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State Farm Auto Insurance Class Action Goes Federal

June 23rd, 2014 Class Actions
Arkansas personal injury lawyer

Nolan Caddell Reynolds‘ own Bill Horton, is representing Christopher Cody Littleton in the U.S. District Court for the Western District of Arkansas against State Farm Mutual Automobile Insurance Company. As reported by Law360, the suit claims State Farm breached its insurance contract with Littleton and other members of the proposed class by imposing improper network reductions on payouts for covered medical services and thereby withholding payments for otherwise valid insurance claims. You can read the full text of the article below.

If you or someone you love was injured in an accident in the last five years and believe you are owed money for medical bills, contact Bill Horton today.

Law360, Los Angeles (January 08, 2014, 10:16 PM ET) — State Farm Mutual Automobile Insurance Co. on Wednesday removed to federal court a proposed class action accusing the company of improperly reducing medical payments to insureds by claiming discounts for networks to which it doesn’t belong, saying the alleged damages exceed the threshold for federal jurisdiction.

State Farm said the U.S. District Court for the Western District of Arkansas has jurisdiction over the suit — which Christopher Cody Littleton originally filed on Dec. 10 in the Circuit Court of Washington County, Arkansas — under the Class Action Fairness Act because the amount in dispute exceeds $5,000, the proposed class comprises 100 or more individuals, and State Farm’s headquarters are located in Illinois.

The suit claims State Farm breached its insurance contract with Littleton and other members of the proposed class by imposing improper network reductions on payouts for covered medical services and thereby withholding payments for otherwise valid insurance claims.

Littleton had an auto insurance contract with State Farm for up to $5,000 in medical bills for injuries suffered in a car accident, according to a complaint. He was injured in an accident in July 2012 and submitted medical bills totaling $4,852 to State Farm for payment under his medpay policy, the complaint said.

State Farm discounted the bills by $1,000, claiming a network adjustment with Littleton’s health care provider, but the provider had no agreement with the company to accept such an adjustment, Littleton alleged. Littleton said he remains liable for the remaining $1,000.

“State Farm is not entitled to a purported ‘network’ discount because State Farm does not maintain provider agreements entitling it to ‘network’ adjustments and has never become a legitimate participant in the provider ‘networks,'” the complaint said.

Littleton accused State Farm of operating a “silent PPO,” an arrangement where an organization uses a discounted rate for services from a health care provider without the provider’s authorization. State Farm’s alleged actions violate Arkansas law, which requires the company to pay an insured’s reasonable medical bills on an accruing basis within 30 days after reception, the complaint said.

“State Farm’s actions are not contemplated by the contract of insurance,” the complaint said. “Moreover, the purported ‘network’ adjustments are improper because medical payment benefits flow to the insured, not the insurer.”

Littleton’s complaint, which seeks compensatory damages and restitution, claims members of the proposed class number in the thousands.

A State Farm representative was not immediately available for comment late Wednesday.

Littleton is represented by Joseph Henry Bates III and Randall K. Pulliam of Carney Bates & Pulliam PLLC and William Gene Horton of Nolan Caddell & Reynolds PA.

State Farm is represented by John E. Moore of Munson Rowlett Moore & Boone PA.

The case is Littleton v. State Farm Automobile Insurance Company, case number 5:14-cv-05007, in the U.S. District Court for the Western District of Arkansas.

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