State Farm Contests Oklahoma AG in Racketeering Lawsuit
State Farm is currently contesting the involvement of Oklahoma Attorney General Gentner Drummond in a lawsuit that alleges racketeering within the property insurance industry. In a motion filed on January 20, State Farm argues that the Attorney General’s statutory claims, centered on AI-driven prior authorization delays, lack legal sufficiency under existing regulatory compliance requirements.
Relevance of Regulatory Acts
The motion challenges the applicability of the Oklahoma Consumer Protection Act (OCPA), the Oklahoma Racketeer-Influenced and Corrupt Organizations Act (ORICO), and the Oklahoma Deceptive Trade Practices Act (ODTPA) concerning the allegations. State Farm asserts that insurance-related activities are governed by the state's insurance commissioner, thereby exempting them from the jurisdiction of the OCPA. The company insists that the Attorney General's allegations fall strictly within regulated insurance activities.
Clarifying ORICO Allegations
Regarding ORICO allegations, State Farm demands the Attorney General demonstrate a pattern of racketeering activity, which necessitates proof of specific violations of predicate acts. The motion argues that since OCPA expressly excludes insurance activities, it weakens the ORICO charge. Additionally, State Farm points out that any claimed OCCA (Oklahoma Computer Crimes Act) violations have not been adequately detailed, failing to meet Oklahoma’s legal standards for alleging fraud.
Disputing ODTPA Claim
The challenge to the ODTPA centers on its relevance, as it applies only to conduct intended to harm competitors. State Farm contends that the state does not stand in competition with the company, nullifying the claim. Furthermore, the motion argues that the Attorney General lacks the statutory authority to pursue such claims on behalf of unidentified entities.
Underwriting and Claims Practices in the Spotlight
As part of a different legal proceeding, State Farm faces demands to disclose documents related to its underwriting and claims processes. This discovery process scrutinizes tools such as 360Value by Verisk Analytics and Xactimate, which are utilized in setting property coverage limits and estimating claims. The utilization of these tools has sparked criticism over potential inaccuracies in property valuations, impacting broader risk management practices.
Critics, including Attorney Jeff Marr, claim these tools, specifically tailored by State Farm, potentially lack the necessary data for precise property assessment. Marr asserts that this flawed methodology has contributed to significant financial gains for State Farm, highlighted by their reported record net worth and substantial executive compensations.