LA County Reused Its State Farm Letter on Farmers, Minus the Cites

Los Angeles County's September 9 letter to Farmers Group reuses the bullet list County Counsel sent State Farm ten months earlier, minus the statutory citations the original carried. The earlier letter names which California authority the County believes each listed practice violates. Farmers has until September 21 to answer.

The six-page Notice of Investigation and Request for Documents went to Farmers Group CEO Raul Vargas and General Counsel Asya Alexandrovich on September 9, 2026, opening a civil investigation under the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., into January 2025 Eaton and Palisades wildfire claim handling.¹ Assistant County Counsel Scott Kuhn signed for Dawyn R. Harrison's Affirmative Litigation and Consumer Protection Division. Seven practices are listed, ten categories of documents demanded, a litigation hold warned.¹

The November 13, 2025 letter to State Farm runs five pages and carries the adjuster-switching bullet, the ALE bullet, the 15-day disclosure bullet, and demand items 5, 6 and 7, which seek in-house and contracted catastrophe adjuster policies on licensing, ethics and continuing education plus documents on the carrier's "use of Artificial Intelligence (AI) tools in the claims review process." That letter carries its authorities inline: 10 CCR 2695.4(a), 2695.5(b), 2695.7(b) and (d), Ins. Code 790.03(h)(1) and (h)(5), §§ 2060 and 2071, and People v. McKale.² The Farmers version drops that list and cites Zhang v. Superior Court instead.¹

The County sued State Farm on August 31, 2026. Two hundred ninety-one days after the November letter.¹³²

What the November letter cited

Listed practice, the authority the State Farm letter cited for it, and the document that proves it

Listed practice	Authority	What to pull
Failed to timely respond, or to timely accept or deny	10 CCR 2695.5(b): 15 days to respond to any claimant communication; 2695.7(b): 40 days to accept or deny after proof of claim	Date-stamp every inquiry against the carrier's reply. Flag gaps over 15 days and any proof of claim past 40 with no written decision.
Switching adjusters in a way that caused delay	10 CCR 2695.7(b), (d): duty to conduct and diligently pursue a thorough, fair and objective investigation	Adjuster-assignment history: every name, every date, and what each handoff forced you to re-document. The reassignment isn't the violation. The delay is.
Failed to pay ALE for up to 36 months	Ins. Code § 2060: 24 months minimum, plus a required extension up to 12 more on a good-faith reconstruction delay, then further six-month extensions for good cause	ALE ledger plus the written delay record: permits, materials, contractor availability. Months 25 to 36 need that showing.
Failed to disclose estimates within 15 days of a request	Ins. Code § 2071: 15 calendar days to produce all claim-related documents, expressly including estimates, bids, scopes and reports	A dated written request, and the response date. No request in the file? Send one. The clock doesn't run until the insured asks.
Failed to pay for smoke testing, investigation or remediation	10 CCR 2695.7(d); Ins. Code § 790.03(h)(5)	Hygienist scope, lab results, and the carrier's written basis for refusing. Out-of-pocket testing invoices are the restitution exhibit.
Misrepresented policy language or scope of coverage	Ins. Code § 790.03(h)(1); 10 CCR 2695.4(a): disclose all benefits that may apply	Every written coverage explanation beside the dec page and endorsements. Note any benefit never disclosed.

Those regulations are the Fair Claims Settlement Practices Regulations, 10 CCR § 2695 et seq.¹²² The Department's smoke-claim guidance, Bulletin 2025-7, is not among them.⁹²

Items 8 and 9 are new in the Farmers version: advertising materials and sales scripts. So is a seventh scope bullet on false or misleading statements made to induce purchase, renewal or retention.¹ Items 5 through 7 carry over, reaching adjuster-training and claims-review material that normally surfaces only when a court unseals it.

§ 2060(b)(1), § 2071 and § 14046

The shorthand in coverage of this letter: 36 months of additional living expenses required by law. Cal. Ins. Code § 2060(b)(1) says something narrower. After a declared state of emergency, ALE runs for no less than 24 months, and the insurer must grant an extension of up to 12 additional months, for a total of 36, where an insured "acting in good faith and with reasonable diligence encounters a delay... in the reconstruction process."³ Months 25 through 36 turn on a record: permit timelines, contractor availability, materials backorders, each dated. Further six-month extensions follow for good cause, so 36 is where the mandatory extension stops rather than where coverage does.³ The County's own phrasing, "up to 36 months," is precise.¹ Section 2051.5(b)(1)(B)'s separate 36-month deadline governs collecting replacement cost, not ALE.¹⁰

Section 2071's duty sits in the standard form fire policy and runs only on request: "Within 15 calendar days after receiving a request from an insured for claim-related documents, the insurer shall provide the insured with copies of all claim-related documents." The definition reaches estimates and bids, appraisals, scopes of loss, reports, and third-party loss findings.⁴ No written request in the file means no clock has been running. Send one, dated.

Catastrophe-adjuster licensing has a hook neither letter names. Section 14046(b) requires the insurer to give the claimant a copy of the Department of Insurance notice within 15 calendar days of receiving notice of the claim. Section 14046(c) requires a supervising licensed adjuster to have any nonlicensed adjuster read the current notice and handbook within 15 calendar days of starting claims work in California.⁵ A parallel duty sits at § 14022(a)(2).¹¹ On an Eaton or Palisades file, either failure is a date question.

Demand item 7 asks for Farmers' AI documents. No California regulation squarely governs AI in property claims handling. CDI Bulletin 2022-5 tells licensees to avoid bias from "artificial intelligence, as well as other forms of 'Big Data'... when marketing, rating, underwriting, processing claims, or investigating suspected fraud."⁸ Nothing in the letter says Farmers used AI on these claims.¹

Zhang holds that "Moradi-Shalal does not preclude first party UCL actions based on grounds independent from section 790.03, even when the insurer's conduct also violates section 790.03," and confines itself to the first party context.⁶ A policyholder has no private right of action under § 790.03(h). A county counsel has § 17206(a), which authorizes suit by "a county counsel of any county within which a city has a population in excess of 750,000" and sets a penalty not to exceed $2,500 for each violation.⁷ The Farmers letter cites § 17206 without naming the subdivision.¹ Farmers told CBS LA that "each claim is reviewed individually" and that it "will cooperate through the appropriate process."¹⁴