The settlement brings to an end a legal process that began more than 16 years ago, when two whistleblowers filed a lawsuit against the Illinois-based insurance company.
State Farm also agreed to dismiss the whistleblowers' counterclaims. The whistleblowers, according to the company, violated their employment agreements and other laws by stealing company documents while working as independent adjusters. The Sun Herald reported on Wednesday that the settlement was reached on July 20.
Cori and Kerri Rigsby, sisters and former adjusters based in south Mississippi, filed a fraud lawsuit against the company after witnessing the company shifting state claims to federal flood insurance that should have been paid by private wind insurance.
In 2013, the Rigsbys won their case, which focused on a single home in North Biloxi, Mississippi. State Farm, according to the sisters, defrauded the National Flood Insurance Program by charging it for flood damage to a policyholder's home when the destruction was caused by wind.
The jury verdict was unanimously upheld by the United States Supreme Court in 2016. State Farm argued that the whistleblower case against the insurer should have been dismissed because its existence had been revealed.
State Farm was ordered to pay $750,000 in damages by U.S. District Court Judge Sul Ozerden, with 30% going to the Rigsbys and the rest going to the federal government.
State Farm will pay the federal government the $100 million in restitution, not individual policyholders.
According to the newspaper, State Farm and the Rigsbys said in a statement that "the parties are pleased to bring this 16-year litigation to a close."