After a Midwest hailstorm generated more than 50,000 claims, State Farm Fire & Casualty Co. began mysteriously denying claims. In fact, the Indiana Department of Insurance received 425 complaints from policyholders and a class action lawsuit was filed including over 7,000 people whose claims were denied by the company. In response, Contractor Joseph Radcliff advertised his hail repair services specifically to State Farm policyholders whose claims were denied.
State Farm suffered an abundance of negative publicity amidst Radcliff’s actions. Their response was to “attack their accuser” – what this meant for Radcliff was a fraud investigation in which he was criminally accused of insurance fraud, corrupt business influence, criminal mischief, and attempted theft. The fraud investigation claimed that Radcliff was purposefully vandalizing properties in order to make claims for the repair costs. However, the files tendered by State Farm left out exculpatory evidence in Radcliff’s favor. Furthermore, State Farm representatives were accused of encouraging policyholders to file vandalism charges against the contractor in order to help the policyholders’ “claims free” discount. After the charges were filed, Radcliff avoided criminal prosecution by admitting that there was probable cause for his arrest for misdemeanor criminal mischief.
State Farm responded by filing a civil lawsuit against Radcliff and his company for insurance fraud and racketeering. In order to protect his livelihood and reputation, Radcliff filed a defamation countersuit, which was later resolved in his favor to the tune of $14.5 million. State Farm appealed this decision. However, a maintain of evidence clearly and convincingly demonstrated that State Farm's actions were meant to defame Mr. Radcliff, and that Mr. Radcliff’s admission of probable cause for his arrest did not equate to probable cause for the felony counts he was facing.
McNabola, Ted. "David Slays Goliath." Chicago Lawyer 37.12 (2013)
