Posted on March 24, 2022

Where State Farm Sees ‘a Lot of Fraud,’ Black Customers See Discrimination

Emily Flitter, New York Times, March 18, 2022

It took years for Darryl Williams to build up the small real estate portfolio that became Connectors Realty, his business on the South Side of Chicago. In early 2017, when a pipe burst in his prized property — a building containing six apartments — Mr. Williams turned to his insurer, State Farm, to help repair the damage.

Mr. Williams said a State Farm claims adjuster told him that she did not believe his version of events. “We have a lot of fraud in your area,” he said the adjuster had told him. Like the majority of people in his neighborhood, Mr. Williams, 58, is Black.

State Farm eventually paid Mr. Williams a small fraction of his claim. By then, his expenses had snowballed. He sold his buildings to pay his bills.

Insurers have a strong incentive to pay as little as possible in customer claims, since their business consists mainly of inflows of money from policy premiums and outflows from claims payouts, which they call “losses.”

But Mr. Williams felt he was being treated especially poorly because of his race. In 2019, he sued State Farm, accusing it of discrimination. His lawyer asked the judge in the case to certify the lawsuit as a class action after analyzing claims data in Illinois, where State Farm is the largest insurer. The judge said that analysis alone was not enough to justify forming a class.

Then, Carla Campbell-Jackson reached out.

Ms. Campbell-Jackson, a Black woman, had worked for State Farm for 28 years in Illinois and Michigan. In 2016, she was fired on the grounds that she had shared confidential information outside the company — a claim she denied. She said her firing had been the final act in a campaign by State Farm to discredit her after she raised concerns that the insurer was using fraud as a pretext to deny the insurance claims of Black customers.

Last year, the Equal Employment Opportunity Commission agreed with Ms. Campbell-Jackson, saying that State Farm discriminated against her. She has also sued State Farm, accusing it of discrimination and retaliation. After she came across Mr. Williams’s lawsuit, she agreed to testify on his behalf. {snip}


Dozens of employees, customers and agents of color are accusing State Farm of racial discrimination. One pending lawsuit, filed in 2020, describes a pattern of discrimination against seven agents by the company, the nation’s largest property and casualty insurer. Another lawsuit, filed last month by a former Indian American employee, claims racial harassment by co-workers.


For years, Ms. Campbell-Jackson was known to her colleagues as “Miss State Farm,” she said in an interview, because of her enthusiasm for her work. She also volunteered for her local N.A.A.C.P. chapter in Kalamazoo, Mich.

In 2014, while working as a manager for State Farm’s auto insurance claims, she was promoted to a role in the insurer’s special investigations unit, known internally as the S.I.U., where claims were sent for closer review after adjusters flagged them for fraud.

Soon after her arrival in the unit, Ms. Campbell-Jackson began to hear the term “fill the cups,” according to her testimony for Mr. Williams’s case. Executives wanted special investigations unit employees to meet with claims adjusters and encourage them to flag more claims for further investigation — with the end goal of denying as many claims as possible. They called the practice “shaking hands and kissing babies” — as if the unit’s employees were politicians courting potential voters.

One way to “fill the cups,” investigators were reminded at weekly meetings, was to focus on claims from “inner city” neighborhoods that were at “high risk for fraud,” making them easier to deny, Ms. Campbell-Jackson said in her testimony. A list of such neighborhoods was often circulated. Once, Ms. Campbell-Jackson suggested that there might not be fraud in a particular neighborhood on the list. She said her boss had replied: “Oh, yes, there is fraud in those areas.”

In 2016, unit leaders announced that the unit had denied almost $136 million in claims the previous year, which they attributed to the success of the program.

“‘Fill the cups’ was simply a means of denying payment of millions of dollars to African American and other minority policyholders,” Ms. Campbell-Jackson said.

On Saturday, State Farm submitted sworn testimony in the case from a former manager on the investigations unit’s analytics team who claimed that the goal of the program — which he called “fill the cup” — was “not to increase the number of claims sent to S.I.U. by encouraging frontline claim representatives to submit claims.” Rather, it was focused on changing the way claims that had already been flagged for fraud were allocated within the unit.

State Farm also said in its filing that Ms. Campbell-Jackson had “a personal ax to grind” against the company.


There were other complaints. In 2020, Black agents for State Farm said in an unrelated lawsuit that they were being pushed into working only in Black neighborhoods, then unfairly accused of technical violations in writing their policies. The lawsuit described “a racially biased corporate culture replete with harmful stereotypes about its African American employees and customers.”