State Farm Immune From Policyholder’s False Advertising and Deceptive Trade Practices Claim

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Servedio v. State Farm Insurance Co.
U.S. Court of Appeals for the Second Circuit.

The plaintiff, Dominick Servedio, commenced a class action against the defendant, State Farm Insurance, raising claims of deceptive trade practices and false advertising, in violation of New York General Business Law §§ 349, 350 and common law fraud. The plaintiff’s § 350 and common law fraud claims were dismissed by the district court in September of 2011 with only the § 349 claim allowed to proceed. The district court subsequently dismissed the § 349 claim as well. In this appeal, the plaintiff seeks a reconsideration of the dismissal of his § 349 claim.

The plaintiff argued that an option in State Farm’s car insurance policies that extended its Personal Injury Protection (PIP) coverage tricked policyholders into believing that the optional PIP coverage, would increase the total dollar amount of coverage and provide reimbursements beyond the standard $50,000 ceiling following an accident, when in reality, it only expanded the definition of “eligible insureds.”

The Second Circuit affirmed the district court’s ruling and rejected the plaintiff’s claims. The court found that the plaintiff’s claim for false advertising under Section 349 of New York General Business Law was barred by the “filed rate doctrine,” which immunized State Farm from claims of overcharging its policyholders once the rate was approved by the New York Department of Insurance. The court noted that “The filed rate doctrine conclusively precludes [the plaintiff] from claiming that the coverage he did receive was worth less than the premium he paid for it.”