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Re: State Farm whistle-blowing agents

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Posted by Lisa Little on January 17, 2001 at 16:58:03:

In Reply to: State Farm whistle-blowing agents posted by on December 13, 1999 at 02:57:02:

They should investigate TN. esp. benton county agency and Eric Staniak in Murfreesboro Tn the big cheese. They are questionable in my opinion.: FORMER STATE FARM AGENTS: STATE FARM TERMINATES WHISTLE-BLOWING AGENTS; DC PRESS

: AUSTIN, Texas, Dec. 9 /PRNewswire/ -- The following was issued today by Larry Wilson, former State
: Farm agent: State Farm Mutual Insurance Co. terminated its contracts with four insurance agents today for
: publicly discussing a company-wide pattern of consumer abuse at America's largest insurance company.
: Additional terminations are expected today.

: These whistle-blower like terminations came on the same day a group of active and former agents
: delivered a letter to insurance commissioners across the country informing them of State Farm's
: violations of state insurance regulations, discriminatory policyholder selection criteria, and attempts to
: fight the release of zip code data commonly used to determine redlining (see letter below).

: A group of active and former State Farm agents earlier presented a letter to the United States Senate
: Commerce Committee discussing State Farm's fraudulent use of medical utilization review companies
: designed to lower payments to victims in auto accidents, fraudulent use of after-market auto parts, history
: of misrepresenting life insurance policies as investment vehicles, overcharging on homeowner's
: insurance and de facto redlining. A press conference took place in Washington DC on October 29, 1999
: where terminated agents Mike Morgan, along with others, made presentations. The letter to the
: Commerce Committee was made public at the press conference, which was signed by the other three
: terminated agents.

: Termination is the standard practice anytime an agent or employee questions deceptive or
: anti-competitive behavior at State Farm," agent spokesman Patrick Woodson said. "The only people who
: have breached any duty are the thugs at State Farm management. It is clear they will stop at nothing to
: quiet any principled agents.

: "Millions of Americans are being abused by State Farm and these agents were trying to make this
: company do the right thing," Woodson said. "These agents have gone to court to stop these practices.
: Now, they have gone public to stop continuing policyholder abuses. State Farm management should be
: held personally accountable for their actions today and for years of disservice they've done State Farm's
: policyholders."

: State Farm cited the agents' participation in the 10/29/99 press conference as the reason for the
: termination proceedings. Agents terminated were: -- Michael Morgan of Dayton, OH. (937) 434-6673; --
: Lee Saghirian of Millersville, MD. (410)266-7920; -- Clifford Lykke of Houston, TX. (281) 444-1520; -- Alan
: Perkins of Tacoma, WA. (253) 537-1444;

: December 9, 1999

: Larry Wilson

: 2402 North Shields Drive

: Austin, TX 78727

: Director Nathaniel S. Shapo

: Illinois Department of Insurance

: 320 West Washington St., 4th Floor

: Springfield, IL 62767-0001

: RE: State Farm Insurance Co. Pattern of Insurance Abuse

: Dear Director Shapo:

: We are writing to call your attention to a national pattern of insurance abuse directed by the management
: of State Farm Insurance Companies towards its sixty million policyholders throughout the United States.

: The signators on this letter are current or former State Farm agents.Beginning in the early 1990's, State
: Farm made a fundamental shift in its management strategy, which has created a company-wide pattern of
: fraud and abuse. For our part, we have filed litigation in California to stop these abusive practices to
: protect both policyholder and agent.

: State Farm knowingly engaged in policies ending coverage, creating de facto discrimination, employing
: fraudulent medical utilization review companies and creating other practices to reduce risk and
: simultaneously enhance profits. These policies violate a number of state insurance regulations and may
: well run afoul of your state's regulations.

: First, we have direct evidence of a corporate practice called "managed growth" or "exposure
: management," which forces State Farm agents to engage in discriminatory declinations unrelated to
: underwriting criteria. These programs force their agents to become discriminatory weapons to control
: profitability in a number of states.

: Second, we can show how State Farm put an insurance to value mechanism in place to extract additional
: premiums from property and casualty policyholders without increasing the commensurate risk to the
: company.

: Third, we have direct knowledge of how State Farm institutes policies directly opposed to the public's
: interest, including the acceptance and declining of policies through "desirability profiles," unfairly declining
: coverage by tying quotas to individual agent profitability, and creating an unrelenting pressure on its agent
: force to sell life insurance.

: Since State Farm's management shift, this company has amassed record profits. In its first seventy years
: of operation (1922-1992) State Farm built an $18 billion surplus. Since 1992, which has included
: Hurricane Andrew in Florida and the Northridge earthquake in California, the surplus has increased to
: more than $60 billion. In the last seven years of operation, company coffers have more than tripled, while
: many consumers have seen eroding coverage and/or higher insurance rates. There is no doubt the
: consumer is being unfairly harmed by State Farm's policies.

: Property and casualty policies in California and Florida are good examples of this trend. In those states,
: State run insurance programs assumed much of the risk after Hurricane Andrew in 1992 and the
: Northridge earthquake in 1994. Despite the fact that company officials had access to an $18 billion
: surplus which California and Florida policyholders helped create, State Farm threatened to quit writing
: new property and casualty policies in those states until government-sponsored entities like the California
: Earthquake authority (CEA) and the Florida Residential Property Casualty Joint Underwriting Association
: (JUA) were set up to assume all or most of the market risk. What resulted for consumers who continued
: with State Farm were considerably higher rates and worsened coverage. Even today, State Farm offers no
: earthquake coverage to California property and casualty policyholders. It is another example of how this
: company has built higher profits on the backs of the policyholders.

: The visible symptoms of the company's practices are just beginning to become apparent. Years of abuse
: have put a handful of State Farm's practices under the legal microscope. In courts in 1999, State Farm
: settled or was forced to pay more than $1.5 billion. A jury found State Farm committed fraud in their use of
: after market car-parts and a judge in Oregon wrote that State Farm engaged in a fraudulent scheme to
: limit payments to auto accident victims through its use of phony medical utilization review companies.

: Another alarming trend is the caustic struggle over trade secrets. State Farm is fighting attempts in Texas
: and California to release coverage data by zip code. As you are aware, that data can be mined to
: determine if State Farm actively engages in redlining particular areas.

: The company uses similar "trade secret" arguments in its intimidation attempts to keep its principled
: agents from even speaking to former customers once they have left State Farm. There is an on-going
: case in San Francisco where State Farm is suing two agents the company terminated for disagreeing
: with State Farm policies and tactics. The suit alleges these two individuals are engaging in "unfair
: competition" under the guise of "trade secrets" of the company when in fact the agents are simply
: maintaining a visible presence in the marketplace and offering former policyholders an alternative.

: Ferreting out these problems is difficult because State Farm has instituted a policy of intimidating and
: threatening whistle blowers. Members of our group have been threatened with termination for speaking
: out against the company and highlighting their unethical practices.

: We are writing to you in the hope that you will look deeply at State Farm's practices and make an
: independent verification that policyholders in your state are not being harmed by these abuses. We would
: welcome the opportunity to share our knowledge with you and are available any time to discuss these
: matters.

: You contact any of us through Patrick Woodson at (512) 474-7514 or through our website at

: Sincerely,

: Larry Wilson

: For: Art Appling, Santa Rosa, CA. Paul Quilici, Reno, NV.

: Bill Bernard, Carmichael, CA Lee Saghirian, Millersville, MD

: Dan Brumfield, Fair Oaks, CA Jo Ann Searcy, Oxnard, CA

: Jacob Castroll, Studio City, CA Tana Schultz, California, MD.

: Lyle Chambers, Nampa, ID. Rosanne Smith, Pleasant Grove, UT.

: Bill Cornelison, Fresno, CA Anthony Vito, Tucson, AZ.

: Marilyn Cusimano, San Jose, CA Terry Walker, Sebastopol, CA

: Larry Daveggio, Santa Rosa, CA Verne Walton Agency, San Jose, CA

: Leonard Doctor, Northridge, CA John Wier, Crescent City, CA

: Dennis Farrell, Bermuda Dunes, CA Larry Wilson, Austin, TX

: Jerry Flanders, West Palm Beach, FL.

: Andy Gaines, Omaha, NE.

: Ray Gilmore, Livermore, CA

: Mike Hartman, West Palm Beach, FL.

: Paul Julian, Palm Desert, CA

: Joseph J. Kelly, Joplin, MO.

: Bob Kennedy, Apple Valley, CA

: Chuck Lewis, Littleton,CO.

: Fred Love, Granite Bay, CA

: Clifford Lykke, Houston, TX.

: Michael Morgan, Dayton, OH.

: Alan Perkins, Tacoma, WA

: Doug Perry, Auburn, CA

: Matt Pickett Jr., San Jose, CA

: Dale Pitney Jr., Scottsdale, AZ.

: Richard L. Pyorre, Ft. Bragg, CA

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