Farmers Insurance announces settlement of class action lawsuit

Farmers Insurance announced today that it entered into a settlement of a nationwide class action lawsuit,

The settlement includes Farmers Insurance Company, Inc., Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, Farmers Group, Inc., Illinois Farmers Insurance Company, and certain related entities (collectively, “Farmers”).

 The Court preliminarily approved the settlement on June 20, 2011.

Plaintiffs alleged that Farmers failed to pay reasonable expenses for necessary medical services related to automobile accidents under Medical Payments (“Med-pay”) and Personal Injury Protection (“PIP”) coverage in automobile policies based on Farmers’ use of certain claim adjustment systems and procedures.  Farmers denies all of Plaintiffs’ claims in the lawsuit.  However, Farmers agreed to resolve the lawsuit to avoid the burden and expense of continued litigation.

The Settlement Class includes all persons who submitted claims for payment of medical bills related to an automobile accident under Med-pay or PIP coverage if (a) the claim was adjusted from January 1, 2001 to February 9, 2009 based upon a recommended reduction from Zurich Services Corporation (“ZSC”), (b) the claim was paid at less than the amount billed, and (c) total Med-pay or PIP payments were less than the respective limits of coverage.  The Class also includes medical providers who were assigned the right to assert these claims.