Jury Slams Farmers Insurance With $17.5 Million Verdict For Fraud
Third Lawsuit in Six Weeks Against Insurer For Bad Faith
March 28th. 2000

Los Angeles - In yet another setback for Farmers Group, Inc., a Superior Court jury today hit the insurer with a $12.5 million punitive damage award for using a campaign of harassment and deceit to force the removal of a company district manager. The plaintiff, Phillip Alexander, who is now disabled as a result of the abuse, was previously awarded $5 million in compensatory damages Friday, March 24th. in the breach of contract, fraud and negligent misrepresentation lawsuit.

This is the third lawsuit in six weeks in Los Angeles to result in substantial damages against Farmers. In the first, Kermith Sonnier, a commercial adjuster fired by the company because he refused to use bad faith practices in adjusting claims, was awarded $9 million. The second lawsuit involved Farmers grossly underestimating the loss on a condominium damaged in the Northridge earthquake. Farmers settled the case for $20 million. Farmers was one of the largest contributors to the campaign to defeat Proposition 30, a measure on California's March ballot that would have discouraged insurance companies from acting in bad faith.

In this most recent case, Farmers executives used lies, open hostility and intimidation to get rid of an outspoken district manager who expressed concerns about the company's unethically practices. "Farmers basically drove this man to illness and disability, and then fraudulently used that as a basis for termination," said Mr. Alexanders attorney, Gary M. Paul of Paul and Janofsky in Santa Monica.

In one egregious example of the harassment at a meeting following the Northridge earthquake someone commented on the large number of people sleeping on the streets. Another employee responded that it did not matter because they were primarily Mexican and Central American - "Not the people Farmers insures." Mr. Alexander, who is half Native American and sensitive to racial issues, started to speak when a supervisor cut him off, ordering him to "shut up and sit down."

Mr. Alexander, who closed his thriving insurance agency after being recruited to serve as a district manager in 1982, accepted the position based on Farmers' promises that district managers held a "job for life" unless they committed any of the "six deadly sins" - extreme instances of wrong doing such as theft and fraud. He was also assured that he would be free to build and manage his district as he saw fit.

As district manager of Farmers Simi region, Mr. Alexander was responsible for recruiting and training agents, and served as an intermediary between Farmers and it's agent force. He quickly rose to the top of his field, building one of the largest, most lucrative and best administered districts in the nation.

When Mr. Alexander voiced his concerns about company practices that adversely affected district managers, agents and customers, Farmers management singled him out as a trouble maker. Soon, he was receiving letters from Farmers executives criticizing his job performance. In person, they treated him with obvious contempt.

After running a successful district for a decade, Mr. Alexander was devastated by Farmers executives' accusations that he was doing a poor job. The stress began to take its toll on his health, and he began to suffer serious anxiety - related illnesses. He told Farmers management about his condition, which only made them badger him more. Eventually Mr. Alexander became totally disabled from the stress. Farmers terminated Mr. Alexander in March 1995.