Two former top investigators for Farm Bureau Financial are suing the company for fraud, racketeering and wrongful termination.
The lawsuit alleges the insurer’s management group knew of fraudulent activity committed by company employees and refused to report fraud to state regulators. The purpose of the scheme was to pass on the bulk of the financial costs of some fraudulent claims or illegal activities to policyholders and other competitors, the lawsuit alleges.
The lawsuit claims the defendants committed racketeering, obstruction of justice, and mail fraud or wire fraud.
The lawsuit, filed by James Newton and Brent Meskimen on Nov. 15 in Iowa district court, alleges the insurer’s management group was repeatedly was informed of fraudulent acts carried out by Farm Bureau adjustors and agents. Newton worked 13 years at FBFS, rising to director of investigations. Mesikmen managed the special investigations unit for the Farm Bureau’s Property & Casualty Insurance Company.
Farm Bureau Financial is a West Des Moines-based insurer that provides auto, home, life and property insurance.
Newton and Meskimen allege they were terminated separately in November 2023 for saying they would submit reports of fraudulent activity to state regulators even if it went against supervisors’ orders.
Lawsuit: Farm Bureau kept fraudulent activity hidden
Farm Bureau’s special investigations unit revealed fraudulent activities by company employees as far back as 2011, the lawsuit alleges. The complaint claims senior management were informed of SIU investigations into fraudulent activities yet repeatedly kept state regulators in the dark.
The lawsuit alleges multiple instances of employees committing forgery, including one case of a Kansas agent forging at least 900 forms for his clients, allegedly with the clients’ consent, and another 100 forms without clients’ consent. The agent was terminated, but no management refused to refer the incident to the Kansas Department of Insurance Fraud Unit.
In another instance, the special investigation unit found that an Iowa agent allegedly altered coverage for a loss after a client’s 1991 Ford Mustang was destroyed in a fire. The insured of the Ford Mustang was the agent’s father, the lawsuit says.
Newton allegedly stressed to his superior that the incident needed to be referred to Iowa Department of Insurance Fraud Unit. Newton was told the agent wouldn’t be disciplined, and that the claim would be paid out of Farm Bureau’s “slush” fund via an Error and Omissions claim, the lawsuit alleges.
Nebraska fire claim
An investigation into a 2023 Nebraska residential fire claim is “the straw that broke the camel’s back,” the plaintiffs say.
The lawsuit alleges the special investigations unit found that a Farm Bureau adjustor at the scene of the fire inspection unlawfully entered a detached garage not associated with the location of the house fire by using a credit card to pick the lock on the detached garage. The adjustor was later fired.
When Newton and Meskimen brought up the incident to their supervisors, Farm Bureau management created a shell claim to conceal any evidence of the known, illegal, and unfair claims settlement practice from the insured, the lawsuit alleges.
To create the shell claim Farm Bureau management allegedly set up the claim using a canceled insurance policy associated with and the personal identification information of another insured out of Minnesota that had no association with the parties involved in the Nebraska fire claim.
Newton and Meskimen allege they were later told that the special investigations unit had terminated its involvement with the claim.
While Newton and Meskimen had been concerned that findings of fraud found by their special investigations unit department investigations were not being reported by Farm Bureau, the “egregiousness” of the Nebraska fire claim “caused Newton and Meskimen to decide they could no longer look the other way,” the lawsuit alleges.
The named defendants in the lawsuit include Paul Swinton, assistant general counsel for Farm Bureau, Daniel Pitcher, CEO of Farm Bureau and Ronald Mead Jr., chief operating officer for property casualty of FBL Financial Group and Farm Bureau.
Topics
Lawsuits
Fraud
Agribusiness
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