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9th Circuit to Rehear Insurance Race Bias Case

(CN) - The 9th Circuit agreed to rehear its decision to revive a class action accusing Farmers Group of using a secret, discriminatory credit-scoring system to charge black homeowners higher insurance premiums.

Lead plaintiff Patrick Ojo of Houston claimed Farmers used "a number of undisclosed factors" to compute credit scores and price homeowners' insurance policies.

Farmers allegedly considered "geographical distinctions" and "various other artifices" to "identify and target minorities for the purpose of charging minorities higher premiums ... than the premiums charged to similarly situated Caucasians."

In May, a three-judge panel in Pasadena voted 2-1 to overturn the district court's dismissal of the case. Judge Pregerson disagreed with the lower court's finding that the class action was "reverse-preempted" by the McCarran Ferguson Act, which lets states regulate insurance without interference from the federal government.

Dissenting Judge Bea said the lower court "got it precisely right." Ojo's complaint "does not allege that Farmers intentionally discriminated against minorities based on race, and it does not allege that Farmers used race as a factor in computing credit scores," Bea argued.

A majority of the 9th Circuit judges agreed to reconsider the panel decision.

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