Fired Insurance Official Wins Suit

For the fourth time in six weeks, a Los Angeles Superior Court jury awarded a multimillion-dollar judgment against Farmers Insurance Group in a case related to the Northridge earthquake.

A jury awarded $12.5 million in punitive damages Tuesday to a former district manager who was fired after speaking out about Farmers’ treatment of victims of the 1994 quake and complaining about the treatment of Farmers agents.

Last week, the same jury awarded the former manager, 59-year-old Phillip Alexander of Calabasas, $5 million in compensatory damages in the case.

Jeff Beyer, vice president of communications for Farmers, denied any wrongdoing by the company and said Alexander was fired because he wasn’t managing the sales force in his Simi Valley territory.

“Phillip Alexander was an independent contractor who, quite frankly, refused to perform his job,” Beyer said. The company, he added, plans to appeal the jury award.

Gary Paul, Alexander’s attorney, said the company had been seeking to terminate his client even before the Northridge earthquake, in part for speaking out about the company’s treatment of agents.

According to Paul, company officials sought negative information about Alexander from subordinates and sent Alexander at least two letters suggesting he resign or take disability leave. He took a stress disability leave in May 1994.

After that, Paul said, the company accused Alexander of abandoning his Simi Valley district--which became grounds for his dismissal.

“They acted intentionally to defraud him and drove him to disability and then used that disability to terminate him,” Paul said. “They were going to do whatever they could to get him out of that job. The jury found . . . it was malicious and oppressive.”

The verdict against Farmers is the third in recent weeks in which a jury has found the insurer acted in bad faith.

In February, another jury awarded $10 million in compensatory and punitive damages to former Farmers adjuster Kermith Sonnier, who was fired after he complained about the company’s handling of claims from the Northridge earthquake.

On March 2, a jury ordered Farmers to pay nearly $4 million in compensatory damages to rebuild an earthquake-damaged condominium project in North Hills. Shortly after, Farmers opted to settle the case for $20 million rather than risk an even greater penalty for punitive damages.

“I don’t think this is a coincidence at all,” Paul said. “I think it’s indicative of the way Farmers deals with both their internal people and their external people, their insured.”

Days after the quake, Alexander attended a staff meeting at which one Farmers executive made light of quake-weary residents sleeping in the streets, according to trial testimony.

Alexander testified that the executive said “it did not matter because [the people] were primarily Mexican and Central American,” not Farmers policyholders, according to a transcript of the case and a letter that was introduced as evidence.

Alexander testified that when he rose to object to the remark, he was told “to sit down and shut up.”

Beyer denied that a Farmers executive had made a derogatory reference to quake victims. He called the jury’s verdict “a very, very bad thing.”

“We’re dumbfounded, shocked, outraged, whatever word you want to use,” Beyer said.

He declined to address specific allegations made by Alexander, citing the expected appeal. The company also plans to appeal the Sonnier case, he said.