Erie Insurance Lawsuits: Cyberattack, Bad Faith, and More

Erie Insurance is currently defending itself in several major lawsuits, the largest cluster being at least five proposed class actions filed after a June 2025 cyberattack knocked its systems offline for weeks. Beyond the data breach litigation, an Erie Insurance lawsuit docket in 2024 and 2025 also includes a Pennsylvania bad faith verdict, a fiduciary duty fight over the company’s management fee that reached the U.S. Supreme Court, a discrimination settlement with Maryland regulators, and a coverage dispute decided by West Virginia’s high court. Each is at a different stage, and each turns on a distinct set of facts.

Class Actions Over the June 2025 Cyberattack

On June 7, 2025, Erie’s information security team detected what the company described as “unusual network activity.”¹ Systems were pulled offline, and the outage that followed disrupted online account access, customer service, claims reporting, and bill payment for more than ten days. Erie announced full resumption of business operations on July 7, 2025.²

Erie has said that after a forensic investigation, “there is no evidence that any sensitive personal information, financial records or legally protected data was breached,” and it has not offered credit monitoring or sent breach notification letters.² The company has never publicly identified the attackers. Cybersecurity reporting has attributed the incident to the hacking group known as Scattered Spider, based on the group’s tactics and warnings that it had been targeting insurers, but no group has claimed responsibility.³

Plaintiffs disagree with Erie’s account of the exposure. They allege hackers accessed Social Security numbers, financial details, and other sensitive information belonging to customers and employees.⁴

The Cases Filed So Far

The first suit was filed on June 15, 2025, in U.S. District Court in Erie, Pennsylvania, by Illinois customer Neal Plascencia, represented by Edelson Lechtzin LLP and assigned to Judge Susan Paradise Baxter. It alleges negligence, breach of fiduciary duty, unjust enrichment, and violations of the Federal Trade Commission Act, claiming Erie failed to implement basic protections such as encryption and access controls.⁴

A day later, former Erie employee Amy Haas of Wisconsin filed her own class action in the same court, also seeking $5 million in damages. Her complaint stresses that as a condition of employment she had provided Erie with her Social Security number, driver’s license information, and financial data.⁵⁶

A third case, Crowley v. Erie Indemnity Co., No. 1:25-cv-00188, was filed on July 2, 2025, in the Western District of Pennsylvania before Judge Cathy Bissoon. Plaintiff Matthew Crowley, represented by Lynch Carpenter LLP, alleges negligence, breach of implied contract, and unjust enrichment, and estimates that millions of individuals had their information compromised. Reporting on the Crowley filing described it as one of at least five class actions pending against Erie.⁷

Across the suits, plaintiffs seek compensatory, statutory, and punitive damages, plus court orders forcing Erie to strengthen its cybersecurity, disclose the full scope of the incident, and provide credit monitoring and identity theft protection. The proposed classes cover a nationwide group of current and former customers and employees.⁴ Erie has called the allegations “baseless and without merit” and said it will “vigorously defend” against the claims.⁷

As of mid-2025, the cases had not been consolidated, and no multidistrict litigation had been proposed. Erie serves roughly 7 million policyholders; the actual number of individuals whose data may have been affected remains unconfirmed.

Pennsylvania Bad Faith Verdict Sent Back for Recalculation

In Devincenzo-Gambone v. Erie Insurance Exchange, a trial court found that Erie acted in bad faith when it withheld $50,000 of a $300,000 arbitration award to policyholder Dina Devincenzo-Gambone and then filed a petition in a different county court to modify the award. The dispute stemmed from a 2004 car accident and an underinsured motorist claim that Erie had agreed to submit to binding arbitration, including on the question of stacking, without communicating any reservation of rights.⁸

On January 10, 2024, the court awarded a total of $1,754,188.24 under Pennsylvania’s bad faith statute, 42 Pa.C.S.A. § 8371, broken out as $877,094.12 in punitive damages, $659,007.90 in interest, $217,100 in attorney’s fees, and $986.22 in costs.⁹

On October 17, 2025, the Pennsylvania Superior Court affirmed the bad faith finding but vacated the damages and remanded for recalculation. The appellate court identified two errors: $100,000 in attorney’s fees tied to the underinsured motorist litigation had been calculated using a contingency percentage instead of the required lodestar method, and the trial court had awarded compound interest when the statute permits only simple interest, running from the date the insured first sought payment.⁹

Management Fee Suit and Denied Supreme Court Petition

Erie Indemnity Company, the publicly traded management arm of the group, serves as attorney-in-fact for the subscriber-owned Erie Insurance Exchange and has consistently set its management fee at 25% of premiums, the maximum allowed under the subscriber agreement.¹⁰

Exchange subscribers Troy Stephenson, Christina Stephenson, and Steven Barnett sued in state court in 2021, alleging that Indemnity breached its fiduciary duty by pinning the fee at the maximum to benefit its public shareholders, and pointing to a special dividend of nearly $100 million paid to Indemnity shareholders in December 2020 that was funded in part by those fees.¹⁰

Indemnity filed a separate federal suit to block the state case, arguing the claims were barred by two earlier federal decisions rejecting similar challenges, Beltz v. Erie Indemnity Co. (dismissed 2017) and Ritz v. Erie Indemnity Co. (dismissed 2019). A federal magistrate judge agreed and preliminarily enjoined the state proceedings in February 2024. The Third Circuit reversed that injunction in October 2025, reasoning that the subscribers’ claims were based on fee decisions made in 2019 and 2020, after the earlier cases ended, and therefore were not precluded.¹⁰

Indemnity petitioned the U.S. Supreme Court for review as No. 25-834. The Court denied certiorari on March 23, 2026, leaving the Third Circuit ruling in place and allowing the state court case to proceed.¹¹

Maryland Discrimination Settlement

In May 2023, the Maryland Insurance Administration issued determination letters finding that Erie had terminated agreements with independent agents and pressured them to reduce business in urban areas with higher Black and Hispanic populations. Baltimore-based agents alleged they had been told to “weed out” consumers in inner-city neighborhoods and threatened with canceled contracts or reduced commissions if they sold policies to Black and Hispanic customers.¹²

Erie sued the regulator in federal court, arguing it had improperly publicized confidential business information. U.S. District Judge Julie R. Rubin dismissed that suit in August 2023, ruling the dispute belonged in state administrative proceedings, and the Fourth Circuit declined to intervene in June 2024.¹³

By March 2025, the parties reached a consent order. Erie agreed to a $400,000 administrative penalty, $200,000 of which can be waived if the company remains in compliance. Erie must stop “front line underwriting” and the use of adverse loss ratios as a proxy for agent management, submit a corrective action plan, and provide regulators with a list of past agent terminations and commission reductions along with explanations. Erie denied violating insurance laws and said it settled to avoid further “expensive and distracting litigation.”¹⁴

West Virginia Mine Subsidence Coverage Case

Brian Frye filed a claim with Erie in November 2017 for property damage he blamed on underground mine subsidence. Erie denied the claim in October 2018, with the denial backed by the West Virginia Board of Risk and Insurance Management (BRIM), which administers the state’s mine subsidence fund and has statutory authority over these adjustments. A circuit court granted summary judgment to Erie, holding that under the statute, policyholders generally cannot sue an insurer over a BRIM-approved denial absent fraud or wrongful delay.¹⁵

On June 12, 2024, the West Virginia Supreme Court of Appeals vacated the denial of Frye’s post-judgment motion, holding that once the constitutionality of the mine subsidence statute was called into question, the trial court had to notify the state Attorney General so the state could consider intervening. The case was remanded for that notification and further proceedings.¹⁵

1
U.S. Securities and Exchange Commission. Erie Indemnity Company Form 8-K
2
Erie Insurance. Erie Insurance Network Outage
3
HIPAA Journal. Erie Insurance Cyberattack
4
GoErie.com. Erie Insurance Lawsuit Claims Customer Data Exposed in Ransomware Attack
5
GoErie.com. Erie Insurance Faces Second Federal Lawsuit Over Ransomware Attack
6
Insurance Journal. Erie Insurance Faces Two Class Action Lawsuits Following Cybersecurity Incident
7
Bloomberg Law. Erie Indemnity Co. Sued Over June Scattered Spider Data Breach
8
Insurance Business Magazine. Erie Insurance Faces $1.75 Million Verdict in Pennsylvania Bad Faith Case
9
Justia. DeVincenzo, D. v. Erie Insurance Exchange
10
U.S. Supreme Court. Erie Indemnity Company v. Stephenson, Petition for Writ of Certiorari
11
U.S. Supreme Court. Docket for No. 25-834, Erie Indemnity Company v. Stephenson
12
Consumer Federation of America. Insurance Companies Frequently Prefer Certain Customers Over Others
13
The Daily Record. Judge Tosses Erie Insurance Lawsuit, Sending Discrimination Case Back to State Regulator
14
Insurance Journal. Erie Insurance Group Settles Maryland Discrimination Dispute
15
FindLaw. Brian Frye v. Erie Insurance Company