In another win for auto insurers, a federal appeals last week struck down a proposed class-action lawsuit over the methods carriers use to value totaled vehicles.
At least five appellate courts in the last few years have said “no” to potentially far-reac
hing class actions filed over actual cash value, noting that each covered vehicle has a unique v
alue and cannot be lumped into one category and one lawsuit, the U.S. 6th Circuit Court of Appeals said in a case that originated in Memphis, Tennessee.
State Farm insured driver Jessica Clippinger attempted to bring the class action on behalf of thousands of other State Farm policyholders. Her lawyers argued
that State Farm’s “typical negotiation” adjustment inappropriately reduces the estimated value of destroyed vehicles.
“Even if Clippinger were correct, though, we agree with the other circuit courts that sh
e cannot pursue this theory on a class-wide basis,” the en banc court wrote in the April 24 opinion. “To determine whether State Farm paid ‘actual cash value’ for the 90,
000 used vehicles in the class, a jury would have to consider unique evidence about each vehicle’s value.”
The appellate judges reversed a ruling from the lower court, the U.S. District Court for Western Tennessee, and remanded the case for further proceedings.
Despite the fact that multiple federal appeals courts have now ruled against class actions on t
he ACV question, lawsuits have continued to churn through lower courts around the country. And insurers have settled some out of court.
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In March, State Farm agreed to pay $15.6 million to settle a class-action suit brought by polic
yholders in Arkansas. In 2024 Progressive agreed to a $48 million settlement with a class of 9
3,000 New York drivers who alleged the carrier had underpaid total-loss claims.
Related: Appeals Court Nixes Pennsylvania Class Action Over ACV
In another, unrelated state case watched by auto insurers, the South Carolina Supreme Court last week found that Progressive Northern Insurance does not have t
o pay the full limits of a policy for a Medicaid-covered passenger.
Alexis Jones was hurt in an accident and received medical care that was billed at almost $28,0
00. She was a Medicaid recipient at the time, and South Carolina’s Medicaid program holds agreements with medical providers to accept reduced payment rates, the court explained.
Medicaid paid the providers $1,324. Progressive, which covered the car Jones was in, paid Jones that amount, per the vehicle owner’s policy.
