State Farm Must Pay $4.5M in Interest to Life Insurance Policyholders, Court Orders

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State Farm Life Insurance Overview:

• Who: State Farm has been ordered to pay policyholders $4.5 million in prejudgement interest.
• What: The payment stems from a class action lawsuit alleging that the insurer overcharged policyholders.
• Where: The order comes from the U.S. Court of Appeals for the Eighth Circuit.

State Farm has been ordered to pay $4.5 million in prejudgment interest to policyholders who allege the insurer overcharged them on life insurance policies after the Eighth Circuit ruled in favor of the consumers for the second time.

State Farm has argued that previous rulings have erred in awarding the policyholders the prejudgment interest and appealed a recent ruling by the Eighth Circuit granting the interest, claiming that damages in the case were not liquidated — a prerequisite for the interest payment.

However, the panel rejected that argument, saying State Farm was using “meritless arguments.”

“We are simply unpersuaded by State Farm’s argument that the previous panel opinion left open the question of whether the damages were liquidated,” the panel said.

The court says in the ruling that given that it had previously said the award of prejudgment interest required the presence of liquidated damages, coupled with its statement that Lead Plaintiff Michael Vogt was entitled to prejudgment interest, it “conclusively determined that the damages were liquidated.”

“Indeed, as the district court noted, to conclude that we did not resolve the issue of liquidated damages would contradict our express statement that Vogt is entitled to prejudgment interest,” the court said.

State Farm Collected Cost of Insurance Fees That Were Not Included in Insurance Policies, Plaintiff Says

Vogt represents around 25,000 class members who alleged in a class action lawsuit breach of contract and conversion claims against State Farm in relation to the insurer’s collection of cost of insurance fees from life insurance policyholders.

Vogt alleged that State Farm illegally collected cost of insurance fees based on factors that were not included in insurance policies. Following a jury trial and a $34.3 million verdict in favor of Vogt, State Farm appealed, the ruling explains.

Vogt filed a cross-appeal, arguing that the district court wrongly denied the class an award of prejudgment interest and the Eighth Circuit sided with him. It concluded that Vogt was entitled to prejudgment interest at the rate of 4%, which was contained in the policy.

A representative for State Farm, Gina MorssFischer, told Law360 the insurer was disappointed in the decision and was considering its next options.

Meanwhile, class counsel Bradley Wilders told Law360 that after nearly three years following the jury verdict in this case, “we are eager to make payments to the victims of State Farm’s wrongful conduct.”

State Farm was hit with a separate class action lawsuit in October alleging that it “systematically and uniformly underpaid” claims made by thousands of consumers who suffered the total loss of their vehicle.

The lawsuit was filed in California by lead plaintiff Joan St. Julian, who alleges that State Farm has breached contracts and violated California law by not paying out sales tax to drivers when reimbursing them the “actual cash value” for their total loss claims.

Do you have insurance through State Farm? Let us know your experience in the comments section below!

Vogt is represented by John J. Schirger, Joseph M. Feierabend and Matthew W. Lytle of Miller & Schirger LLC; and Norman Siegel, Patrick J. Stueve, Ethan M. Lange, Lindsay T. Perkins and Bradley Wilders of Stueve Siegel Hanson LLP.

The State Farm Life Insurance Class Action Lawsuit is Michael Vogt v. State Farm Life Insurance Co., Case Nos. 20-3481 and 21-1370, in the U.S. Court of Appeals for the Eighth Circuit.

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