$31 Million Settlement After State Farm Kept 1.4 Million Ohio Policyholders in the Dark

In October 1994, the Ohio Supreme Court issued a ruling in Martin v. Midwestern Group Ins. Co. that voided a common policy exclusion insurers had used to limit uninsured-motorist coverage. The decision meant that a large segment of Ohio drivers had the right to better coverage, often at a lower net cost, than the policies they had been sold.

State Farm had a history of sending written notices to policyholders when Ohio law changed in ways that affected their coverage. After the Martin ruling, the company broke from that practice and decided not to put anything in writing. As a result, more than 1.4 million State Farm policyholders in Ohio paid premiums for a lesser form of coverage without ever knowing the court had effectively expanded their rights.

Plaintiff Christine Baughman filed suit on behalf of the class in 1995, alleging that State Farm's silence amounted to a material omission in the sale and renewal of uninsured-motorist coverage. Attorneys David Paris and Kathleen St. John of Nurenberg, Plevin, Heller and McCarthy prosecuted the case through hard-fought class-certification battles, representing a class defined as policyholders who paid premiums during the period from October 5, 1994, through September 2, 1997, the date a legislative amendment superseded the Martin holding.

State Farm contested class certification at every stage, arguing that the named plaintiffs lacked typicality and that individual issues would swamp common questions. The trial court disagreed, certified the class, and the Ohio Supreme Court affirmed that decision in May 2000, issuing its opinion at 88 Ohio St.3d 480. Justice Alice Robie Resnick, writing for the court, found the typicality and predominance requirements satisfied across a class that numbered in the millions.

With class status secured by the Supreme Court, the parties reached a $31 million settlement, which the trial court approved. The fund was distributed to class members who had paid premiums for uninsured-motorist coverage during the three-year window without receiving any notice of their expanded rights under Ohio law.