State Farm Returns Documents to Court File

Responding to orders by a federal judge, State Farm attorneys on Wednesday returned papers they removed from a public court file that contain a former employee’s sworn declarations that the insurance giant was cheating customers.

The documents are part of a lawsuit against State Farm and contain allegations of misconduct made by former State Farm employee Amy Zuniga. She alleges that company officials routinely defrauded policyholders and lied in court while she worked as regional claims specialist in the firm’s Newbury Park office.

State Farm attorneys had asked the 2nd Appellate District Court to seal Zuniga’s declarations; the request was denied by Judge Joan Klein on May 29. State Farm submitted another request Wednesday to allow them to take the documents back or place them under seal.

Klein had ordered the documents returned to the court file on Tuesday after learning they had been removed a day earlier.

Court Clerk Joseph Lane said Klein would rule today on the company’s request to keep the declarations out of public view.

Zuniga’s declarations were made public Monday, the same day State Farm attorney Julie Roback sent a letter to the court saying the documents were “lodged” with the court rather than “filed.” When documents are lodged with the court they can be retrieved by the parties who submitted them. Conversely, when documents are filed, they become part of the public record. Removing or tampering with public records is a crime.

In a speakerphone conversation with another attorney, Roback said she removed Zuniga’s declarations because she “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.”

Tracy Genesen, special assistant to the State Bar of California’s discipline prosecutor, said removing public records from court files is grounds for disbarment.

“In these kind of cases--where there is potential misconduct--we do conduct a full investigation,” said Genesen. “Our office will take a look at it.”

Lane said he was unclear about the status of the papers, whether they were lodged or filed. So the court, he said, is not likely to punish Roback.

“This was nothing more than a misunderstanding,” Lane said.

Douglas Adler, a partner at Roback’s law firm, says State Farm attorneys should not be held accountable for a mistake made by the court. In fact, the court suggested Roback send a messenger to retrieve the documents, Adler said.

Klein did not respond to requests for an interview.

Harvey Rosenfield, director of the Proposition 103 Enforcement Project, an insurance industry watchdog group, questioned State Farm’s motives. In a news release, Rosenfield said: “If State Farm has nothing to hide, why has it purloined the material from court records? Obviously, State Farm wishes to conceal information which, if true, would call for state and federal investigations into its conduct.”

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. In sworn statements, Zuniga accuses State Farm agents of forging customers’ signatures on forms declining earthquake coverage to avoid paying claims after the 1994 Northridge earthquake.

Zuniga says in her sworn statements that there were many “State Farm claims arising out of the Northridge earthquake . . . involving unauthorized signatures by State Farm agents . . . omitting earthquake coverage.”

Mark Lowder, deputy commissioner of the state Department of Insurance, disputes the claim. “We don’t see a pattern here,” he said, noting that only one complaint has been made to his department about alleged State Farm forgeries since 1989.

But Kurt Sjoberg, the state’s top auditor, reported in May that the agency has a backlog of more than 5,000 complaints. Budget cuts in its consumer affairs divisions have handicapped its ability to respond to unfair insurance practices, he said last month.