Snake Killer

In court, Zilisch listened to former and current State Farm employees describe how the company bullied the "weakest of the herd," inviting disgruntled elderly or female clients to challenge them in court because State Farm assumed it could overpower them. She heard testimony that showed the company had a policy of stringing policyholders along, offering them settlements lower than what they deserved, and rewarding employees who could pay out the lowest claims by finagling auto repair estimates.

In March, the Arizona Supreme Court found in Zilisch's case there was evidence that "State Farm engaged in a deliberate practice of underpaying claims nationwide," that the company set arbitrary claim payment goals for its personnel and rewarded them for reaching those goals so it could have "the most profitable claims service in the industry." The court noted evidence that the company subjected Zilisch to unreasonable delays, made her an "outrageous" settlement offer of $55,000 and treated her in a way "consistent with the way it did business across the country."

The justices said the fact that State Farm ultimately paid Zilisch her $100,000 policy limits is not an absolute defense to the bad-faith claim:

"The carrier has an obligation to immediately conduct an adequate investigation, act reasonably in evaluating the claim, and act promptly in paying a legitimate claim. . . . It should not force an insured to go through needless adversarial hoops to achieve its rights under the policy. It cannot lowball claims or delay claims hoping that the insured will settle for less."

Despite the Supreme Court decision, the case was not resolved. As Zilisch learned at her trial, the company has an arrogant attitude toward such rulings. Verdicts that jurors might deem big enough to issue a wake-up call to State Farm don't even register on the corporate giant's radar screen, evidence showed.

Manuel Mendoza, who was claims counsel for the company's 11-state region that includes Arizona, testified at Zilisch's trial that he wouldn't bother to tell superiors about a jury verdict in a bad-faith case or punitive-damages assessment unless it reached a threshold of $100 million. A lesser judgment did not merit notice.

Mendoza also said State Farm did not change its claims-handling practices as a result of punitive-damage verdicts. Other employees testified that they were not informed of decisions in bad-faith cases, although juries that assess punitive damages are led to believe they are sending a message to State Farm that the company should change its unfair practices.

Cal Thur says because regulation of insurance companies has been "wholly inadequate," the legal system is the best hope for industry reforms. He says juries assessing punitive damages against insurance companies with bad claims practices can help change those practices -- except when the company is State Farm.

"They are so large, nothing has stopped them yet," he says.

Compain-Romero of State Farm says State Farm reevaluates its practices as a result of policyholders' concerns in ongoing efforts to provide the best customer service, with or without jury verdicts. "It doesn't take punitive damages to get our attention," she says.

Jurors in Zilisch's case believed Mendoza. They told attorneys they wanted to give her $100 million so that State Farm would hear about their verdict. But the group feared Zilisch would likely have to wait through years of appeals to see any of that. Jurors agreed on the $1 million amount ($460,000 in compensatory and $540,000 in punitive damages) -- a token amount for the huge company -- hoping the insurer would simply write her a check.

The jurors' hopes were misplaced.

The teenager who crippled Kim Zilisch and killed her fiancé was out of prison and starting a new life after six months.

But 10 years after the crash, after arbitration in her favor, the jury trial in which she prevailed, after the Arizona Court of Appeals and the state Supreme Court rendered decisions on her side, Zilisch still is waiting for State Farm, her own insurance company, to settle up with her.

Attorney Cal Thur confirms a report that some lawyers have a nasty nickname for State Farm: They call it "Snake Farm."

Company officials have steadfastly denied any wrongdoing over the years, claiming the firm's primary goal is to treat its policyholders fairly and pay what is owed. But those who have tangled with the company disagree. The "good neighbor" can be downright vicious, they believe.

Thur claims State Farm's practices are "among the most egregious in the industry." And he says State Farm's behavior has a trickle-down effect. Because it is the biggest by far, other insurance companies tend to mimic its practices to remain competitive, he says.

Ina De Long, a California insurance consultant who worked for State Farm for nearly 25 years before quitting in protest of what she considered deceitful policies, believes her former employer is, indeed, the greatest offender in the business.