Erie Insurance Says It Handled Former Judge’s Claim Correctly

January 8, 2008

  • January 8, 2008 at 8:15 am
    Anonymous says:
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    Utah, the company was fine $25 million in punitive damages, in part for the “systematic destruction of documents and systematic manipulation of individual claim files to conceal claim mishandling”. An Idaho appeals court fined the company $9.5 million in punitive damages for making use of “a completely bogus” outside bill review company that helped lower the cost of medical bills. In October of 1999, an Illinois jury rendered a $456 million judgment against State Farm and an additional $730 million in punitive damages for the insurer’s breach of contract with auto policy holders by relying on generic replacement parts. Rust was adamant in his insistence that fraud had not been committed. A class action law suit in the name of State Farm policy holders was filed in 2003 for breach of contract and statutory consumer fraud in which $1.1 billion was awarded to plaintiffs. When a company is misleading the public, should that not be considered fraud? A consumer would go to prison for that type of behavior. State Farm will let you know that, in several states, fraud and abuse is pushing up the cost of auto insurance. A court in late 2001 reached an unfriendly consumer decision that could have the effect of reaching deep into the pockets of the consumer. Sharply higher jury awards in vehicular liability cases are putting additional upward pressure on auto insurance rates. The average jury award in auto liability cases rose from $187,000 to $269,000 in 2000, an increase of 44%. I question if any of the lawsuits would be necessary if the company would just fairly pay their claims. The company represents on their web-site that consumer protection is one of their most important goals, but do they really think that courts would be awarding multiple millions of dollars in bad faith claims if that were their emphasis? State Farm’s ratings are based on their financial strength. State Farm states that their high ratings are also based on strong claims paying ability. With this ability, why is it necessary for their policy holders to allege that the claims department was directed, in evaluating their cases, to take them to trial instead of settling within the limits of the policy? This practice exposed policyholders to judgments above the limits of their policies, when the company was attempting to make an effort to win smaller decisions. Two former in-house attorneys for State Farm contend that they were often called upon by the insurer to represent its’ policy holders and were forced to commit “unlawful and unethical activities, including requiring the two to stay silent about the rights of the policyholders”. State Farm seems to have reckless indifference for the truth for the purpose of corporate and personal economic gain. State Farm should know that continued scrutiny of their claims paying practices will continue especially with the advent of new claims that are surfacing from lawsuits revolving around Hurricane Katrina. A message to Mr. Rust, and any employee of the company that is acting in bad faith for its policy holders. Its time to stop no more.

  • January 8, 2008 at 8:24 am
    Anonymous says:
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    During the 1990s Rust would face a number of legal problems that critics said were an outgrowth of State Farm’s inbred culture and obsession with cost controls. A 1994 earthquake in the Los Angeles area led to lawsuits by homeowners, who charged that the company had secretly reduced their earthquake coverage. The matter was settled in 1997, when State Farm agreed to make $100 million in payments. In 1998 State Farm was “rocked by a string of blistering punitive damage decisions,” as reported by BusinessWeek ). As the article noted, in Utah the company was fined $25 million in punitive damages, in part for the “systematic destruction of documents” and “systematic manipulation of individual claim files to conceal claim mishandling.” An Idaho appeals court then fined the company $9.5 million in punitive damages for making use of “a completely bogus” outside bill-review company that helped lower the cost of medical claims. In October 1999 an Illinois jury rendered a $456 million judgment against State Farm. That amount was then stiffened by an additional $730 million in punitive and other damages awarded by the judge for the insurer’s breach of contract with auto policyholders by relying on generic replacement parts. Although the case revealed a number of damning internal documents, Rust was adamant in his insistence that State Farm had not committed fraud. A trained lawyer, Rust made his opinion of the current state of the court system a matter of public record. In 1995 he spoke before the Appellate Lawyers Association, outlining his belief that the civil justice system had undergone a fundamental shift in the years following World War II: “It has gone from a fault-based to a pseudo-compensation-based system” (Vital Speeches of the Day, September 15, 2003). In his opinion, this change was in many ways a reflection of people’s decreased willingness to accept responsibility for their actions. Moreover, lawsuits were becoming viewed “a bit like a lottery,” with a large number of people looking to turn misfortune into a jackpot. At a lower level, people were more willing than ever to pad insurance claims, but even this activity, he said, was fraud. It was not the insurance company that would foot the bill, of course; the policyholder would pay because in the end, it was the policyholder’s money that was at stake. In the corporate culture of State Farm with which Rust so identified, protecting the interests of the policyholder was sacrosanct.>

  • January 8, 2008 at 8:26 am
    Patriot says:
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    What the hell does “again” to this discussion about crooked judges???

  • January 8, 2008 at 8:44 am
    previously tried to disqualify says:
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    Wyatt said State Farm has previously tried to disqualify a federal judge and one of his law clerks from presiding over hurricane litigation.

  • January 8, 2008 at 9:18 am
    BLONDE says:
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    Im curious Ed Rust how do you live with yourself getting how many millions and an 82% increase in salary. WOW No wonder I cant afford anything. All the slim at the top are getting all the money ”

    You be the judge Someone need,s to. When things are so wrong we need federal judges who will stand up for the people. Not The$$$$$$$$$$$$$$$$$$$$$$$$$

  • January 8, 2008 at 9:25 am
    Anonymous says:
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    The 60 million U.S. homeowners who pay more than $50 billion a year in insurance premiums are often disappointed when they discover insurers won’t pay the full cost of rebuilding their damaged or destroyed homes. Property insurers systematically deny and reduce their policyholders’ claims, according to court records in California, Florida, Illinois, Mississippi, New Hampshire and Tennessee. The insurance companies routinely refuse to pay market prices for homes and replacement contents, they use computer programs to cut payouts, they change policy coverage with no clear explanation, they ignore or alter engineering reports, and they sometimes

  • January 8, 2008 at 9:45 am
    Patriot says:
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    Being a long time insurance person, I find the comment about the public being screwed just doesn’t wash. There may be some companies that have that attitude but a little thing like “Bad Faith” can bite a company in the *** big time. And they do not want a bad faith situation.

    If it were not for insurance where do you think this country would be? Unless you killed all attorneys suggest by one of the ancient philosophers no one would venture out in business or buy homes or cars. No more anything, just stagnation.

  • January 8, 2008 at 10:39 am
    wudchuck says:
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    “Federal prosecutors don’t say the insurance companies did anything wrong. They say Joyce submitted false information about the extent of his injuries.”

    um…this was a superior court judge and he filed false claims for more than the actual damages? where does it end?! this is getting ridiculous that the elected or appointed officials are trying to take advantage of the system. yet, in this case its a falsity. why can’t everyone play by the same rules, afterall, is not a judge supposed to be a fair/impartial? um…sounds like we need to recertify all the judges….

  • January 8, 2008 at 1:41 am
    Judges - higher standard? says:
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    Judges should be held to a higher standard than the rest of us. It almost sounds like his attorney is as slimey as he is.

  • January 8, 2008 at 4:15 am
    Patriot says:
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    You are both right. Judges are held to a higer standard and when they violate that standard, oath of office, etc. they should be made to step down at the least, jailed at the best (!) and stripped of their license to steal ( call a law license)and then made to stand in the public square with a sign around his crooked neck stating ” I am a crook”…

    Do you folks think this would deter the element call TRIAL LAWYERS???



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