A state appeals panel has determined a Kane County judge was correct in ruling state law doesn’t allow a woman to sue State Farm for being late in processing an accident claim.
Denise Hopman said she was involved in a multi-car crash with a State Farm client. In a separate matter, she brought a negligence lawsuit against that driver to recover financial compensation for her injuries. But she also directly sued State Farm, alleging it violated two parts of the Illinois Department of Insurance Rules and accused it of improper claims practices under the Illinois Insurance Code.
Kane County Circuit Court Judge Mark Pheanis dismissed the complaint with prejudice in October 2023, finding only the government can enforce those rules and private citizens cannot resolve such disputes through litigation. Hopman challenged that ruling before the Illinois Second District Appellate Court.
Justice Mary Schostok wrote the panel’s opinion, filed June 18; Justices Ann Jogensen and Margaret Mullen concurred. The order was issued under Supreme Court Rule 23, which restricts its use as precedent.
According to Schostok, Pheanis dismissed Hopman’s original complaint in July 2023. She said State Farm should’ve either settled her claim faster or provided a reasonable written explanation for the delay. She also sought breach of contract damages, alleging her status as a third-party beneficiary of State Farm’s contract with its client entitled her to State Farm’s compliance with statutory and regulatory obligations.
The panel agreed the provisions Hopman cited “do not provide for a private cause of action,” saying the prohibition on such action from Illinois Administrative Code Title 50 “is well established.” What Hopman should’ve done, Schostok wrote, is submit a complaint to the Department of Insurance.
Furthermore, Schostok wrote, “While sections 154.5 and 154.6 of the Insurance Code set forth improper claims practices, sections 154.7 and 154.8 authorize the state director of insurance to enforce the codes and penalize any improper practices.”
Still, Hopman argued both the Insurance Code and Insurance Rules implied the right to a private lawsuit, a position the panel considered “also without merit.”
There are four factors establishing an implied right of private action, the panel said: a plaintiff must belong to the class the law was intended to benefit; providing the right must be consistent with the law’s underlying purpose; the legal injury must be one lawmakers intended to address; and a private lawsuit would have to be necessary to yield adequate remedy for statutory violations.
Hopman failed on the fourth factor, Schostok wrote, because the Department of Insurance can investigate allegations of rules violations and is empowered to assess penalties. The panel rejected her argument the 1970 Illinois Constitution’s open courts provision demands a private right of action. It cited a 2004 Illinois Third District Appellate Court ruling, Martinez v. Department of Public Aid, which held that provision “is merely an expression of philosophy and does not mandate that a certain remedy be provided in any specific form.”
The panel also said Hopman failed to prove her inability to sue violates the state Common Law Act, saying the four-factor test falls adequately under that umbrella. It also identified the “well settled” principle “a plaintiff cannot use a breach of contract claim to enforce statutory provisions that lack a private right of action,” so even if Hopman could establish her position as a third-party beneficiary to a State Farm policy, “the breach of contract claim is insufficient as a matter of law.”
State Farm did not respond to a request for comment.