You pay your auto insurance premiums religiously. In return, the company promises to protect you from liability should you get into an accident.
A simple formula to help you sleep at night, right?
Two former in-house attorneys for State Farm, the nation's largest insurance carrier, say it is time people wake up.
Richard K. Spratley and Brett G. Pearce have filed a civil lawsuit in 3rd District Court against State Farm Automobile Insurance company and top Utah executives saying they were required by the company to engage in "wrongful, illegal and unethical conduct."
According to the lawsuit, those insured by State Farm were victimized because company attorneys were required to represent the insurance company to the detriment of those who had paid for insurance coverage.
When they refused, the company retaliated by reducing Spratley and Pearce's pay and bonuses, demoting one attorney, making derogatory and demeaning comments and otherwise creating a hostile work environment that prompted both men to leave State Farm, according to the lawsuit.
"State Farm always looks out for the best interests of our policy holders," responded State Farm spokeswoman Maria Taylor. "We believe we acted appropriately at all times and contend there is no basis for their allegations."
The lawsuit is the latest legal headache for the insurance giant, who in 1996 was ordered by a Utah jury to pay $145 million for "malicious and fraudulent" treatment of one of its customers. State Farm has appealed the judgment and is awaiting a ruling later this year by the Utah Supreme Court.
In that case, called the Campbell case, State Farm employees testified that they altered accident reports indicating who was at fault, that they misled claimants about benefits they were due and exposed their clients to unnecessary trials that exposed them to personal liability above and beyond their policy limits.
The new lawsuit, filed by Salt Lake attorney L. Rich Humpherys who successfully sued State Farm in the Campbell case, makes similar allegations.
"There are correlations and overlaps with the Campbell case, and there's no question there is some relationship and similarities in the evidence," Humpherys said.
According to his latest lawsuit, the two former State Farm attorneys maintain they were required to:
"misrepresent facts and circumstances to other parties in lawsuits and to the judges assigned to cases in litigation."
"remain silent and otherwise breach their legal and ethical duties to disclose facts and other information."
"take actions in violation of their legal and ethical duties as lawyers and officers of the court."
The lawsuit alleges that State Farm reneged on assurances that the company would satisfy its contractual obligations to "pay and/or protect the best interests of its insureds and deal fairly with its insureds."
In other words, the company attorneys were ordered to protect the best financial interests of the company first, even though the company had promised its clients their financial position would have priority in the event of conflicting interests.
The lawsuit contends that decisions on whether or not to settle cases or take them to trial were being made by non-attorneys in the claims department, and that these managers interfered with the attorneys' efforts to represent those who were insured by the company. And that constituted an illegal practice of law.
The managers also instructed the attorneys not to disclose to clients their rights to have claims settled within policy limits and to try more cases in the courts rather than settle out of court, the lawsuit said.
The lawsuit seeks to have a jury determine the amount of damages that should be awarded against State Farm.
Also named as defendants in the case are State Farm managers Michael Arnold and Scott D. Kotter of Utah, and Mike Nixon and Craig Kingman of Colorado.