Oklahoma Watch: Attorney general intervenes in State Farm lawsuit

Attorney General Gentner Drummond has employed a rare statutory maneuver to intervene in Hursh v. State Farm, the most public-facing of around 200 individual State Farm cases brought by an Oklahoma City law firm.

That firm, Whitten Burrage, has waged a years-long campaign against State Farm over an alleged scheme to cheat policyholders on claims of roof damage resulting from wind and hail. It is now calling for the release of critical documents the firm said in a petition that "State Farm does NOT want the Oklahoma or national public to see."

A common theme in the firm's presentations and in dozens of petitions across the state is that what is at stake is not any one particular roof, but the common good as it relates to Oklahoma's largest writer of homeowners insurance.

The petition filed Dec. 4 by the Attorney General's Office states the action is being brought "not to vindicate individualized private claims, but to restrain an ongoing fraudulent scheme ... ."

"The petition accuses State Farm of violating the Oklahoma Consumer Protection Act, the Oklahoma Racketeer-Influence and Corrupt Organization Act, and the Oklahoma Deceptive Trade Practices Act," according to a news release issued alongside the petition. "It also accuses State Farm of Civil Conspiracy and Unjust Enrichment."In 2020, State Farm arbitrarily set a goal of reducing payments on wind and hail claims by 50%, Whitten Burrage petitions said. Wildly successful, the wind-hail initiative earned State Farm hundreds of millions in Oklahoma and billions beyond, the firm's attorneys said in court. From 2020 to 2023, dozens of policyholders filed suit when claims were denied. Whitten Burrage represented 125 cases that settled for sometimes shocking amounts, well beyond the value of the homes at issue.Even as it controlled 30% of the homeowners market in Oklahoma — making it a potential oligopoly — State Farm paid secret settlements on every one of the 125 cases that kept the nature of the alleged scheme secret. Just one of the cases settled for $3 million.Then it kept happening. Drummond's intervention in Hursh v. State Farm is one of as many as 60 additional cases taken on by Whitten Burrage.The petition to intervene characterizes State Farm's actions as racketeering as defined under Title 12 of Oklahoma law."The Attorney General identifies the harm to numerous Oklahoma policyholders as proof of 'the pattern of racketeering activity' required by ORICO," the petition reads. "Their experiences demonstrate the scope and magnitude of State Farm's enterprise-wide scheme."Drummond's power to intervene is vested in Section 18b of Title 74, which calls on the attorney general to prosecute and defend all proceedings in which the state is interested as a party.Specific to insurance, the statute requires the attorney general to represent insurance consumers in rate-related proceedings before the insurance commissioner and to investigate and prosecute criminal action relating to insurance fraud.The attorney general's State Farm petition echoes the sentiment of the law."The Attorney General has a substantial, legally protectable interest in ensuring that Oklahoma insurance consumers are not subjected to deceptive, unfair, or unlawful insurance practices," the petition reads.The attorney general may also call on a doctrine known as parens patriae, or parent of the country, which provides for the state the ability to intervene when legal proceedings among private citizens or corporations impact the physical health of people or the economic health of a market or the state as a whole."The Attorney General may bring an action in the name of the state, as parens patriae on behalf of natural persons residing in the state … to secure monetary damages for injury sustained … to their business or property," states Section 205 of Title 79.Former Oklahoma Attorney General Mike Hunter invoked parens patriae in a notable 2021 opioid case, which also involved attorneys from Whitten Burrage.The attorney general may also call on powers granted to his office by the Oklahoma Consumer Protection Act, passed in 1972.Described in Title 15, the law was part of a broad effort to safeguard consumers against bait-and-switch practices and misrepresentations of price, among other protections. The law granted the attorney general expanded powers to issue subpoenas and investigate on suspicion of wrongdoing, and established the Consumer Protection Unit, which was empowered to do whatever was required under the OCPA.That said, a 2000 Oklahoma Supreme Court ruling suggested that the insurance industry may be exempt from the OCPA. Not tested in a quarter century, the ruling said that the role of regulating the insurance industry already fell on the commissioner of the Oklahoma Insurance Department.A subplot of the attorney general's decision to intervene in the State Farm cases may be fundamental legislative conflicts between the offices of the attorney general and the insurance commissioner.Despite powers invested in the AG in other portions of Oklahoma law, the Insurance Data Security Act, passed in 2024, appears to grant unchecked power to the insurance commissioner on almost anything relating to insurance.The resulting tensions may have come to the surface with the revelation that Drummond may already be investigating current insurance commissioner Glen Mulready for potential wrongdoing in the commissioner's stewardship of homeowners insurance rates.The attorney general's news release noted that the State Farm intervention comes on the heels of his office's confrontation with the insurance commissioner."The intervention follows an Aug. 12 letter to Oklahoma Insurance Commissioner Glen Mulready in which Drummond asked the Insurance Department to collaborate with his office to combat rising homeowners insurance premiums in Oklahoma," the release said.It remains to be seen whether Drummond's intervention in Hursh v. State Farm will provide restitution to Oklahoma insurance consumers or enable document releases that State Farm has already paid handsomely to prevent."Drummond is asking the court to award penalties, damages, structural reforms and the recovery of profits State Farm allegedly obtained through its scheme," the release said.