McGraw sued Nationwide on last business day as AG

BLUEFIELD – Another lawsuit filed by former state Attorney General Darrell McGraw during his time as a lame duck has been removed to federal court.

On Feb. 14, Nationwide Affinity Insurance Company removed the lawsuit filed by McGraw on Jan. 11 in McDowell County Circuit Court. The suit was filed on the Friday before Patrick Morrisey, who defeated McGraw in November’s general election, was sworn in on Monday Jan. 14.

McGraw, a Democrat who served as AG for 20 years and was considered one of the most active state AGs in the area of consumer protection, had also filed a lawsuit against pharmaceutical companies Pfizer and Ranbaxy on Jan. 2 in Mason County.

The Nationwide lawsuit concerns the company’s discount to members of the West Virginia Farm Bureau, an entity McGraw says is affiliated with the American Farm Bureau Federation.

“While the American Farm Bureau attempts to maintain an image of fighting for the small farmer, its affiliates invest tens of millions of dollars into corporate aggregate business,” the complaint says.

“Nationwide maintains a close relationship with the various farm bureau non-profits. The West Virginia Farm Bureau runs a political action committee whose interests are not always consistent with the interests of the West Virginia farmer, or Nationwide policyholders and membership in the West Virginia Farm Bureau has nothing to do with the actuarial risk.”

WVFB members are offered discounts on automobile, homeowners and agribusiness insurances.

“The insurance rates charged by Nationwide, while in and of themselves are not discriminatory, are applied to its policyholders in a discriminatory manner when the discount offered does not correspond to expected losses and average expenses and there are no expected average cost differences reflected in the application,” the suit says.

“The discount offered by Nationwide forces certain Nationwide policyholders to subsidize the premium of Farm Bureau member Nationwide policyholders. Moreover, the discount on some Farm Bureau member policies carrying a similar risk is five percent while on it is seven percent, and on others it is less than five percent.”

To represent the State, McGraw hired William Tiano, a Charleston attorney who donated $2,000 to McGraw’s campaign in 2012. Tony O’Dell and Cheryl Fisher, two other attorneys at Tiano O’Dell, are also working on the case.

The lawsuit seeks restitution and civil penalties up to $5,000 for each violation of state law.

In its removal notice, Nationwide noted that the West Virginia Insurance Commission is charged by statute to review proposed insurance rates and did approve Nationwide’s discounts.

Nationwide also argued McGraw’s lawsuit is somewhat discriminatory itself.

“If Plaintiff prevails in this action and is successful in eliminating the Farm Bureau discount in West Virginia, those West Virginia citizens who are now receiving the Farm Bureau discount on their insurance policies will see their insurance premiums increase when the discount is eliminated from their policies,” the removal notice says.

“Nor will that subset of citizens, who were already receiving the Farm Bureau discount, obtain any benefit from the ‘consumer restitution’ payments requested in Plaintiff’s complaint.

“Thus, the civil court action, if successful, would benefit one class of West Virginia citizens at the expense of another class of West Virginia citizens.”

In removing the case, Nationwide argued it is a class action with a total amount in controversy exceeding $5 million, which makes it removable under the Class Action Fairness Act.

Nationwide has more than 40,000 customers with homeowners policies and 75,000 with auto policies who are not eligible for the Farm Bureau discount.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.