Personal Injury Law

Class Action Lawsuit Filed to Protect San Diegans

By Ross Jurewitz

Earlier today, a class action lawsuit was filed in United States District Court in Los Angeles, alleging that State Farm Insurance had unjustly enriched itself by receiving and retaining payments that belonged to its' insureds. According to the complaint, State Farm obtained these payments by violating California law by the "Make Whole Doctrine."

Typically, insurance policies contain provisions which require an insured to reimburse their insurance company for benefits paid by the insurance company if the insured receives money from another source, such as when the insured receives money from a wrongdoer after an accident.

However, the "Make Whole Doctrine" prevents the insurance company from receiving reimbursement from its' insured unless the insured has already been made whole by the other source. In other words, if the other source fails to pay 100% of the insured's damages, the insurance company cannot claim a right to reimbursement.

The claims for reimbursement are very common. The named class representative in this lawsuit had $63.49 wrongfully withheld by State Farm. State Farm processes more than 12 million claims per year. Even if State Farm wrongfully exercised a right of reimbursement in 10% of those case, that would be 1.2 million cases. Multiply that by $63.49 per case and the unjust enrichment obtained by State Farm would be close to $75 million.

And that's the amount that State Farm would have wrongfully profited by in one year alone.

Full post as published by San Diego Injury Lawyer Blog on May 15, 2008 (boomark / email).