The 8th US Court of Appeals has ruled that State Farm Life Insurance must repay policyholders in Missouri over $34 million, for charging them undisclosed fees.
A 25,000-member class action lawsuit was filed against State Farm in 2016 – the plaintiffs were individuals who had obtained life insurance from the company between 1994 and 2004. The suit alleged that while State Farm’s whole life insurance policies’ premiums were said to be based on customers’ age, sex, and applicable rate class, the insurer was also using other “non-mortality factors” to determine pricing – such as taxes, profit assumptions, investment earnings, and capital & reserve requirements – which added hidden fees to the total cost of insurance.
A 2018 jury verdict and pretrial rulings by a Missouri federal judge ruled against State Farm in the case. The insurer later appealed to the 8th US Court of Appeals to overturn the ruling.
But last week, the federal court ruled that the insurer’s policy language was ambiguous, adding that Missouri law requires ambiguous statements to be construed in favor of customers. The court also rejected State Farm’s argument that the case’s class certification was inappropriate because the class included members who did not suffer damages, Bloomberg Law reported.
Kansas City Business Journal said that State Farm could still appeal to the overall 8th Circuit and ask for the US Supreme Court to review the case, but the company has yet to reveal its intentions.
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