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A win for policy-holders against big insurance

Insurance companies are not always on your side. They look out for their interests first. That is why it is so important to have an advocate to protect you while dealing with an accident claim. Insurance giant, State Farm, recently settled a lawsuit stating that they illegally shielded their bottom line, affecting millions of policy-holders.

State Farm reached a preliminary settlement in a federal class-action conspiracy lawsuit earlier this month. The lawsuit claimed that the insurance company funneled money into a candidate’s campaign to help him win his seat in the Supreme Court over a decade ago.

Influence in the Supreme Court

State Farm reached the $250 million preliminary settlement before the trial could begin for the federal class-action lawsuit purporting that the company used funds to boost the campaign of Supreme Court Chief Justice Lloyd A. Karmeier in 2004. Why would the insurance company back the candidate with funneled money? Lloyd A. Karmeier was the deciding vote in the reversal of a decision made on a previous lawsuit against State Farm.

A $1.06 billion judgement was decided in 1999 against State Farm in the case of Avery v. State Farm regarding the company’s use of aftermarket vehicle parts for repairs. State Farm used lower quality parts to repair vehicles damaged in automobile accidents. The lawsuit claimed fraud and breach of contract.

State Farm allegedly funneled millions of dollars through donations to the U.S. Chamber of Commerce to send money directly into Karmeier’s campaign in agreement that Karmeier would represent their interests in court. The campaigns for Karmeier and his opponent for the Illinois spot in the Supreme Court was one of the most expensive judicial races in history at that time. In 2005, Karmeier cast the deciding vote to reverse the decision against State Farm, stating that using aftermarket parts was not a breach of contract.

Policy-holders finally get their payout

Plaintiffs sought almost $10 billion in the class-action lawsuit against State Farm but settled for $250 million to avoid the cost and time it would take to go through litigation and appeals. Plaintiffs also agreed to drop Racketeer Influenced and Corrupt Organizations claims, and unjust enrichment claims against the company.

The insurance company denies liability, but 4.7 million members of the class action will receive payouts in the end.

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