Lindeen To Announce Settlement In $455 Million Class Action Lawsuit

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HELENA, Mont. – Montana Commissioner of Securities and Insurance Monica J. Lindeen will announce final resolution in a class-action lawsuit against Farmers Group, Inc., that spanned nearly a decade and affecting more than 160,000 Montanans. Lindeen will make the announcement at a press event Thursday, September 20, at the quarterly Montana Justice Foundation board meeting in Billings.

More than a year ago, Farmers struck a $455 million settlement agreement with a group of its customers who sued the company in a class action. In that case, Fogel v. Farmers Group, Inc., the customers alleged Farmers charged excessive fees to customers through some of its subsidiary companies from January 1, 2009, through December 31, 2010. Payment of the $455 million settlement was delayed when concerns arose about the cumbersome process Farmers customers had to undergo to claim their share of the settlement.

When the December 2011 deadline to submit claims passed, less than a third of the more than 160,000 eligible Montanans had returned the claim form, leaving approximately $3.4 million of Montanans’ share of the settlement unclaimed. Under the terms of the class action settlement with Farmers, unclaimed settlement funds would be returned to subsidiaries controlled by Farmers.

Lindeen objected to the settlement, arguing that some of the unclaimed settlement funds should return to Montana and other states. Four more states, Oregon, Indiana, Utah, and Iowa, joined Lindeen’s objection.

On September 14, the law firm representing the class members who sued Farmers agreed to pay $2 million of their attorney’s fees to non-profit organizations in the states that objected. Professional code of conduct rules set by the Montana Supreme Court bar the firm from paying its attorney’s fees to any non-attorneys except non-profit organizations, so the $2 million will be divided among legal nonprofits in the five states. Because Lindeen’s office led the efforts, more than $1.2 million will go the Montana Justice Foundation, a charitable, non-profit organization that provides grant funding for legal services organizations.

Legal services organizations throughout the state assist Montanans who can’t afford to hire an attorney. Federal funding for legal services organizations has faced steep cuts in recent years, placing additional stress on the Montana Justice Foundation’s dwindling revenue.

The Foundation is funded in part by interest on lawyers trust accounts. As interest rates bottomed-out nationally, however, revenue from the trust accounts fell sharply. In the last five years, the Foundation’s annual budget fell from close to $1 million in 2007 to just over $160,000 today — a more than 80 percent cut.

All Montanans who filed claims in the original class-action settlement will receive their refund in the coming months. Payments will be made according to the amount of excess fees Farmers customers paid between January 1, 1999, and December 31, 2010. For Montanans, those refunds could range from $20 to more than $400.