Oklahoma Attorney General Intervenes in State Farm Insurance Claims Litigation

The Oklahoma Attorney General, Gentner Drummond, has intervened in a high-profile legal case involving State Farm, the state’s largest homeowners insurance provider, accused of underpaying claims related to wind and hail damage. This intervention comes as part of a broader legal campaign led by the law firm Whitten Burrage, which has represented hundreds of policyholders in lawsuits against State Farm for allegedly orchestrating a scheme to significantly reduce claim payouts starting in 2020. The Attorney General’s petition highlights violations of key Oklahoma laws including the Consumer Protection Act, the Racketeer-Influence and Corrupt Organization Act, and the Deceptive Trade Practices Act, alongside allegations of civil conspiracy and unjust enrichment against State Farm. From 2020 through 2023, State Farm reportedly aimed to reduce payments on these specific claims by 50%, successfully garnering hundreds of millions of dollars in savings in Oklahoma alone, according to legal documents. Settlements in cases brought by Whitten Burrage often resulted in substantial payouts, including one notable $3 million settlement, though these agreements kept the details of the alleged scheme confidential. The Attorney General’s intervention seeks to address these systemic issues through a parens patriae action, emphasizing the state’s interest in protecting its insurance market and residents. Drummond’s powers to intervene are grounded in Oklahoma statutes that empower the Attorney General to represent the public interest in legal proceedings affecting consumers and to pursue enforcement actions against fraudulent insurance practices. Importantly, this includes authority under the Consumer Protection Act to investigate and take action against deceptive insurance practices, despite past legal challenges suggesting some potential exemptions for the industry. This case also highlights potential jurisdictional tensions between the Attorney General’s office and the Oklahoma Insurance Commissioner, especially following legislation that appears to grant broad regulatory authority to the Insurance Department. The intervention by the Attorney General seeks remedies including penalties, damages, structural reforms within State Farm, and recovery of profits allegedly gained through fraudulent practices. The case remains closely watched for its potential impact on homeowners insurance regulation, claims handling practices, and market integrity in Oklahoma. It also raises questions about inter-agency cooperation and oversight in state insurance regulation, with the Attorney General’s office reportedly requesting collaboration from the Insurance Commissioner to address rising insurance premiums. This legal action follows a pattern of increasing scrutiny on insurance claims practices amid growing concerns over fairness and transparency in claim settlements. The outcome of the State Farm litigation could set important precedents for regulatory enforcement and consumer protection in the homeowners insurance sector in Oklahoma and potentially beyond.