State Farm Faces Bid to Unseal Records, Depose CEO in Oklahoma Roof Claim Lawsuit

An Oklahoma couple suing State Farm over a denied roof damage claim is asking a Comanche County judge to make internal company records public and require the insurer’s chief executive to answer questions under oath, arguing the evidence could support allegations that company policies influenced how their loss was handled.

Comanche County District Judge Grant Sheperd heard arguments Thursday in the lawsuit brought by Neil and Lacy West against State Farm Fire and Casualty Company and Nancy Holcomb Insurance Agency. The dispute stems from damage the couple says their home sustained during a June 2023 hailstorm and State Farm’s subsequent denial of their roof claim.

The Wests contend their claim was affected by practices aimed at limiting payments for hail and wind damage, particularly full roof replacements. Their attorneys argue internal State Farm records could help show how those policies were developed and applied, while the request to depose CEO Jon Farney is aimed at obtaining testimony about the company’s claim handling.

Their lawsuit includes claims for breach of contract and breach of the duty of good faith and fair dealing, commonly known as insurance bad faith. The couple also brought separate claims against their insurance agency concerning how their coverage was obtained or represented.

An insurance policy is a contract, and a breach of contract claim can arise when an insurer allegedly fails to provide benefits required under that agreement. Whether a loss is covered generally depends on the policy language, what caused the damage and the condition of the property.

Insurance bad faith involves a separate legal duty. Oklahoma law requires insurers to deal fairly and act in good faith when investigating and deciding claims. A denial does not amount to bad faith simply because a policyholder disagrees with the decision or later establishes that coverage existed. The key question is whether the insurer had a reasonable basis for its decision and handled the claim fairly based on the information available at the time.

The Wests’ attorneys argue the disputed records describe internal measures intended to restrict full roof replacements, including added managerial oversight and limits on the authority of frontline adjusters. They also claim State Farm relied on definitions or standards developed with outside companies when evaluating damage.

State Farm disputes those allegations and maintains that coverage decisions are based on the facts of each loss and the terms of the customer’s policy, including the cause and extent of the damage and any applicable exclusions. The insurer has also rejected accusations that it systematically denies or underpays valid Oklahoma claims and says it has paid more than $1 billion to customers in the state for wind and hail damage during the past two years.

The West lawsuit is unfolding as Oklahoma officials pursue a separate challenge to State Farm’s handling of storm claims. Attorney General Gentner Drummond sued the insurer in Cleveland County in June, accusing the company of using an internal program known as the Hail Focus Initiative to reduce roof replacement approvals and claim payments. The state alleges violations of Oklahoma consumer protection and racketeering laws, along with other claims.

Another Oklahoma lawsuit involving similar allegations produced a ruling Friday concerning Farney. In a separate case brought by Billy and Lacy Hursh, a judge ruled that the State Farm CEO may be questioned under oath about company practices. That case is pending before a different court and does not resolve the requests before Sheperd.

Sheperd took both motions under advisement Thursday and said he will issue his rulings in writing.