Judge Allows California Insurance Collusion Lawsuits Against State Farm and Others to Move Forward

In a ruling issued Thursday, Los Angeles County Superior Court Judge Samantha Jessner largely upheld the lawsuits, which accuse the insurers of violating California antitrust and unfair competition laws. Per Reuters, the judge dismissed two narrower claims included in the complaints but allowed the core allegations to proceed against more than a dozen insurers, including State Farm General, California’s largest home insurer.

The lawsuits claim the insurers benefited financially after policyholders were dropped from traditional homeowners coverage and forced to obtain insurance through California’s FAIR Plan, according to Reuters. Plaintiffs argue that because the insurers financially support the FAIR Plan, they stood to gain when consumers moved into policies that often carry higher premiums and more limited coverage.

“This is very good news for our people, our plaintiffs, because we’re going to be able to go ahead now with our antitrust claims in both cases,” said Bob Ruyak, an attorney representing the homeowners.

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State Farm spokesperson Sevag Sarkissian responded to the ruling, saying it did not “address the accuracy of the allegations” and that the company looks “forward to presenting our case in court.”

One of the lawsuits was brought by Todd and Kimberley Ferrier, whose home in the Pacific Palisades was destroyed in a fire. That case seeks compensation for 60 homeowners who allege their losses were worsened by the FAIR Plan’s coverage limitations, according to Reuters.

The second lawsuit seeks class-action status and aims to recover the higher premiums policyholders say they paid after being moved onto the FAIR Plan.

The litigation has also drawn attention from the U.S. Department of Justice. Earlier this month, the department filed a brief challenging arguments made by the insurers in support of dismissing the cases, per Reuters.

The insurers had argued they were protected from antitrust liability under both California and federal law through a legal doctrine that can shield certain regulated conduct from competition claims. While the Justice Department did not take a position on whether the collusion allegations were valid, it said it files such briefs “where doing so helps protect competition and consumers, including by encouraging the sound development of the antitrust laws.”

Source: Reuters