Liberty Mutual Insurance Company is one of the largest insurance agencies in the United States. The company operates through multiple subsidiary companies to provide insurance policies for its customers to cover homeowners, The Boston-based company started business in 1912 and has grown to become the sixth-largest global property and casualty insurance company. It’s an old and trusted insurance policy provider, but it’s had its share of legal problems. The company has settled dozens of lawsuits and fought allegations of misconduct on numerous occasions in various courtrooms. Here are the ten biggest Liberty Mutual Lawsuits in company history to underscore that notion.
10. Silverman v Liberty Mutual Insurance Company Settlement amount: $850,000
Policyholders alleged that Liberty Mutual Insurance company filed a poxy regarding its conversion to a mutual holding company. They claim that the proxy was misleading as it indicated the conversion would harm the equity interest of policyholders in the mutual. The plaintiffs (Silvermans) and Liberty Mutual Insurance were able to agree before the case went before the court in pretrial litigation that ended with a settlement of more than $850,000 to cover the costs of litigation plus funding for ongoing reform efforts on the part of Liberty Mutual. The company agreed to make significant changes in the way that it operated for a period of up to ten years to eliminate potential conflicts from the conversion.
9. Safeco Insurance Company fined penalty for consumer protection-related offenses Penalty amount: $900,000
Safeco Insurance Company is a subsidiary of Liberty Mutual Insurance. It was accused of insurance violation by using unapproved credit scores in its consideration of homeowners applying for coverage. The company denied some homeowners coverage and failed to follow the rating guidelines approved by Safeco Insurance Company. The allegations made against Safeco Insurance company were investigated by the California Department of Insurance after civil litigation was filed against them. Safeco Insurance Company was fined a penalty of $900,000 for violation of insurance laws and regulations and for violating consumer protection laws. The case was settled on November 15, 2013, with Safeco Insurance Company agreeing to pay the penalty of $900,000.
8. Liberty Mutual Insurance fined for consumer protection offenses Penalty amount: $925,000
Liberty Mutual insurance was accused of making two separate offenses in a lawsuit filed in a California multi-jurisdiction civil case. The company was accused of consumer protection violations and false advertising. Liberty Mutual was investigated by multiple state-level and local agencies from District Attorneys of San Diego, Los Angeles, and Riverside counties for advertising an accident forgiveness program, then making it not available to residents of the state of California. In California, the accident forgiveness clause was illegal under state law. Liberty Insurance was held responsible for advertising a service that it was not allowed to sell in California and it was fined $925 for advertising the illegal services to Californians. The company agreed to pay the penalty of $925,000 in the case that was settled on October 20, 2016.
7. Liberty Mutual accused of taking kickbacks and bribery Penalty amount: $2 million
The Connecticut Attorney General investigated claims that Liberty Mutual Insurance broke anti-competition laws in the state of Connecticut by paying secret commissions to insurance brokers to gain preferential access to clients. The penalty amount was levied at $2 million for offenses that violated anti-competition laws and other laws. When confronted by the state agency, Liberty Mutual agreed to pay the fine to resolve the accusations. The case was resolved on December 30, 2010.
6. Liberty Mutual loses lawsuit over bad faith in payment on a policy but not for bad faith Settlement amount: $4.5 million
Nu Property Casualty 360 reports that a lawsuit was filed against Liberty Mutual in a federal district court in Illinois, alleging that the insurer acted in bad faith. In August 2013, driver Michiah Risby drove a vehicle insured by her mother through Liberty Mutual to a place in Peoria, Illinois, where a party was taking place. A friend of Risby’s obtained the keys to the car without Ms. Risby’s permission to drop off a friend. Miquasha Smith took with keys and the vehicle without permission. Ms. Smith picked up two passengers and had another person in the car. She crashed the car into the curb, hitting two parked cars. A passenger in the vehicle received a severe traumatic brain injury in the crash. The driver of the vehicle got cited by law enforcement on multiple charges. She pleaded guilty to the charges. She was 16 years old at the time. Her story changed several times and her family did not have auto insurance or a vehicle. Mr. Hyland’s mother sued Ms. Smith for negligence. Ms. Smith’s mother submitted copies of the lawsuit to Liberty Mutual. She informed them that she was being sued, by Ms. Hyland. She stated that she had permission to drive the car. The complaint got referred to a Liberty Mutual Attorney for claims investigation. The insured mom, Ms. Perkins, relayed the information that her daughter did not permit the person who took the car. There is a conflict between the statements. Although the court did not find evidence of the insurer acting in bad faith by denying the claim for the $25,000 policy, the court ruled that Liberty Mutual Fire Insurance Company was liable to pay $4.5 million. Liberty Mutual got ordered to pay $4.5M on a $25,000 policy, going beyond the limits of the policy. The company did not act in bad faith. The courts determined the bodily injury portion of the policy would be ordered because the insurer had erroneously failed to defend the rights of Mr. Hyland, who suffered severe bodily injury.
5. Liberty Mutual sued for Overtime regulation violations Penalty: $6.4 million
McLaughlin, et al. v. Liberty Mutual Ins. is the class-action case involving 149 members against Liberty Mutual Insurance company for allegations of employment-related offenses. The 2005 lawsuit claimed that Liberty Mutual failed to pay overtime hours for workers who were eligible to receive the payment. The lawsuit was filed in a federal court in the District of Massachusetts in a private civil case, filed for employees who suffered financial harm as the result of the violations. The litigation was settled on December 21, 2005, with Liberty Mutual ordered by the court to pay a penalty of $6.4 million, part of which compensated workers for the loss of rightful payment, and part for penalties for the wage and hour law violations. The parties were auto damage appraisers employed by Liberty Mutual.
4. Liberty Mutual sued for consumer protection law violations Settlement amount: $14.5 million
The Attorney General’s Office of Massachusetts confirms that Liberty Mutual Insurance company was accused of committing consumer protection-related offenses in the State of Massachusetts, against its policyholders. The civil case investigated by the Attorney General’s Office for the state of Massachusetts found evidence to support the claims against Liberty Mutual Insurance Company, and subsidiaries that overcharged consumers for motorcycle insurance coverage. The company agreed to pay $11.1 million in restitution to refund the overcharges to the consumers affected by the illegal charges. Liberty Mutual was further penalized an additional $3.1 million for violating regulations and laws governing charge calculations for motorcycle insurance. The case was settled on January 14, 2010.
3. Moyle et al v. Liberty Mutual Retirement Benefit Plan et al Settlement amount: $30,000 000
Law 360 reports that Moyle et al filed a lawsuit against Liberty Mutual’s Retirement Benefit Plan division claiming violation of benefit plan administration and ERISA violations. The private litigation was filed in a federal court of the Southern District of California in a civil action. The suit further accuses Liberty Mutual Retirement Benefit Plan administrators of misleading them with inaccurate information about how retirement benefits are calculated for its employees. When the suit went to trial, the court awarded the members of the class-action lawsuit damages and compensation for the inaccuracies of Liberty Mutual’s benefit plan administrators and ordered the company to pay a penalty of $30 million, part of which will compensate the employees for financial harm they suffered as a result of the improper behaviors of their employers. The case was settled on March 2, 2018.
2. Liberty Mutual sued for misclassification of its workers Settlement amount: $65 million
RGRD Law (https://www.rgrdlaw.com/cases-liberty-mutual-litigation.html) confirms that its clients filed a class-action lawsuit against Liberty Mutual Insurance company claiming that claims adjusters in California were misclassified by the company and not paid at the payment rates and compensation benefits they had coming under California law. The lawsuit was filed in a California court which initially ruled that the plaintiffs were exempt from overtime pay under the labor laws of California. the case was appealed and was heard by two judges within the California Court of Appeal system granting the plaintiff’s summary judgment then again moving backward because of the application of an incorrect legal standard. After thirteen years of battles and appeals, the California Court of Appeals granted the plaintiffs relief in the case, deciding that Liberty Mutual was responsible for paying unpaid overtime to the members of the class-action case. The defendants sought to appeal the case to the California Supreme Court, but the court denied its petition to hear the case. The court awarded the plaintiffs a settlement of $65 million from Liberty Mutual in June 2013.
1. Liberty Mutual Insurance was named in the Stonegate lawsuit in the UK Lawsuit amount: $1.059 billion in USD
Liberty Mutual Insurance is one of the Insurance companies listed in the UK’s biggest pub group litigation. The lawsuit is asking for reimbursement for financial damages in the amount of 845K British pounds, which is the equivalent of more than a billion dollars in USD. The plaintiff is the owner of the Slug and Lettuce chain which claims that the pandemic triggered interruption policies that cost the company financially, according to FT. Stonegate is the largest pub group in the United Kingdom and it is embroiled in a bitter dispute between the insurance and hospitality industries. It is backed by TDR Capital and is leading the charge in London’s High Court naming, Liberty Mutual Insurance Europe and Zurich as defendants in the suit. It claims that the companies have not disputed its policies and should have paid out to its policyholders for submitted claims, but Liberty Mutual claims that the claims have been paid according to their limits with special conditions due to business interruption policies over the ongoing covid-19 pandemic. Stonegate contends that businesses such as The Slug and Lettuce, along with Walkabout chains, which are owned by Stonegate have not received their due. If Stonegate wins its pandemic challenging lawsuit, which holds insurers accountable for paying their claims, the damage could be more than a billion dollars. It’s worth noting that many businesses paid additional premiums to protect themselves from pandemics and epidemics and Stonegate contends that insurance companies should be compelled to pay out.
The ten lawsuits discussed in our review of Liberty Mutual Insurance’s legal problems are only a few of the dozens of lawsuits filed against the company. Liberty Mutual has been accused of many other indiscretions and acts that violate either insurance laws or other regulations. Some of the lawsuits settled out of court for hundreds of thousands of dollars or were quietly resolved before they reached the level of a jury trial. Some of the penalties that the company paid taught the leaders and policymakers valuable information about how to conduct business legally. Some cases filed against the company were dismissed for lack of evidence. Liberty Mutual has paid millions to resolve its legal issues, but there is still a case pending that could cost them over a billion if they are found liable for the accusations.