Class Action: State Farm’s Claims Investigation Process Discriminates Against Minorities

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A proposed class action filed in Arizona against State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company alleges the insurers’ policy of investigating automobile accident-related personal injury claims discriminates against racial and ethnic minorities.

According to the lawsuit, State Farm attempts to detect fraudulent insurance claims by targeting particular healthcare providers who exhibit so-called “patterns” of treatment that could indicate fraud. In practice, the suit alleges, the defendants disproportionately target healthcare providers in urban areas who cater mostly to minority patients. The lawsuit says that once a healthcare provider is considered “suspect” by the defendants, State Farm implements what it calls a “TIN block” or “TIN diversion,” a procedure by which all claimants who received treatment at a “suspect” provider are subjected to lengthy investigations that unlawfully delay claims payments for months.

State Farm, the suit says, conducts “unnecessary, accusatory, even harassing interviews and litigation” against its insureds that often occur months or even more than a year after the accidents occurred, when claimants may have difficulty recalling certain details that were documented in their claims. The lawsuit additionally notes that many of the accused insureds do not speak English, “adding a further filter and potential confusion” to the investigation. Through this process, the case continues, the defendants seek to “evade the claims and put the targeted doctor out of business.”

While State farm’s investigation process was purportedly developed to detect fraud, the lawsuit argues it’s no more than a ploy to cut costs and prey on minority communities who may be more easily talked out of their rightful insurance benefits.

“State Farm’s investigation goes far beyond the review necessary to decide a claim,” the complaint reads. “Rather, State Farm’s ‘investigation’ is part of an elaborate process in which State Farm uses data-mining operations, ‘special investigation departments,’ and outside law firms to damage, intimidate, or altogether eliminate healthcare providers that State Farm decides are costing it too much money, and to discourage State Farm’s insureds from seeking policy benefits related to their injuries.”