October 5, 2010
On October 5, 2010, NP gained final approval of a national class action settlement against the State Farm family of insurance companies. In 2004, NP and its co-counsel, brought suit on behalf of a proposed national class against State Farm based on its alleged improper claims handling practices regarding structural loss claims. Specifically, NPR alleged on behalf of the class that State Farm did not consistently pay general contractor’s overhead and profit when three or more construction trades were involved in the estimated structural loss claim. NP alleged it was industry custom to make such payments when three or more trades were estimated to be involved in the repairs and that State Farm ceased making these payments owed to insureds to increase its own profitability.
After six years of difficult litigation led by NP, a proposed settlement was reached. The approved settlement class consists of almost 200,000 members. Based on the approved settlement, class members submitting approved claims will receive reimbursement in the total amount of the alleged underpayment – 20% of the value of the structural loss claim, subject to certain discreet limitations. In addition, NP was able to obtain changes in the way State Farm handled its payment of contractors’ overhead and profit and also require State Farm to make certain disclosures in its claim handling process to raise awareness among policyholders of such payments as policy benefits. The estimated total benefit to the class was approximately $500,000,000. Based on the size of the class benefit and the skill and outstanding leadership NP showed throughout the litigation, the court awarded attorney fees in the amount of $40,000,000.
NP Partners Cary Patterson and Michael Angelovich and associate Chad Ihrig led the litigation for NP.