Ex-Employee Accuses Insurer of Forgery to Avoid Paying Claims


A former State Farm Insurance employee alleges in court documents that the company withheld key evidence to fend off lawsuits by policyholders and forged documents to avoid paying out earthquake-related claims.

The sworn statements by Amy Zuniga, who said she quit the company’s litigation unit last year after an unwanted transfer, are included as evidence in a lawsuit against the firm by a Sherman Oaks couple who contend that they were cheated out of their earthquake insurance coverage.

In a sworn declaration made public Monday by the 2nd District Court of Appeal, Zuniga said State Farm officials in Southern California routinely lied in court, denying that they had documents requested by opposing parties in lawsuits. Zuniga also described the firm’s aggressive litigation tactics in which “every effort was to be made to make it financially unfeasible for the insured to obtain any benefits regardless of whether liability was clear or not.”


State Farm officials deny any wrongdoing.

Zuniga worked in State Farm’s regional litigation unit, which monitored lawsuits against the company. Her job was to respond to discovery requests by opposing attorneys and to prepare witnesses for depositions.

State Farm employees are trained to avoid direct answers and to be as evasive as possible during sworn depositions, she said in her declaration.

“Witnesses were taught not to answer a question with a ‘yes’ or ‘no,’ to minimize the likelihood of giving a truly responsive answer,” she said in her declaration. “The entire point of this training was to make it as difficult as possible for the insureds’ attorney to learn any meaningful information about the company, its practices or the insureds’ claim.”

She also alleges that State Farm agents routinely forged documents to avoid paying out claims to Northridge earthquake victims.

In her declaration, she said that in 1996 a senior State Farm executive told her and department colleagues that “State Farm witnesses should not admit that forgeries happen, unless and until they are compelled to do so by court order.”

Zuniga also said company executives insisted that she not use the word “forgery” when discussing the subject. “[A senior State Farm official] went on to state that we have to decide how to tell our story should the company be compelled to admit that it has knowledge of the ‘unauthorized signatures.’ He said we should try to make this practice look like a ‘service.’ ”


Her testimony is the centerpiece of a lawsuit alleging that State Farm agents forged signatures on customer forms declining earthquake insurance. The home of the plaintiffs, Robert and Krista Taylor, was badly damaged in the Northridge quake. They are suing the insurance giant because, they allege, they were led to believe that they had earthquake coverage.

State Farm officials possess signed forms showing that the couple declined to carry earthquake insurance. The couple alleges that the signatures are forged.

“I am aware that there were many other State Farm claims arising out of the Northridge earthquake like the Taylors’ involving unauthorized signatures by State Farm agents . . . omitting earthquake coverage,” according to Zuniga’s testimony.

State Farm officials would not respond directly to Zuniga’s allegations because of the lawsuit. “But I can say that we are a company that the public trusts with their insurance needs . . . or we would not be the highly regarded company we are,” said State Farm spokesman Bill Sirola.

State Farm attorney James Robie said: “Some things [alleged by Zuniga] certainly did not occur.”

State Farm paid $2.7 billion in claims to more than 116,000 policyholders whose homes were damaged during the 1994 Northridge earthquake.


Shortly after the court records were made available to the public Monday, State Farm attorney Julie Roback removed Zuniga’s declarations from the public file.

Second District Court of Appeal Judge Joan Klein, who on May 29 denied a State Farm request to seal Zuniga’s declaration, has asked State Farm to return the documents, said Frank Stapleton, a senior deputy clerk. Removing court documents is a felony offense, he said.

In a speaker phone conversation between Roback and Zuniga’s attorney, John Rowell, Roback said she took the declarations because “I was concerned that any Joe Schmoe in the public could just go in there and get a copy of the exhibits--any newspaper or newspaper reporter--anybody could go in there and look at it.”

Several calls to Roback and Douglas Adler, a partner at her law firm, were unanswered by late Tuesday.

State Farm had sought to keep Zuniga’s sworn statements under court seal, arguing that the comments are confidential and protected by the attorney-client privilege.

But the 2nd Appellate District Court ruled April 22 that Zuniga’s testimony was not privileged because “substantial evidence exists to support the implied finding of the trial court for application of the crime/fraud exception to the attorney-client privilege . . . to preclude disclosure of information of Zuniga declarations would work a fraud or injustice.”


State Farm on Monday began steps to appeal the decision to the state Supreme Court, firm officials said.

Los Angeles Superior Court Judge Aviva Bobb in May denied an injunction filed by State Farm against Zuniga to silence her. “Any contract which acts to require an employee to remain silent as to her employer’s fraud is not just and reasonable,” Bobb said in her decision.