Former investigators file fraud lawsuit against Farm Bureau

Farm Bureau Property & Casualty Insurance Co., as well as certain company leaders, have been accused of covering up their fraudulent claim-handling activities in six states, according to a lawsuit lodged by two of its former investigators.

The suit stems from a 2023 Nebraska residential fire claim. According to the suit, a Farm Bureau adjuster allegedly used a credit card to break into a detached garage not associated with the location of the house fire, which was then allegedly covered up by top Farm Bureau officials.

The case is filed in the U.S. District Court for the Southern District of Iowa by James Newton and Brent Meskimen. Newton was hired as a special investigator for FBL Financial Group (FBL)/Farm Bureau Financial Services (FBFS) and subsequently served as team lead, Special Investigations Unit (SIU) manager, SIU internal manager, and investigations director. Meskimen was hired as a special investigator for FBL/FBFS and was later promoted to SIU manager. The suit notes that Newton and Meskimen were police officers before working as insurance investigators.

“Newton and Meskimen were often and continually directed not to make mandatory referrals to the appropriate Departments of Insurance for review and investigation by the appropriate insurance regulators in states where FBL was operating and conducting business, including Kansas, Iowa, Nebraska, Utah, Arizona, and New Mexico, by members of the FBL Management Group,” the suit states.

Certain actions of an informal group, or association of some managers of FBL — defendants Paul Swinton, Ronald Mead, Daniel Pitcher, Anthony Kimmi, Mark Wickham, Karl Olson, and Karen Rieck — in connection with the May 5, 2023, Nebraska fire claim were not only unethical, but also violated the law, according to the suit.

During a teleconference, Assistant General Counsel Olson and Vice President Kimmi considered paying the claim once they had a full understanding of the total exposure, the suit states.

“At the very least, Olson advised they simply would not contest any property discovered in the detached garage,” the suit states. “The next day, Olson allegedly stated during a teleconference that he wanted to make sure only a limited number of people knew about the issue. Olson had also directed that contact with the involved third parties be terminated.”

Kimmi also allegedly said that the adjuster in question had been terminated.

“Assistant General Counsel Olson said that if a bad faith claim would arise, the firing of adjuster P.T. would allow FBL to claim it had taken immediate action in terminating the employee after the issue had made its way to the Office of General Counsel,” the suit states.

“Olson then directed, and Property Casualty Claims Vice President Kimmi agreed, that all documentation as to the illegal entry to the insured’s detached garage, including any and all photographs, should be placed into a separate claim file that Vice President Kimmi would oversee setting up. It was expressed during this teleconference that no one should know about this second claim file being set up other than a very limited number of people — adjusters and most others being excluded.”

Kimmi allegedly said the reason for setting up and retaining this separate second claim file was “in the case of a bad faith claim, FBL would still have access to the information in reference to the garage that was retained… to defend any bad faith claim.”

Olson and Kimmi directed Newton and Meskimen not to document anything about the detached garage or the illegal entry into it.

“Newton and Meskimen communicated to each of these vendors, separately, that they (Newton and Meskimen) strongly disagreed with this directive from Assistant General Counsel Olson and Vice President Kimmi to remove from their reports any reference about the illegal access to the detached garage,” the suit states. “Newton and Meskimen strongly disagreed with Olson and Kimmi’s directive because they believed this would be making false entries into the company’s insurance records and reports relating to this claim.”

Kimmi directed Property Claims Consultant Kevin McCoy to “scrub” the main claim file, which was allegedly done according to the suit. The suit states that McCoy informed SIU of the illegal entry into the garage.

Claims Administrative Director Marina McMains later told Newton and Meskimen that she had never set up a secondary claim file.

“She also told them the reason it took the time it did for her and her team to set up was because she and her team had to bypass internal claims and underwriting systems,” the suit states. “She referred to the second claim (Claim No. A933026P00) as a ‘shell claim.'”

Newton and Meskimen then met with General Counsel Wickham to tell him that they could no longer, in good conscience, be associated with this file, the suit states.

“Newton and Meskimen told Wickham that a ‘shell’ claim and claim file had been set up to place what Kimmi had previously called the ‘poisonous’ information, photographs, and/or documentation from the illegal accessing of the detached garage,” the suit states. “Newton and Meskimen also told Wickham that this second claim file, or ‘shell’ claim file, had been set up using a canceled insurance policy associated with and the personal identification information of another insured out of Minnesota that had absolutely no association with this claim or the parties involved.

“Newton and Meskimen told Wickham they both wanted to be removed from any further correspondence involving this Nebraska fire claim because they believed it was wrong ethically and that it violated state statutes, claims best practices, Farm Bureau core values, doing what’s right, and that it could very well be criminal and could potentially violate privacy rights.”

Wickham allegedly told Newton and Meskimen that they would be allowed to terminate their involvement with the claim and that he would speak with FBL/FBFS leadership “to make sure this never happened again.” The plaintiffs also told Wickham that the directives Kimmi provided to establish the “shell” claim came from Wickham’s own assistant general counsel, Karl Olson.

“FBL Management Group (and each of the individual members of that group) also knew that they had a duty of full disclosure of that illegal and unfair claims settlement practice to the appropriate insurance regulatory authorities… [and] had the obligation to report this known, illegal, and unfair insurance claims settlement practice to the appropriate insurance regulatory authorities so that an appropriate investigation of the illegal and unfair insurance claims settlement practice,” the suit states.

The suit notes that the Nebraska claim wasn’t the first time Newton and Meskimen had become concerned that findings of fraud found by their SIU department investigations were not being reported by FBL’s management group to the appropriate Departments of Insurance for review and investigation.

“Iowa, Nebraska, Kansas, Minnesota, New Mexico, and Utah — states where many of these referrals were not being made — were and are all states requiring mandatory reporting as to findings of fraud,” the suit states. “On at least two occasions, Newton was barred by Swinton from making mandatory agent referrals and/or termination notifications to the appropriate state Departments of Insurance.”

In his 2022 year-end report to Wickham, Newton included two instances in which Swinton refused to allow SIU to make referrals to the appropriate insurance regulatory authorities, the suit states.

According to the suit, Newton stated in the report, “‘I am concerned that incidents of noncompliance and fraud are not being reported to our Internal Unit for investigation. I am also concerned that we are not being allowed to adhere to state statute Mandatory Reporting mandates. Here are two examples… 2022-15 [P.S.] falsified form/information [and] 2022-17 [R.C.] falsified form/information.'”

The suit adds, “When General Counsel Wickham saw Newton’s write-up on agents P.S. and R.C. in the end-of-year report, Wickham was furious at Newton… General Counsel Wickham directed Newton to never put anything in writing like that again.”

The suit alleges violations of:

• • The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §1962(c), by Swinton, Mead, Pitcher, Kimmi, Wickham, Olson, Rieck, and Wickham & Geadelmann, P.L.L.C.
  • RICO 18 U.S.C. §1962(d), specifically, mail/wire fraud, obstruction of justice, fraud, and identity theft by Swinton, Mead, Pitcher, Kimmi, Wickham, Olson, Rieck, and WG
  • Public policy for wrongful termination of Newton and Meskimen

Newton and Meskimen demand judgment against FBL/FBFS and/or FBPCIC “in an amount that will reasonably compensate the plaintiffs for the damages sustained by them individually,” as well as interest and coverage of court costs related to filing and litigating the suit.

Damages to the plaintiffs include lost wages and benefits, emotional distress, and mental anguish.

Images

Featured image credit: Liudmila Chernetska/iStock