Lawsuit claims Farm Bureau hid fraudulent activity from insurance regulators

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Two alleged whistleblowers are suing Farm Bureau Property & Casualty Insurance Co. and its affiliates for alleged racketeering, wrongful termination and concealment of information from state regulators.

The lawsuit alleges Farm Bureau officials repeatedly concealed from regulators in Iowa and other states instances of fraudulent activity committed by company agents or employees. The defendants’ conduct in the matter amounts to racketeering, obstruction of justice, and mail fraud or wire fraud, the lawsuit claims.

The lawsuit was filed by James Newton and Brent Meskimen, former police officers who later became special investigators for Farm Bureau. They are suing Farm Bureau Property & Casualty Insurance Co., FBL Financial Group, Farm Bureau Financial Services, and the West Des Moines law firm of Wickham & Geadelmann in U.S. District Court for the Southern District of Iowa. Also named as defendants in the case are several Farm Bureau executives and attorneys.

The lawsuit claims Farm Bureau officials “engaged in a scheme to defraud insurance policyholders, insurance and other governmental regulatory authorities, and other participants in the insurance industry who are complying with their mandatory duty of reporting fraud and other fraudulent or other illegal acts.”

It also claims the defendants violated Iowa’s law on the wrongful discharge of employees in violation of public policy. That law prohibits the termination of employees for refusing to participate in illegal conduct or for acting as whistleblowers by reporting or objecting to illegal conduct.

The defendants in the case have yet to file a response to the lawsuit. Calls to Farm Bureau, Farm Bureau Financial Services and the law firm of Wickham & Geadelmann were not immediately returned Wednesday.

Break-in at policyholder’s residence

The lawsuit claims that as far back as 2011, Farm Bureau officials failed to report to state regulators evidence of fraudulent activity within the company, but the “straw that broke the camel’s back” was an insurance adjuster’s alleged break-in on a policyholder’s property.

According to the lawsuit, a residential fire occurred at the policyholder’s Nebraska residence on May 5, 2023, and the policyholder immediately filed a claim for losses.

In the course of investigating the claim, Farm Bureau’s Special Investigation Unit learned that an adjuster working for the company had used a credit card to pick the lock of the policyholder’s garage near the scene of the fire to determine whether it contained items the insured claimed as being lost in the fire, the lawsuit alleges.

Newton and Meskimen allegedly met with Farm Bureau’s general counsel, Wickham, and advised him Farm Bureau had an obligation to inform the policyholder of the illegal access to their garage.

According to the lawsuit, the company’s assistant general counsel, Karl Olson, “eventually agreed” to allow Meskimen and Newton to meet with the policyholder and inform them of the illegal garage entry by the adjuster, but barred Meskimen and Newton from disclosing that two third-party vendors hired to investigate the claim had also been inside the garage.

The lawsuit claims Olson and Property Casualty Claims Vice President Anthony Kimmi then agreed that all “poisonous” documentation pertaining to the illegal entry, including photographs, should be placed in a separate file using a canceled insurance policy associated with a Minnesota policyholder who had no association at all with Nebraska fire.

After the new file was created for information about the garage, efforts were made to “lock down” the file to ensure limited access to its contents, and Kimmi directed the staff to suppress all printout capabilities from the file, the lawsuit alleges.

On June 9, 2023, Newton and Meskimen allegedly met with Wickham, the general counsel, at the Farm Bureau home office in West Des Moines and reported that they “could no longer in good conscience be associated with this file,” the lawsuit claims, telling Wickham “it was wrong ethically and that it violated state statutes, claims best practices, Farm Bureau core values, doing what’s right, and that it could very well be criminal and could potentially violate privacy rights.”

According to the lawsuit, Wickham responded by saying he’d speak to Farm Bureau leadership “to make sure this never happens again,” to which Meskimen allegedly said the directive to create the file “came straight from General Counsel Wickham’s own assistant general counsel, Olson.”

After Newton, Meskimen and the Special Investigations Unit concluded fraud had been committed by the company, the findings were allegedly relayed to Paul Swinton, a vice president and assistant general counsel of property and casualty at FBL Financial Group, according to the lawsuit.

The lawsuit claims Swinton refused to forward “the significant majority of the findings” to regulators in Iowa and Nebraska for their review and investigation, despite mandatory-reporting requirements.

Lawsuit: State regulators kept in the dark

According to the lawsuit, the 2023 incident was not the first time Swinton and Newton clashed over information that wasn’t being shared with state regulators.

“Newton and Meskimen were often and continually directed not to make mandatory referrals to the appropriate Departments of Insurance for review and investigation by the appropriate insurance regulators in states where FBL Financial Group was operating and conducting business, including Kansas, Iowa, Nebraska, Utah, Arizona and New Mexico,” the lawsuit alleges.

Among the alleged examples cited in the lawsuit:

— Forged signatures: In the spring of 2023, a Farm Bureau agent in Kansas admitted he had forged the signatures of approximately 50 of his policyholders, without their permission, over a period of three to four years, and that the forms contained false and misleading information to support of the clients’ insurance policy applications. Farm Bureau “refused to allow Newton and/or Meskimen to submit this admitted fraudulent conduct to the Kansas Department of Insurance,” the lawsuit alleges, despite a state law requiring such reporting.

— Two fired agents: In 2022, Swinton refused to share information with regulators about two fired Farm Bureau agents. In one of the two cases, a Kansas agent admitted to having forged at least 900 various documents with clients’ signatures, allegedly with the clients’ consent, and another 100 documents without the clients’ consent. Swinton allegedly refused to share information with regulators about the two firings. The lawsuit claims that after Newton wrote in an annual report that he had concerns with such matters going unreported, Wickham “was furious” and instructed him to never put anything in writing like that again.

— Fraudulent claim: In 2023, after a Farm Bureau agent was fired for filing a fraudulent claim on his own home in Utah, Swinton or others within the company refused to allow Newton and Meskimen to submit information on the agent’s conduct to the Utah Department of Insurance, despite a state law requiring such a referral.

— Father’s altered policy: In 2018, the company’s Special Investigations Unit determined an Iowa agent had altered a customer’s policy after a fire so that the policy included a Ford Mustang that was consumed in the blaze. The customer was the agent’s father and a retired Farm Bureau agent. The lawsuit claims Swinton barred the unit from referring the incident to the Iowa Department of Insurance.

Newton and Meskimen are fired

The lawsuit alleges that while the unreported instances of fraudulent activity date back to 2011, it was the May 2023 garage break-in that “the tipping point for Newton and Meskimen.”

The lawsuit alleges that on Aug. 30, 2023, Newton had an in-person meeting with Wickham and insisted the information related to that case needed to be referred to the Nebraska Department of Insurance. “Wickham responded by telling Newton that if he made that referral his career would be over,” the lawsuit claims.

On Nov. 9, 2023, Newton and Meskimen allegedly met with Karen Rieck, the vice president of human resources for Farm Bureau Financial Services, and voiced their concerns about the lack of referrals to state regulators.

A week later, Newton received a phone call from Wickham and Rieck, in which Wickham said Newton had “essentially resigned” by refusing to report directly to Swinton. The lawsuit alleges Newton indicated he had no problem reporting to Swinton but that if Swinton was not going to make the mandatory referrals related to fraud, he would do so himself.

“As a result, Newton was fired,” the lawsuit claims. Meskimen was allegedly fired five days later after telling his superiors that he, too, would make such referrals if they were required by law.

The lawsuit claims that shortly before the two men were fired they each were given positive performance reviews, with Newton described by his superiors as “one of the most well-respected employees in the organization” and Meskimen described as a trusted leader whose “integrity is beyond reproach.”

In addition to Swinton, Olson, Kimmi and Wickham, the named defendants in the lawsuit include Daniel Pitcher, chief executive officer of FBL Financial Group and Farm Bureau Financial Services, and Ronald Mead Jr., the chief operating officer for property casualty of FBL Financial Group and Farm Bureau Financial Services.