Farmers Continues Its Attack on Body Shop Fraud, Seeking a Court Order to Halt Fraud and to Recover Damages

LOS ANGELES--Sept. 2, 2004--Farmers Insurance Exchange has begun serving civil summons and complaints upon a Los Angeles body shop and its director, accusing them of taking part in a scheme designed to defraud Farmers and its policyholders. The civil complaint, which is similar to prior successful lawsuits against body shops that submitted false insurance claims, seeks damages for the fraud committed.

The lawsuit details a systematic scheme where the body shop billed Farmers for services that were never performed. This includes billing for parts and labor that were never provided. Once Farmers suspected fraud, it immediately inspected the cars involved and exposed physical evidence of fraud.

"When faced with concrete evidence that someone has tried to defraud Farmers and its policyholders, Farmers faces a choice: Do nothing or take action against such unscrupulous individuals. Farmers will not sit idly by and allow profiteers to succeed with their schemes," said Doug Ashbridge, Director of Special Investigations. "We want the word to get out that Farmers will fight insurance fraud no matter what form it takes. Farmers will work with law enforcement, as well as institute its own civil actions in hopes of deterring these individuals, and anyone else who is contemplating submitting fraudulent insurance claims. It is our commitment to our policyholders to take fraud out of their premium dollars."

Farmers' Special Investigations Unit, which includes body shop experts, inspected 10 vehicles repaired by Bracha, Inc., DBA Best of the West Carstar Auto Body and DBA Exclusive Collision Center, and documented fraud in the repair invoice for each vehicle. Farmers is seeking over $250,000 in statutory damages for the intentional actions of the defendants.

Mr. Ashbridge went on to state: "Farmers has developed a statewide team that is designed to detect precisely this type of fraudulent activity. Our investigators' efforts and expertise exposed the fraud being perpetrated here and developed the physical evidence of fraud. Lawsuits such as this are part of a nationwide commitment to stem the tide of insurance fraud."

                      Farmers Group, Inc. -- Q&A

       State of CA ex rel Farmers Insurance Exchange and Farmers
 Insurance Exchange vs. Bracha Inc., DBA Best of the West Carstar Auto
          Body, DBA Exclusive Collision Center, Hillel Shamam

Q. Why has Farmers chosen to pursue a civil lawsuit?
A. Farmers is doing its part to fight body shop and other forms of
insurance fraud. A successful fight against fraud requires a
multifaceted approach. The efforts of the Department of Insurance and
the Local District Attorneys are necessary to fight fraud. Now
insurance companies can join the fight, with laws that allow the
carriers to recoup money, obtain other damages and get court orders
preventing future fraud.

Q. Under what legal provisions are you filing this suit?
A. The lawsuit is filed under the California Insurance Fraud
Prevention Act, Insurance Code ss.1871.7, as well as Business and
Professions Code ss.17200 for unfair business practices. The
California Insurance Fraud Prevention Act has enacted a novel,
anti-fraud law that was designed to help combat insurance fraud. The
law allows for a penalty of $5,000-$10,000 per false claim, three
times the false claim for compensation, all attorney fees, expenses
and costs, as well an injunction against further fraud.

Q. How did the insurance fraud scheme operate?
A. As is alleged in Farmers' Complaint, this was a complex and
sophisticated scheme that involved billing for parts and labor that
were never provided. Specifically, as explained in the civil
complaint, the defendants billed for repair work that was not done at
all; they billed to replace parts which they did not replace; they
repaired parts and billed to replace those parts; they billed for OEM
parts, but did not use them; and on certain occasions, they paid the
insured back their deductible and "adjusted" their invoice
accordingly, charging back Farmers for that amount.

Q. How long had the Farmers investigation been going on?
A. Farmers has a team, which specializes in detecting insurance
fraud who conducted a detailed and comprehensive investigation,
including a full inspection of the cars at issue here. The
investigation revealed that the defendants were attempting to pass off
false claims to Farmers. Farmers' investigation is continuing at this
time. More claims may be added to the lawsuit and the claim for
damages may grow further.

Q. Will these defendants be prosecuted as criminals?
A. Farmers has offered its full cooperation to the California
Department of Insurance and the Los Angeles District Attorney who have
the authority to make these decisions.

Q. Is the Farmers investigation complete?
A. No. By its very nature, fraud is deceptive. Farmers has a
statewide special investigative unit who focuses on individuals who
are attempting to submit fraudulent claims.

Farmers is represented by Dennis B. Kass, Manning & Marder, Kass, Ellrod, Ramirez, LLP.

Farmers Insurance Group of Companies(R) is the nation's third-largest Personal Lines Property & Casualty insurance group. Headquartered in Los Angeles and doing business in 41 states, the insurers comprising the Farmers Insurance Group of Companies provide Homeowners, Auto, Business, Life insurance and financial services to more than 10 million households through 17,000 exclusive and independent agents and district managers. For more information about Farmers, visit our Web site at www.farmers.com.