State Farm Settles For $250 Million

If you follow the insurance space, even just a little bit, the odds are good that you have heard about State Farm’s attempt to rig the Illinois justice system 19 years ago. This case has become legendary in the insurance business, not just for what happened, but for the incredible length of time the repercussions have been dragging on. Earlier this month, State Farm finally gave this story an ending by agreeing to a settlement of $250 million. A hefty some to be sure, but likely far less than what a jury would have asked for.

To truly appreciate this tale’s ending, you have to understand exactly what happened 19 years ago. State Farm, then the largest insurer in the United States, was accused of working to recruit a judge that would be friendly to their cause to the Illinois Supreme Court. The company secretly directed large amounts of money through advocacy groups that were known not to disclose the names of their donors to Judge LLoyd Karmeier’s 2004 election campaign. Of course, all of that is technically in direct violation of federal Racketeer Influenced and Corrupt Organizations Act. Which in addition to making it illegal, means that all damages would be tripled as a penalty.

Why was State Farm so interested in getting that particular judge on the bench? Because they were hoping that this state’s supreme court would overturn a $1 billion jury verdict that had been levied against State Farm previously. Obviously, that did not work out.

Customers were seeking up to $8.5 billion in damages against State Farm, which they very well may have gotten had this case gone all the way to trial. It’s a bit surprising as is that this case made it as far as it did. The settlement came after the jury was select and just prior to opening statements being given. Obviously, the State Farm legal team didn’t like what they saw and decided to cut their losses.

Of course, that is not the official State Farm statement. According to the Insurance Journal, State Farm company spokesman Jim Camoriano said that “The settlement ‘is made simply to bring an end to the entire litigation,’ and ‘to avoid protracted litigation and appeals that could continue for several more years,’”.

$250 million dollars may seem like a lot of money, but to a major company like State Farm it is well worth the price to set this entire debacle behind them.


About Katie Rosario

Katie has been in the marketing industry for over 10 years and has a strong passion for writing great content. She has been writing for TGS Insurance for three years and strives to make every piece of content she works on informative and easy to read. In her spare time, she enjoys baking and spending time with her family.

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