interest in justice in all of this yes, we want fair recoveries, we want the plaintiff to recover.” The filing of hundreds of complaints against State Farm by Hoosiers for unfair claims practices would suggest otherwise.
But State Farm’s agenda isn’t limited to low-balling consumers on their claims. Joe Radcliff was more than just another dismayed claimant who State Farm sought to manipulate. He actually had the temerity to say that State Farm was stonewalling its policyholders on paying property damage claims. Mr. Radcliff learned firsthand that if you fight State Farm, you better be prepared for some rough treatment.
In April, 2006, central Indiana suffered a large hailstorm that caused millions of dollars in property damage. Homeowners filed almost 50,000 claims against State Farm. State Farm’s peculiar sense of justice led it to reject thousands of its policyholders’ claims even though other insurance companies were paying similar claims. In the wake of the storm, the Indiana Department of Insurance received 425 complaints from State Farm policyholders, and in March 2007, the Department began a market conduct examination to investigate State Farm’s handling of the hailstorm related claims.
Shortly after the storm, Mr. Radcliff formed a company to help homeowners identify and repair storm damage and work with insurance companies to pay for the repairs. Radcliff was retained by a number of State Farm policyholders. Amid an avalanche of bad publicity about State Farm’s claims response, including televised reports about State Farm’s refusal to pay claims related to the storm and the backlash against State Farm from its policyholders, State Farm launched an insurance-fraud investigation into Radcliff and his company. As the furor over its claim practices grew, State Farm became more and more concerned with the public’s perception of its image.
State Farm instigated Mr. Radcliff’s arrest on fourteen felony counts, all of which were later dismissed by prosecutors. Even after those charges were dismissed, State Farm, its sense of justice offended, sued Radcliff and his company for racketeering and insurance fraud, alleging that he had engaged in a fraudulent scheme of intentionally damaging homes to simulate hail and wind damage and submitted false insurance claims. Radcliff countersued alleging that State Farm had defamed him by falsely accusing him of criminal conduct.
In June 2011, after a six-week trial, the jury found in favor of Mr. Radcliff on his defamation claim and awarded him $14.5 million, one of the largest defamation verdicts in United States history. After the verdict, State Farm filed a motion for a new trial and argued that the damage award was excessive. The trial court denied State Farm’s motion. After failing twice in the trial court, State Farm appealed. In April 2013, more than 6 years after his arrest, the Indiana appellate court upheld the jury’s verdict, finding that Mr. Radcliff proved State Farm’s actual malice in defaming him by clear and convincing evidence. If legal funding had not helped Mr. Radcliff relieve financial pressures, he may never have had the wherewithal to clear his name.
Make more sense now why State Farm wants to bannish legal funding?
State Farm, in concert with the U.S. Chamber of Commerce, has now turned its attention to ending legal funding. State Farm, through Mr. Zurich and other hired guns, has been on a national campaign to kill the legal funding industry for everyone - not just for small business owners in Indiana like Mr. Radcliff. This coalition has insinuated, as Mr. Zurich did in Representative Lehman's Indiana House Insurance Committee hearing, that it is somehow unjust to try to level the playing field and give low and moderate income consumers access to the justice that State Farm would otherwise deny them. State Farm policyholders and legislators should beware of State Farm’s sense of justice.