U.S. Supreme Court Declines to Intervene in Country Mutual Insurance Lawsuit

The U.S. Supreme Court declined to intervene in a lawsuit brought by Country Mutual Insurance Co. policyholders, alleging that the insurer is hoarding profits. The case will now revert to Illinois state court after the high court passed on reviewing a decision by the Court of Appeals for the Seventh Circuit.

Country Mutual policyholders claim that the insurer, as a mutual insurance company, is in breach of contract by not providing insurance at cost and returning surplus premiums to policyholders. Court documents reveal that the company has collected an “excess surplus of over $3.5 billion.”

Plaintiffs Angela M. Sudholt, Kyhl A. Sudholt, Kara Jones, and Benjamin Jones filed a class-action lawsuit in 2022 in the St. Clair County Circuit Court against Country Mutual, its officers, and directors, citing breach of contract. They argue that as a mutual insurance company owned by policyholders, Country Mutual has an obligation to provide insurance at cost and return any excess premiums to policyholders.

Country Mutual attempted to move the lawsuit to federal court under the Class Action Fairness Act of 2005 (CAFA), which extends federal diversity jurisdiction to class actions. However, the plaintiffs argued that the case satisfied one of the exceptions to CAFA, including the internal-affairs exception and the home-state controversy exception.

The Seventh Circuit three-judge panel ruled in favor of the plaintiffs, stating that the internal-affairs exception applies to the Country Mutual lawsuit due to the level of management decisions involved. Country Mutual then applied for a writ of certiorari to the Supreme Court, arguing that the case presents a substantial question for the high court.

Country Mutual is part of Country Financial, a group of insurance and financial services companies with customers in 19 states. The group offers a range of insurance and financial products and services, including auto, home, life, farm, commercial insurance, retirement planning, investment management, and trust services. The corporate headquarters are located in Bloomington, Illinois.

The outcome of this lawsuit could have significant implications for mutual insurance companies and their policyholders. The case highlights the importance of transparency and accountability in the insurance industry, as policyholders seek to ensure that they are receiving fair treatment and value for their premiums.