Lawyer Says Insurer Has Blacklisted Him : Lawsuit: Libel action says that of 161 attorneys on State Farm list for special investigative attention in auto accident cases, 75% are Jewish. Firm says religion is not involved.

A Los Angeles attorney has accused insurance giant State Farm of blacklisting him and more than 100 other lawyers--three-quarters of them Jewish--because of suspected fraud in auto accident cases.

Erwin Sobel’s libel suit against the nation’s largest auto and homeowner insurer cites a 1983 State Farm memorandum that includes a three-page list of Los Angeles-area lawyers, Sobel among them.

In the memo, a State Farm manager instructs employees not to settle claims with the listed attorneys but instead to refer their cases to a special new fraud unit for further investigation.

The extra investigation led to long delays and difficulties in settling claims, Sobel said in his suit. As a result, he said, both his clients and his business suffered.

Sobel believes he was placed on the list because he is Jewish, “as were 123 of the 161 lawyers listed,” he said. In an interview this week, Sobel said he personally polled 90% of the lawyers on the list to see how many are Jewish.

The list mentioned in Sobel’s lawsuit, which has been grinding through the courts for more than six years, surfaced publicly this month in a hearing before the 2nd District Court of Appeal in Los Angeles.

State Farm says that religion played no part in developing the list, nor was there any malice on the company’s part.

B. Gerald Reynolds, a vice president and counsel at State Farm’s Bloomington, Ind., headquarters, said that before opening the new fraud unit in 1983, managers wanted to stock its empty files with cases so that investigators would have something to work on instead of accumulating cases gradually. The lawyer list was prepared “in order to provide an inventory of files,” he said.

Lawyers’ names were chosen for the list, Reynolds said, “because of their volume of claims (against State Farm), not because of any evidence that there was a problem with those claims--in fact, with respect to Mr. Sobel, the evidence is to the contrary.”

However, the State Farm manager who wrote the memo initially denied knowledge of any such list when Sobel questioned him in a related lawsuit in December, 1985.

Shortly after that court session, a fat, brown envelope arrived anonymously at Sobel’s law office, he said in an interview. Inside, amid numerous State Farm internal documents, was the memo with the lawyer list.

The five-page memo, which State Farm acknowledges is authentic, contains language that implies that its author did not consider the lawyer list innocuous.

“After the files have been selected for referral, the attorney listing should be destroyed as it will have no future purpose,” said the memo, written and signed by George A. Vivlamore, a claims superintendent in a Los Angeles State Farm office.

“Please re-emphasize to your superintendents and claim handlers not to indicate that the file has been transferred to the ‘fraud unit’ or ‘you’re on our list,’ etc.,” the memo said.

State Farm declined to make Vivlamore available for an interview, saying he is a potential witness in the Sobel case.

In a court deposition after the discovery of the memo, former State Farm claims investigator Sandra Hoffman said that in her experience, when an attorney was singled out for special treatment, the reason was suspected fraud rather than mere volume of cases.

“The assumption was sort of rife that if an attorney was treated in this manner, that there was something to look for,” she said.

A Superior Court judge rejected Sobel’s libel suit in 1990, saying he hadn’t been injured. The case is pending before the Appeal Court.