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May 01, 2000

CONTACT: Doug Heller - 310-392-0522 x309

Unfair Business Practices Lawsuit Filed Against State Farm

In Wake of Quackenbush Scandal, Consumer Seeks Court Remedy For Northridge Quake Behavior
Los Angeles-- Northridge earthquake victim and State Farm policyholder Ronald Gallimore, filed suit last week for violations of California's Unfair Competition Act in Los Angeles Superior Court (Gallimore v. State Farm, case no. BC229003). The suit seeks an injunction against State Farm precluding the company from engaging in such practices as low-balling, excessive depreciations of home value and misrepresenting policy information to insurance consumers. The suit also calls for restitution to be made by State Farm to any policyholders impacted by the company's illegal behavior.

In recent weeks, newspaper reports and state legislative hearings have publicized secret examinations of State Farm, by the California Department of Insurance (DOI), that indicate massive violations of state claims handling laws. According to the report, State Farm and other insurers mistreated tens of thousands of policyholders who made earthquake-related claims after the Northridge quake.

DOI officials recommended that State Farm repay policyholders $114.7 million and pay $2.3 billion in fines, however, Insurance Commissioner Quackenbush allowed the companies instead to make a $2 million contribution to a private foundation created by Quackenbush. The final settlement between State Farm and DOI does not require the company to change its claims handling behavior or repay cheated earthquake victims.

Mr. Gallimore is represented by the Foundation for Taxpayer and Consumer Rights (FTCR) and the firm of Robinson, Calcagnie & Robinson. FTCR is a non-profit, non-partisan organization which has been a lead insurance consumer protection organization in California for 15 years. Robinson, Calcagnie & Robinson is a private law firm.


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