Background
In Huskey & Wynn v State Farm, two Black homeowners alleged that State Farm’s claims-handling and fraud-detection systems discriminated against Black policyholders, imposing extra scrutiny, delays, and lower payouts compared to white policyholders. The court granted in part and denied in part State Farm’s motion to dismiss: FHA §§ 3604(a) and 3605 were dismissed (without prejudice) and one plaintiff’s injunctive claim was dismissed for lack of jurisdiction, but the § 3604(b) disparate-impact claim survived; the case is ongoing.
AI interaction
‘Since at least 2018, in its initial review of claims, State Farm has relied on algorithmic decision-making tools to predict the likelihood of fraud and determine whether to pay claims immediately or trigger further scrutiny.’ The order allows a disparate-impact theory to proceed against an insurer allegedly using machine-learning-driven triage, signaling that algorithmic claims-processing can be tested under federal housing discrimination law when it affects access to housing-related insurance benefits.
Note: The motion-to-dismiss ruling keeps the § 3604(b) claim alive while dismissing §§ 3604(a) and 3605; subsequent proceedings will determine liability and any remedies.