Farmers Settles Class-Action Lawsuit over Medical Payments

An Oklahoma court has approved a settlement in a nationwide class action lawsuit filed by Farmers Insurance auto policyholders who claim the company shortchanged them on claims for medical expenses filed in the wake of auto crashes.

Under the terms of the settlement, approved earlier this week by the District Court of Canadian County, the insurer has agreed to pay four named plaintiffs $7,500 each for representing the class and to cover $6.5 million in attorney fees and other costs, but does not admit any wrongdoing.

The plaintiffs had alleged that Farmers improperly failed to pay reasonable medical expenses because of the company’s use of “certain systems and procedures” for claims adjustment in payment of medical benefits.

“We are pleased to have been able to resolve this matter with plaintiffs,” Jerry Davies, a Farmers spokesman in Los Angeles, said in an email Friday. Davies would not comment further, but court documents say the company agreed to the settlement in order to avoid the cost of a trial and possibly an appeal.

The class action includes auto accident victims nationwide who:

–were injured in an automobile accident and submitted a claim to Farmers for payment under the medical payments or personal injury protection (PIP) portion of their policies

–had their claims adjusted from Jan. 1, 2001, through Feb. 9, 2009, based on a recommended reduction from Zurich Services Corporation, the parent company of Farmers

–were paid by Farmers or had their medical providers paid an amount less than their submitted medical expenses or less than the limits stated in their policy

There is still time for consumers to take part in the settlement if they believe they were underpaid by the company on claims filed under their Oklahoma auto insurance policies or policies issued in other states.

Eligible members of the class represented in the lawsuit who file valid claims by Dec. 29 may receive 60 percent of the difference between the amount of the medical bills they submitted to Farmers and the amount the company paid.

Under the terms of the settlement, class members give up the right to sue Farmers over the same matter in the future.

Individuals who have filed separate lawsuits against the insurer that are still pending are excluded from the settlement and not eligible for payment, but retain the right to sue.

For more information on the settlement, go to the Farmers Med-Pay Litigation website.

To read the experiences of current and former Farmers policyholders, readers can find user-submitted Farmers auto insurance reviews online.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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