Farmers Insurance PIP/Med-Pay Benefits Class Action Lawsuit

Farmers Insurance PIP/Med-Pay Benefits Class Action Lawsuit

By Mike Holter

Farmers Insurance Group Inc. was hit with a $5 million class action lawsuit yesterday alleging it stiffs auto policyholders out of full reimbursement for medical expenses.

Texas plaintiff Theodore Morawski alleges in the Farmers Insurance class action lawsuit that the insurer intentionally shortchanges policyholders who have private health insurance by only paying for medical claims their private insurers won’t cover instead of reimbursing policyholders for all their incurred medical costs.

“The Farmers Insurance Group pays only the lesser of the ‘paid’ medical bill — in direct violation of the insurance contract — and is thereby trying to benefit from a prudent insured who has private health coverage,” Morawski says in the class action lawsuit.

Morawski filed the class action lawsuit on behalf of his child, who faced about $2,000 in medical bills after being injured in a 2009 car accident. His private insurance paid for about a third of the cost and Farmers paid the difference, but Morawski claims his Farmers policy entitles him to full payment for all incurred costs, regardless of his private medical insurance.

Morawski claims Farmers is wrongly relying on a 2003 Texas tort reform law to justify its actions. The measure was designed to limit an uninsured person’s potential recovery for medical or healthcare costs from an insurer to the amount actually paid or incurred on their behalf, whichever is lesser. This rule doesn’t apply to insured policyholders, Morawski says, who should be able to recover all incurred costs under their insurance agreements.

State Farm, Allstate, Progressive and other major Texas insurers do not rely on the tort reform law and pay their policyholders for all incurred costs whether or not they have private health insurance, the class action lawsuit says.

The Farmers class action lawsuit is brought on behalf of all Farmers Insurance automobile policyholders in Texas who carried personal injury protection (PIP) benefits and or medical payment (Med-Pay) benefits and who were underpaid for medical expenses.

The Farmers Insurance Auto Policy Class Action Lawsuit case is Morawski et al. v. Farmers Texas County Mutual Insurance Co. et al., Case No. 13-cv-00102, U.S. District Court for the Eastern District of Texas.

Morawski is represented by Ronald S. Vickery of Vickery Law Firm and Eric Findlay and Brian Craft of Findlay Craft LLP.

Updated February 6th, 2013

All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions