| BUSINESSWEEK ONLINE : NOVEMBER 8, 1999 ISSUE | ||||||||
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| LEGAL AFFAIRS
'I Have Never Seen a Case Disappear Like This' Thanks to the First Amendment, Americans have a fundamental right to view court records. But good luck trying to get a peek at the fraud lawsuit Debbie Foltz filed against State Farm Mutual Automobile Insurance Co. in the U.S. District Court in Portland (Ore.) in 1994. The case centers around one of the company's most controversial practices: hiring aggressive outside ''utilization review'' companies to analyze policyholders' bills. After Foltz challenged the practice and won an undisclosed settlement from the company last year, many plaintiffs' attorneys and public interest organizations were dying to look at the evidence Foltz had marshalled against State Farm. But because of an unusually broad sealing order, most of the pretrial paperwork and all of the testimony and corporate documents submitted to the court are permanently locked away from public view. SECRECY STRATEGY. In fact, record of the suit's having ever been filed was even deleted from courthouse's electronic filing system. ''I have never seen a case disappear like this,'' says Sarah Posner, an attorney for Trial Lawyers for Public Justice in Washington, D.C., one of three public interest groups that is trying to unseal the Foltz case. Secrecy is one of State Farm's key tactics in its unending battle against plaintiffs' lawyers. It has gone to unusual lengths to shroud sensitive internal documents and trial paperwork in several big cases, including the litigation surrounding the 1994 Los Angeles earthquake and the company's use of generic car-repair parts. State Farm in-house lawyer Jeffrey W. Jackson defends this strategy as necessary to combat plaintiffs' lawyers, who share ''smoking gun'' documents with one another on the Internet and then recycle them as evidence in new cases ''whether they are relevant or not.'' Jackson adds that in the Foltz case the company is trying to seal the case record in order to protect trade secrets and some policyholders' health records. But critics say the company has a different motivation for such behavior: increasing the cost of litigation. Gary Fye, an Austin (Tex.) independent claims adjuster who has testified against State Farm, says that because most plaintiffs can't afford to get into lengthy pre-trial discovery battles with the company's giant legal department, many are unfairly forced to give up their claims. Which side is right? Traditionally, judges have deferred to companies seeking to keep sensitive documents out of the public eye. But convinced that the practice has gotten out of hand, plaintiffs' lawyers are increasingly challenging the practice--and winning. That trend could be worrisome--and potentially costly-- news for State Farm. By Mike France in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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