One of the largest auto insurance companies has reached a $250 million preliminary settlement in a class-action lawsuit. The lawsuit, filed in federal court, alleges that State Farm violated the Racketeer Influenced and Corrupt Organizations Act (RICO Act). The plaintiffs believe State Farm funneled money through several advocacy groups, which in turn kept donor lists anonymous, in order to elect a certain candidate to the Illinois Supreme Court in 2004.
Almost twenty years ago, State Farm was sued by a class of auto insurance customers for consumer fraud. The original lawsuit claimed that State Farm failed to pay for original parts when customers’ vehicles needed repairs. A trial court found in favor of the plaintiffs in the original lawsuit, but State Farm appealed. In 2001 an appellate court affirmed the approximately one billion dollar judgment against State Farm. Flash forward to 2004 and the plaintiffs in the civil RICO suit allege that the candidate supported by State Farm’s undisclosed donations won his election to the Illinois Supreme Court. Once elected, the judge cast a vote in overturning the one billion dollar verdict against State Farm. The complaint alleges that State Farm spent more than $3 million on the candidate’s election.
State Farm has denied the allegations that it participated in a RICO scheme to elect a candidate to the Illinois Supreme Court or that it engaged in any wrongdoing. The company released a statement that it agreed to settle the litigation to avoid a long litigation and appeals process that could continue for several years. Therefore, even with making the $250 million payment, State Farm is not admitting any guilt.
If you or someone you know has been mistreated by an insurance company, contact an attorney at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner by calling 713-231-9360 or toll free at 1‑800-594-4884.