Another Appeals Court Balks at Class Action Over Auto Insurers’ ACV Methods

In another win for auto insurers, a federal appeals last week struck down a proposed class-action lawsuit over the methods carriers use to value totaled vehicles.

At least five appellate courts in the last few years have said “no” to potentially far-reaching class actions filed over actual cash value, noting that each covered vehicle has a unique value and cannot be lumped into one category and one lawsuit, the U.S. 6^th Circuit Court of Appeals said in a case that originated in Memphis, Tennessee.

State Farm insured driver Jessica Clippinger attempted to bring the class action on behalf of thousands of other State Farm policyholders. Her lawyers argued that State Farm’s “typical negotiation” adjustment inappropriately reduces the estimated value of destroyed vehicles.

“Even if Clippinger were correct, though, we agree with the other circuit courts that she cannot pursue this theory on a class-wide basis,” the en banc court wrote in the April 24 opinion. “To determine whether State Farm paid ‘actual cash value’ for the 90,000 used vehicles in the class, a jury would have to consider unique evidence about each vehicle’s value.”

The appellate judges reversed a ruling from the lower court, the U.S. District Court for Western Tennessee, and remanded the case for further proceedings.

Despite the fact that multiple federal appeals courts have now ruled against class actions on the ACV question, lawsuits have continued to churn through lower courts around the country. And insurers have settled some out of court.

In March, State Farm agreed to pay $15.6 million to settle a class-action suit brought by policyholders in Arkansas. In 2024 Progressive agreed to a $48 million settlement with a class of 93,000 New York drivers who alleged the carrier had underpaid total-loss claims.

Related: Appeals Court Nixes Pennsylvania Class Action Over ACV

In another, unrelated state case watched by auto insurers, the South Carolina Supreme Court last week found that Progressive Northern Insurance does not have to pay the full limits of a policy for a Medicaid-covered passenger.

Alexis Jones was hurt in an accident and received medical care that was billed at almost $28,000. She was a Medicaid recipient at the time, and South Carolina’s Medicaid program holds agreements with medical providers to accept reduced payment rates, the court explained.

Medicaid paid the providers $1,324. Progressive, which covered the car Jones was in, paid Jones that amount, per the vehicle owner’s policy.

Jones sued Progressive for breach of contract. Her lawyers argued that the insurer owed her the full $10,000 of the policy limits. A trial court agreed. But on appeal, the Supreme Court found that the auto policy clearly states that Progressive will pay “reasonable expenses incurred” for necessary medical treatment.

Jones did not actually incur the full cost of treatment, as billed by the medical providers, the high court noted.

“The meaning of ‘expenses incurred’ in the Progressive policy is unambiguous. Jones has never had, and will never have, an obligation to pay more than $1,323.60,” the justices wrote in the April 22 opinion.

South Carolina statutes provide that personal injury, medical payment coverage, or economic loss cannot be assigned or subrogated, and is not subject to a setoff. But that law does not apply in this case, the court said. Progressive was not asking for setoff and did not contest its obligation to pay Jones the $1,324 Medicaid paid to her medical providers, the justices explained.

ACV-Related: Depreciation on ACV Is A-OK, Court Says in Knocking Down Class Action vs. Cincinnati

Topics Lawsuits Carriers Auto