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Suit Alleges State Farm Covered Up Donations to Illinois Justice Who Voted in Insurer's Favor

Source: Chicago Tribune


Posted on 16 Sep 2011

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Lawyers in a class-action case accuse insurance giant State Farm of defrauding the Illinois Supreme Court by covering up its support of the Republican candidate in the most expensive state judicial race in U.S. history.

Those attorneys, including  former television star and U.S. senator Fred Thompson, allege State Farm lied and mislead the court, hiding its "extraordinary support of Justice (Lloyd) Karmeier's campaign and to thwart Justice Karmeier's disqualification."

A petition was filed last week, asking the court to reconsider its decision to void a $1 billion verdict against State Farm. The petition is based on an investigation by former FBI agent Michael Reece.

"The bottom line of my investigation is that State Farm used the Illinois Civil Justice League to elect Judge Karmeier and Judge Karmeier knew it," Reece stated in his affidavit that accompanied the petition.

The petition alleges Karmeier received at least $2.5 million and up to $4 million in contributions from State Farm during the 2004 campaign against his opponent, Democrat Gordon Maag. Karmeier declined to recuse himself from the class-action case against State Farm because of a conflict of interest and eventually cast his vote to void a $1 billion judgment.

"This case was resolved by the Illinois Supreme Court years ago. Plaintiffs attempts to have the case heard by the U.S. Supreme Court were unsuccessful," said State Farm spokesman Dick Luedke.

Karmeier was hearing oral arguments in Springfield on Wednesday and could not be immediately be reached for comment.

"The Court does not comment on a case pending before it," said Joe Tybor, Supreme Court spokesman.

The decision to recuse from a case is mostly left up to the judge.

"There are no hard and fast rules. Most courts leave it up to each judge's discretion," said Northwestern University law school professor J. Samuel Tenenbaum, who teaches civil litigation.

But the U.S. Supreme Court has offered some guidance.

In a 2009 ruling, the court stated a West Virginia appellate judge should have recused himself from a case where the judge received $3 million in campaign contributions, then overturned a verdict against a contributor.

The U.S. Supreme Court decided the judge should have recused himself because of the "serious risk of actual bias."

The Illinois case dates back to 1997 when it was filed in Williamson County. The suit alleged State Farm breached its contract with policyholders when it directed the use of non-original parts in vehicles damaged in crashes. A jury awarded $465 million to some State Farm customers. Williamson County Associate Judge John Speroni awarded $730 million to other policy holders.

In 2001, the Appellate Court let stand a $1.05 billion judgment.

The Supreme Court heard oral arguments in May 2003.

Karmeier, then a circuit judge in Washington County, announced six months later that he would run as a Republican for Illinois Supreme Court.

Karmeier was elected to the Supreme Court in November 2004.

State Farm later represented to the Supreme Court that it provided $350,000 to the Karmeier campaign when plaintiffs' attorneys requested Karmeier recuse himself from the class-action decision.


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