State Farm documents go public that allegedly show profits from claim denials

Multiple media outlets are reporting on unsealed State Farm documents and email correspondence related to an Oklahoma home insurance claim lawsuit that plaintiffs’ attorneys say prove the insurer is profiting by denying claims.

The documents were released as part of discovery in a lawsuit filed against State Farm by Neil and Lacy West. The suit alleges bad faith practices by State Farm and seeks civil relief of more than $10,000, according to District Court of Comanche County filings.

“In the very first year, they lowered indemnity payments to insureds $1.4 billion,” said Reggie Whitten, attorney for the Wests, according to Oklahoma News 4. “Each dollar that’s in that $1.4 billion was a human being’s claim.”

Oklahoma News 4 says documents now public show State Farm has denied claims 39% of the time, saving more than $15,000 per denied claim, according to emails sent between executives.

“That is State Farm leadership in 2023 bragging about closing without payment on claims,” said Hannah Whitten, in reference to the aforementioned emails. “So if you’re sitting there with State Farm training and you say, ‘Hey, this is a total roof replacement,’ you’re going to have another State Farm employee come into your office and say, ‘Sorry buddy, you’re approving too many roofs.’ You are incentivized to deny claims.”

The news station also quotes a letter sent by email in 2021 by Tracy B. Haus, a Kentucky State Farm agent, to the company’s then-CEO and CFO, which states: “Reputable companies that for years have loved working with us and now say we are just as bad as Allstate… Calls have increased; almost every roofing claim we have, the customer is unhappy. …we end up paying what we should have in the beginning but end up with a mad customer…”

Hannah Whitten added that the email asked State Farm to fix its wind and hail claim handling practices, according to Oklahoma News 4 video.

News On 6 Tulsa adds that several released exhibits reportedly “contain concerns from State Farm agents about how to explain roof claim decisions to customers.”

The article quotes Reggie Whitten as saying, “I’m sure we don’t have them all, but there’s just a ton of agents that have privately written State Farm basically saying, I know we’re not paying roof claims anymore, but how do I explain this to my client?”

In an Aug. 22 Reel shared on Whitten Burrage’s Facebook page, Reggie Whitten states: “State Farm has had national claim handling standards for as long as I’ve been handling insurance cases. I was a full-time insurance defense attorney for 20 years… Not all companies are that way. But State Farm has national standards, and so we have alleged this scheme is national. Our suit is over our clients, but the scheme was like a giant net, and it has caught tens of thousands of people in it. We have alleged this scheme has netted State Farm billions of dollars.”

A Court Clerk-stamped Aug. 20 order from Judge Grant Sheperd, shared by Merlin Law Group in a blog post, essentially lifts a protective order in discovery for State Farm, which the insurance company argued were confidential because they contained trade secrets.

The Aug. 20 order notes that the protective order, granted in May, “permits a party to designate material ‘confidential’ only ‘after a bona fide determination made in good faith that the material is in fact trade secret or other confidential information as defined…'”

It then quotes the protective order’s definitions of “confidential” and “trade secret,” which differentiate confidential research, development, or commercial information and personal confidential information.

“Paragraph 4 of the Protective Order establishes the procedure for challenging a designation and allocates the burden of proof,” the order states. “It provides that a designation shall not ‘create a presumption the document is, in fact, confidential or a trade secret entitled to protection,’ and that ‘[t]the burden of establishing that a document or testimony contains trade secret or personal confidential information and is entitled to the protection of this Protective Order shall remain on the party making the designation.'”

The order also notes that the court granted plaintiffs’ motion to compel, meaning State Farm was ordered to release documents. However, when State Farm provided more than 800,000 pages, the plaintiffs say it flagged all as confidential. State Farm argues that not all of the pages were designated confidential.

“[T]he parties have failed to resolve the dispute informally,” the order states. “The documents plaintiffs specifically identify as improperly designated concern State Farm’s internal ‘FME’ and ‘wind/hail’ initiatives, tracking of roof replacements and indemnity savings, and managerial-approval requirements for full roof replacements.

“Plaintiffs have raised the issue as to State Farm’s blanket confidentiality designations. Under both Oklahoma law and paragraph 4 of the protective order, the burden now rests on State Farm to justify, on a document or category basis, the confidentiality of the material it has designated. A designation applied uniformly to every page of the production, without regard to content, does not satisfy that burden.”

The judge also ordered State Farm, within 30 days of the order, to review the documents it has produced and only re-designate them, or portions of them, as confidential after “it has determined in good faith” that “confidential” falls within one of the three categories defined in the protective order. The Aug. 20 order states that any documents not re-designated within that period will no longer be subject to the protective order.

The Oklahoman reports that similar actions have been made in a Cleveland County district court in Gary Lyle and Melanie Lyle v. State Farm Fire and Casualty Company and Michael Garey Insurance Agency.

“District Judge Jeff Virgin both partially granted and denied a motion by State Farm and Casualty Company to maintain confidentiality protections on certain discovery materials earlier this month in a more than two-year-old lawsuit against the company,” the article states.

It states that the case was filed in February 2024.

“Non-redacted exhibits include internal emails, instant-message transcripts, data dashboards and executive communications from 2020 to 2021 related to State Farm’s handling of wind and hail damage claims, with information detailed that includes references to an internal initiative called the ‘FME.’

“The petition brings claims for breach of contract and bad faith against State Farm, along with claims of constructive fraud and negligent misrepresentation against Michael Garey Insurance Agency, Inc. …The Lyle case brings documents to light that have relevance in other lawsuits against State Farm in Oklahoma and nationwide. In the Sooner State, where residents pay among the highest homeowners premiums in the U.S., more than 1,000 lawsuits have been filed against State Farm and Allstate by homeowners alleging similar fraud claims.”

Earlier this month, an Oklahoma judge ruled State Farm’s CEO can be questioned under oath about its practices.

Fox 25 reports the judge “shot down State Farm’s motion to keep the CEO from being deposed in a lawsuit currently before the Oklahoma Supreme Court.”

“The litigation dates back to 2025, when Billy and Lacy Hursh of Tulsa sued State Farm after the company denied a claim for hail damage to their home,” the article states. “More than 800 similar cases are now pending. Under a recent order, State Farm must produce all documents by Sept. 3.

“The judge hasn’t decided on whether the company has to make what’s known as the company’s ‘hot’ documents public. Many of the documents show company guidelines, with State Farm arguing they should be protected because they contain trade secrets, while attorneys for the Hursh’s argue the documents should be made public because they believe they support allegations that State Farm has engaged in a pattern of underpaying wind and hail claims.”

Oklahoma Attorney General Gentner Drummond has also filed suit against State Farm, alleging __

InsuranceNewsNet reported in July that Drummond sued State Farm on June 24, “a day after the Oklahoma Supreme Court ruled that the state could not join a bad-faith claim lawsuit previously filed by one of the company’s policyholders.”

“In that case, Broken Arrow residents Billy and Lacy Hursh allege that State Farm denied their claim for serious roof damage after a hailstorm and left them to cover about $22,000 out of pocket,” the article states. “The Whitten Burrage law firm represents about 600 other Oklahoma homeowners with similar claims against State Farm. More than 900 such lawsuits have been filed statewide.”

In a statement to media published in the InsuranceNewsNet article, State Farm denied allegations that it denied payment on legitimate claims.

“State Farm is facing intensified scrutiny in Oklahoma as media reports and lawsuit allegations frame individual claim disputes as evidence of a broader, intentional effort to underpay or deny wind and hail roof claims, an accusation we take seriously and strongly reject,” said State Farm, according to the article. “This coverage is shaping public perception at a time when many homeowners are already stressed by storm damage, rising repair costs, and higher premiums. Oklahoma’s high frequency of wind and hail events, combined with inflation in materials and labor, is a major driver of homeowners insurance cost pressure statewide. Even amid the criticism, State Farm has paid more than $1 billion to Oklahoma customers for wind and hail losses over the past two years and remains committed to serving communities through more than 300 local agents and ongoing work with state regulators.”

The suit is similar to one Drummond filed against Allstate. Drummond alleges Allstate engages in a “‘disaster payment minimization scheme’ designed to reduce claim payments and increase profits,” the InsuranceNewsNet article states.

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