State Farm won a class-action court decision this week in which a policyholder claimed the car insurer had deceptively promoted an add-on to the personal injury protection (PIP) coverage he bought.

In his initial complaint filed in 2010, plaintiff Dominick Servedio claimed that State Farm provided a misleading definition of what coverage that add-on would provide. State and common laws, he alleged, forbid what he saw as State Farm’s “deceptive trade practices and false advertising.”

Plaintiff Alleged Optional PIP Benefit Was Misleading

The case centers on Servedio’s PIP policy with State Farm, which offers $50,000 worth of PIP coverage—the minimum amount required by New York auto insurance law—as well as an optional PIP benefit package.

The additional purchase extended coverage to any passenger “in any vehicle operated by the insured or his or her relatives,” according to an earlier court decision that was eventually supported by the appeals court ruling released on Monday.

Servedio paid for the additional PIP coverage with a separate “premium [that was] in addition to the amount paid for the mandatory PIP coverage,” according to the earlier court ruling.

“Importantly, the optional PIP benefit did not increase the total dollar amount of coverage,” that decision read.

According to Servedio, State Farm had “deceived him into believing” that the additional PIP benefit would provide higher coverage limits and not, in fact, the expansion under which passengers would be protected through the car insurer’s PIP coverage.

“The alleged deceptive practice caused him to pay more than the good or service he actually received was worth,” the court decision said regarding Servedio’s claim.

The court relied on New York’s “filed rate doctrine” in its dismissal. The doctrine shields insurers’ rating plans, once they are approved by state regulators, from “judicial proceedings brought by ratepayers” who believe they are overpaying for coverage.

The doctrine guarded State Farm against Servedio’s claims, according to the court, which said that “the value of the coverage Servedio obtained—an expanded definition of ‘eligible injured person’—was precisely equal to the premium he paid.”

Servedio had asked the District Court to reconsider his case on the argument that it had misunderstood his wording of “worth less” when he had meant “worthless,” and that he “did not receive anything of value” from the additional PIP package. The court also denied that argument, calling it “merely an extension” of the initial claim that was rejected.

“Deceived consumers may nevertheless receive—and retain the benefits of—something of value, even if it is not precisely what they believed they were buying,” according to the court.

Appeals Court Backs District Court Decisions

A September 2011 District Court decision dismissed Servedio allegations on the basis of common law.

The appeals decision handed down Monday by the U.S. Second Circuit Court of Appeals backed two decisions made by a district court in eastern New York last year that dismissed Servedio’s claims against State Farm based on state business laws.

In a two-page summary order, the appeals court said that the rulings in 2012—delivered in September and December—“did not err, substantially for the reasons set forth by the District Court.”