Farmers Insurance has reached a settlement to resolve anationwide class action lawsuit. Although Farmers denies anywrongdoing, the insurer agreed to the terms of the settlement inorder to “avoid ongoing litigation” and the significant time andmonetary resources associated with that path.

In Re Farmers Med-Pay Litigation (CJ-2004-559),plaintiffs charged that Farmers failed to pay—either in wholeor in part—“reasonable” expenses for necessary medical servicesunder the medical payments (Med-pay) and/or personal injuryprotection (PIP) coverage outlined in their automobile policies.This alleged inadequate distribution of benefits wasbased on Farmers' use of certain systems and procedures foradjusting claims for paying medical expenses incurred as aresult of an auto accident.

The District Court of Canadian County, Oklahoma entered a finalorder approving the settlement on Nov. 29.

“We are pleased to have been able to resolve this matter withthe plaintiffs,” a spokesman for Farmers stated.

According to Farmers website, comprising the Settlement Classare those who submitted claims for payment of medical bills relatedto an automobile accident under Med-pay or PIP coverage if (a) theclaim was adjusted from January 1, 2001 to February 9, 2009 basedupon a recommended reduction from Zurich Services Corporation; (b)the claim was paid at less than the amount billed; and (c) totalMed-pay or PIP payments were less than the respective limits ofcoverage. The Class also includes medical providers who wereassigned the right to assert these claims.

Under the terms of the settlement, Class Members who submita valid claim form postmarked no later than December 29 maybe eligible to receive 60 percent of the difference betweenthe amount of the bills submitted to Farmers for Med-pay and/or PIPclaims and the improperly reduced amount paid by Farmers.

Collectively, Farmers is the third largest U.S. insurer of both personallines passenger automobile and homeowners' insurance. Thesettlement includes Farmers Insurance Company, Inc., FarmersInsurance Exchange, Truck Insurance Exchange, Fire InsuranceExchange, Mid-Century Insurance Company, Farmers Group, Inc.,Illinois Farmers Insurance Company, and certain relatedentities.