State Farm to settle Arkansas actual cash value lawsuit for $15.6 million
State Farm has agreed to settle an Arkansas class action lawsuit over alleged undervalued actual cash values for nearly $15.6 million.
Rose Chadwick, the lead plaintiff, filed the suit in 2021, alleging that State Farm used Audatex North America valuation reports to systemically thumb the scale against its insureds when calculating ACVs by applying “typical negotiation adjustments.”
The complaint states that the adjustments are “contrary to appraisal standards and methodologies that do not permit arbitrary adjustments not based on observed and verifiable data.”
On March 27, U.S. District Court Judge D.P. Marshall Jr. preliminarily approved the settlement, noting that Chadwick’s case prevailed before a jury.
State Farm has agreed to pay attorney’s fees, litigation costs, and the service award, and to reimburse class counsel for the costs of notice and administration separately, according to the order.
Marshall also notes in the order that the settlement doesn’t constitute an admission, concession, or indication by the parties of the validity of any claims or defenses in the action or of any liability, fault, or wrongdoing of any kind by State Farm.
“State Farm vigorously denies all the claims and allegations raised in this case,” the order states.
A final approval hearing is set for July 15.
In September, CBS News reported that State Farm was facing lawsuits in multiple states alleging the company used software to calculate actual cash values too low.
The newscast focuses on Chadwick’s case, in which the jury found State Farm shortpaid customers after their vehicles were totaled.
Chadwick told CBS she realized the insurance company underpaid her for her 2011 Hyundai after learning about other potential legal action against the company.
Chadwick’s attorneys argued that the “typical negotiation adjustments” were a potential discount from used car dealers, CBS reports. It adds that the “haggling discount” is no longer consistent with how modern-day used cars are priced and sold.
An Arkansas federal jury ruled in favor of 37,000 plaintiffs in June, the CBS newscast says. It determined Chadwick was underpaid by about $600 for a car worth $4,700.
State Farm argued that the software it used was standard for most vehicle insurance companies at the time and that it no longer uses the same program to calculate reimbursement amounts.
A similar North Carolina case continues while a court-ordered vehicle appraisal is conducted.
State Farm asked the court to stay the case pending an appraisal of the plaintiff’s vehicle. U.S. Chief District Judge Catherine C. Eagles ordered the appraisal in February and denied a stay of the case pending the results. She also denied State Farm’s motion to dismiss the case.
The complaint alleges State Farm reduced the retail cost of vehicles comparable to total losses to reduce payouts by 4–9%, according to the suit. It alleges violations of North Carolina’s Unfair and Deceptive Trade Practices Act (UDTPA) and Unfair Claims Settlement Practices Act (UCSPA), as well as breach of contract specific to plaintiff Craig Brewer.
Separate class action suits have also been filed on behalf of policyholders in Alaska, Illinois, Kentucky, Mississippi, Tennessee, and West Virginia. Cases in Kentucky and Mississippi were thrown out in October.
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