The Department of Justice is weighing in on a landmark California case, arguing federal law doesn’t shield 16 insurers accused of allegedly conspiring to cancel homeowners’ fire coverage and push customers onto a state-run plan.
“The last thing the fire victims need is the improper use of certain legal doctrines to deprive Angelenos of their day in court,” Deputy Assistant Attorney General Charlie Beller of the Justice Department’s Antitrust Division said in a statement. “The DOJ Antitrust Division is monitoring insurer conduct across the country to ensure that an improper understanding of federal law does not preclude state or federal antitrust claims.”
The Department of Justice filed a statement of interest arguing the Noerr-Pennington doctrine should not apply to the insurers’ alleged group boycott of the homeowner policyholders. AFP via Getty Images
A man watches the flames from the Palisades Fire burning homes on the Pacific Coast Highway amid a powerful windstorm on January 8, 2025 in Los Angeles. Getty ImagesThe DOJ is not taking sides on the merits of the case, but rather filed a statement of interest on Monday in an effort to make sure the judge properly understands the law.
Last year, 60 homeowners filed a lawsuit in the state Superior Court of Los Angeles County alleging the homeowner insurance companies jointly conspired to cancel their fire insurance in the years leading up to the Palisades and Eaton fire, resulting in the residents having to obtain coverage under the California Fair Plan with with much less protective coverage and higher out-of-pocket costs to rebuild their homes.
Todd and Kimberly Ferrier, one of the plaintiffs named in the lawsuit, claimed State Farm notified them on October 1, 2024 it would not renew their policy and terminated their coverage without offering any other replacement property policy, according to the lawsuit.
Despite reaching out to other insurance companies, the couple could not obtain coverage from a different carrier, leaving the Fair Plan as their only option.
Dozens of other homeowners faced the same problem.
A State Farm insurance company sign sits amid the rubble of a building destroyed by the Palisades Fire on Sunset Boulevard in the Pacific Palisades neighborhood of Los Angeles on January 16, 2025. AFP via Getty Images
60 homeowners filed a lawsuit claiming more than a dozen of insurance companies conspired together to drop their fire insurance and force them to obtain coverage under a state-run program. Getty Images
A senior DOJ official told The Post that the hope is the statement of interest will deter insurers from pursuing similar strategies in other states. AFP via Getty ImagesWhile the case of Ferrier v. State Farm Fire and Casualty Company was brought under California state antitrust law, the insurance companies argue the homeowners claims should be dismissed under the Noer-Pennington doctrine — a federal legal principle that shields individuals and companies from antitrust liability when petitioning the government
“What we’re saying is, ‘No, what the plaintiffs say is not that it was illegal to set up FAIR, but that it was illegal for the insurers to work together to exclude them from certain plans under the FAIR plan,’” a senior justice department official told The California Post. “So, in its reasoning, essentially every time the government set up a FAIR like program anything the insurers did would be protected.”
“We want to make sure that this doesn’t get dismissed particularly on a legal issue that we feel strongly about,” the senior justice department official said.
The Ferrier v. State Farm Fire and Casualty Company has been in litigation for a year. Getty ImagesThe statement of interest also noted that while the McCarran-Ferguson Act, which leaves insurance regulation primarily to the states, it doesn’t necessarily protect insurers from federal antitrust claims when they conduct group boycott claims like the type alleged in this case.
Some of the state’s largest insurance companies are named in the lawsuit, including Allstate, Travelers and State Farm — which faces a potential multi-million dollar fine and a suspension of its license after a California Department of insurance investigation found widespread mishandling of LA wildfire claims.
The investigation findings released Monday uncovered 398 violations of state law in 114 of the 220 sample claims reviewed by the state, ranging from unreasonably low payouts to claims not being resolved within required timelines.
State Farm pushed back, denying any claims that the company “engaged in a general practice of mishandling or intentionally underpaying wildfire claims.”
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the insurance giant, which insures over a million in California, said in a statement.
Federal officials hope the statement of interest in the case of Ferrier v. State Farm Fire and Casualty Company will deter insurers from pursuing similar strategies in other states.
“Our hope would be across the board, insurance companies are just thinking about what the legal risk is and then acting responsibly across the country,” the senior DOJ official said.
