Farmers Insurance PIP Claims - Frequently Asked Questions

INFORMATION ABOUT CLAIMS PROCESS

FREQUENTLY ASKED QUESTIONS

(1) What is this claims process about?

(2) What are the possible benefits from the Class Fund?

(3) Who is a Class member, and how can Class Members and Healthcare Providers share in the Class Fund?

(4) How to remain as a Class member and Share in the Class Fund?

(5) How to be excluded from the Class and from sharing in the Class Fund?

(6) Who is a healthcare provider that can participate in the Class Fund?

(7) Who should I contact if I have questions?

(8) When will my claim be paid?

(1) What is this claims process about?

The purpose of this claims process is to determine who is entitled to share in the limited judgment that has been entered by the court in the class action lawsuit entitled Strawn et al. versus Farmers Insurance Company of Oregon, Mid-Century Insurance Company, and Truck Insurance Exchange. The lawsuit was about the defendant insurance companies' failure to pay all reasonable medical expenses from automobile accident injuries submitted for payment under the personal injury protection (or PIP) coverage in their insurance policies.

At trial, the plaintiff class showed that from January 26, 1998 through July 31, 1999, the insurance companies wrongfully refused to pay a portion of healthcare expenses incurred by PIP claimants. That period of time is the "Class Period". On December 5, 2003, the jury found that the insurance companies had breached their contractual obligations under PIP to pay all reasonable medical expenses, had breached their contractual obligations of good faith and fair dealing, and had committed fraud. The jury awarded $1,500,000 in compensatory damages and prejudgment interest, and $8,000,000 in punitive damages. This verdict of $9,500,000 has been entered as part of a limited judgment by the court. The $9,500,000 will form the "Class Fund".

The wrongful reductions in payment were coded with special "Reason Codes" by the insurance companies on a form called an "Explanation of Benefits" ("EOB") which was sent to claimants and to healthcare providers. The EOB showed the amount allowed for payment, the amount of the reduction, and a "Reason Code" for the reduction. This lawsuit concerns only Reason Codes RC 40 and B2.

Persons who had a healthcare bill reduced during the Class Period by the insurance companies for Reason Code 40 or B2 are "Class Members." Only reductions coded RC 40 or B2 are subject to this lawsuit. All other reason codes that appeared on an EOB are not within the scope of this lawsuit.

After this claims process has been completed, the court will enter a general judgment showing the amount of each claim that has been allowed. It is expected that the defendants will appeal the judgment. Of course, payment of claims is subject to the results of the appeal.

(2) What are the possible benefits from the Class Fund?

A preliminary statement of each class member and healthcare provider's claim is shown near the top of page 1 of the Official Statement of Claim.

The compensatory damages portion is based on information obtained from the insurance companies in the lawsuit for the reductions coded as Reason Code 40 or B2 for each Class Member. Prejudgment Interest on those reductions was calculated at 9% per annum from the "Date of Service," which is the date of that the healthcare service was provided, through December 5, 2003.

The Award Estimate at the top of page 1 of the Official Statement of Claim also shows an estimated award of punitive damages. Only Class Members may share in the award for punitive damages. The amount of punitive damages for each Class Member will be determined by the court, which may decide to award more or less than the amount shown in the Award Estimate. Post-judgment interest will be added later.

(3) Who is a Class member, and how can Class Members and Healthcare Providers share in the Class Fund?

Persons who had a healthcare bill reduced during the Period from January 26, 1998 through July 31, 1999 by the insurance companies for Reason Code RC 40 or B2 are "Class Members." These reductions would have been shown on a form called an Explanation of Benefits that was sent by defendants to a claimant whenever a claim was made.

(4) How to remain as a Class member and Share in the Class Fund?

You must have completed and returned an Official Statement of Claim Form in order to preserve your claim and to share in the Class Fund.

The Official Statement of Claim form must be postmarked on or before December 6, 2004.

If you did not return a claim form by December 6, 2004, you will be automatically excluded from the class and from sharing in the Class Fund.

(5) How to be excluded from the Class and from sharing in the Class Fund?

If you do not wish to remain a member of the class and share in the judgment, you should not return a claim form. If you do not return a claim form, you will be automatically excluded from the class and from sharing in the judgment.

(6) Who is a healthcare provider that can participate in the Class Fund?

Healthcare providers who are assignees of a Class Member in the lawsuit are entitled to submit a claim for a share of compensatory damages from the Class Fund. A healthcare provider who has an assignment of benefits from a patient may be an assignee. Under assignments of benefits, many Healthcare Providers submitted charges to the insurance companies for payment for healthcare expenses incurred by one or more Class Members. Information obtained in the lawsuit indicates that those healthcare providers may not have received full payment of their charges due to RC 40 and B2 reductions shown on explanation of benefits. If a healthcare provider did not receive full payment of charges because of such reductions, and if the healthcare provider received and still holds a valid assignment of benefits from the patient, the healthcare provider may be entitled to receive payment directly from the Class Fund, plus interest at 9% per annum.

A preliminary statement of each healthcare provider's claim is shown near the top of page 1 of the Official Statement of Claim form. This preliminary statement is called the "Award Estimate" and summarizes the detailed information on the Award Estimate Sheet.

Members may share in the award for punitive damages. The amount of punitive damages for each Class Member will be determined by the court, which may decide to award more or less than the amount shown in the Award Estimate. Post-judgment interest will be added later. All claims will be subject to review, approval or modification by the court.

(7) Who should I contact if I have questions?

For further information regarding this class action you may call the Claims Administrator TOLL FREE AT 800-245-5097, OR WRITE TO THE CLAIMS ADMINISTRATOR AT THE FOLLOWING ADDRESS:

STRAWN v. FARMERS INSURANCE CO.
CLAIMS ADMINISTRATION
P.O. BOX 3560
PORTLAND, OREGON 97208-3560

Please do not contact the court. Please do not call to ask when your claim will be paid. After completion of the claims process and after all appeals are exhausted by defendants, the court will decide when claims are to be paid.

(8) When will my claim be paid?

After all Claims Forms are submitted, the court will enter a general judgment for the total amount of submitted and approved claims, punitive damages, and prejudgment interest. The general judgment will be the source of payment of submitted claims, and will also include post-judgment interest at 9% as it accrues. It is expected that the defendants will appeal, and we do not know when the appeals process will be completed. The payment of claims is subject to the results of the appeal and can occur only after the appeal process has been completed.