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This document is also available as a PDF. ABSTRACT: DECLARATION OF AMY GIROD ZUNIGA I, Amy Girod Zuniga, declare as follows. 1. I am an adult over the age of 18 and am not a party to this
action. I have personal knowledge of all of the following, and
if called as a witness I could and would testify competently to
the truth thereof. 2. I am a former employee of State Farm Fire and Casualty Co.
and State Farm Mutual Automobile Insurance Co. (collectively,
"State Farm" or "the Company"). I was employed there from 1988
through mid-1996, and in fact separated during the pendency of
the Taylor litigation. Since August of 1994, I worked first in
the Automobile Company's so-called "SAC" unit ("Suits Against the
Company" unit) and then in the Fire Company's SAC unit. Later
these units were renamed, "Litigation Units." My most recent job
Copyright © 1999, title before separation from the Company was Claims Specialist.
The Association of My responsibilities included evaluating bad faith suits brought
Trial Lawyers of against the Company by insureds, responding to discovery and
America. All rights monitoring litigation. I did so in connection with the Taylor
litigation.
reserved.
Terms and conditions 3. In this capacity, I am aware that there were many other State
of use. Farm claims arising out of the Northridge earthquake like the
Taylors' involving unauthorized signatures by State Farm agents
or agency employees on applications omitting earthquake coverage.
At the time of the Taylor claim, the Company was well aware that
this was a problem. As a matter of practice, the Company would
pay these claims, if it believed that the forgery issue would be
brought to light and proven by the insured. Because of the
forgery issue in the Taylor case, if the case was not dismissed
on summary judgement, it was my impression that the claim was
going to be reconsidered. However, we were waiting to see if we
could save money on the Taylor claim by having summary judgement
granted, and as part of that plan I was instructed not to provide
certain relevant information at my depositions. 4. Specifically, my supervisor in the SAC unit, Vanessa Gudelj,
and her supervisor, John Poptanich, put pressure on me to
withhold the existence of documents memorializing certain State
Farm claims handling guidelines from plaintiffs' counsel Bernie
Bernheim at my deposition, which they believed, if revealed,
would defeat summary judgement and ultimately lead to payment of
the Taylors' claim. They pressured me into not revealing the
existence of claims handling documents which established
guidelines under which claims like the Taylors were to be
handled. These included a three ring binder called "CATHR
Management Information and Memos Manual" used and maintained by
Claim Superintendent Tinga Nicholson who was the Claim
Superintendent that denied the Taylors' claim. It was responsive
to the Taylors' discovery request and we simply chose not to
produce it. Similarly, Ms. Nicholson had prepared a breakdown
of earthquake claims in her unit (the SHU unit - see below) by 1 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht category of claim, and one of the categories was "unauthorized
signatures." This document showed the percentage of total
earthquake claims which involved unauthorized signatures. This
document, too, was never produced. 5. The Taylors' claim was denied by personnel working in the
so-called "Special Handling Unit." In addition to the claims
handling documents mentioned above, we never produced to Mr.
Bernheim a document memorializing a SHU meeting at which the
subject of unauthorized signatures on applications omitting
earthquake insurance was discussed. This document has a heading
as follows: "Problem areas
- Telephone apps [applications] - EQ [earthquake] has to be in person.
Und. [Underwriting] was supposed to catch 'not signed'
- in some cases the agent or staff signed it." 6. In the SAC unit, we knew that Rod Taylor's signature on the
application was clearly not his signature. I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct. Executed this
19th day of September, 1996 at Ojai, California. Amy Girod Zuniga Bernie Bernheim (SB #144319)
Kick & Bernheim
201 N. Figueroa Street, Suite 700
Los Angeles, California 90012
(213)975-1588 Lawyers for Plaintiffs
Roderick Taylor and Krista Taylor SUPERIOR COURT FOR THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES RODERICK TAYLOR, an individual; and ) CASE NO.:BC 119992
KRISTA TAYLOR, an individual )
Plaintiffs, ) (Case assigned to the Honorable
) Charles McCoy for all purposes)
)
vs. ) DECLARATION OF AMY GIROD
) ZUNIGA IN SUPPORT OF
) PLAINTIFFS' MOTIONS FOR
) RECONSIDERATION AND
STATE FARM FIRE AND CASUALTY ) MOTION FOR NEW TRIAL
COMPANY, et al., )
Defendants. ) DATE: November 5, 1996
) TIME: 8:30 AM
______________________________________) DEPT.: 24
- ) DISCOVER CUTOFF: Vacated
AND RELATED CROSS-ACTIONS ) MOTION CUTOFF: Nov.24,1996
______________________________________) TRIAL DATE: Dec. 9, 1996
- 2 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht DECLARATION OF AMY GIROD ZUNIGA L Amy Girod Zuniga, declare as follows: 1. I am an adult over the age of 18 and am not a party to this
action. I have personal knowledge of all of the following, and
if called as a witness I could and would testify competently to
the truth thereof. 2. I am a former employee of State Farm Fire and Casualty Co.
and State Farm Mutual Automobile Insurance Co. (collectively,
"State Farm" or the "Company"). I was employed there from 1988
through mid-1996, and in fact separated during the pendency of
the Taylor litigation. Since August of 1994, I worked first in
the Automobile Company's so-called "SAC" unit ("Suits Against the
Company" unit) and then in the Fire Company's SAC unit. Later
these units were renamed, "Litigation Units." My most recent job
title before separation from the Company was Claims Specialist.
My responsibilities included evaluating bad faith suits brought
against the Company by insureds, responding to discovery and
monitoring litigation. I did so in connection with the Taylor
litigation. 3. Mr. John Poptanich, Divisional Claim Superintendent, was
head of my Litigation Unit in part of 1995 and 1996. Michael Coy
Kendall, Divisional Claim Superintendent, was his predecessor.
There was also a Costa Mesa Litigation Unit. Its personnel
included Ralph Carlino, Dana Dillabough, Diane Andrikos, Dave
Capirillo. There was also a General Claim Litigation Unit headed
by Jim Stark. Its members included Mary Ann Ridgeway, who
observed me in the first session of my deposition and Mary
Bowman. 4. I have reviewed many of the papers and declarations which
State Farm submitted in support of its summary judgement motion
and opposition to plaintiffs' motion for leave to amend. 5. While I was working on the Taylor case at the State Farm SAC
unit, Mr. Richard Churik, the operator of the Automatic
Insertion Machine ("AIM") and others at State Farm made
statements to me which are inconsistent with much of what is
contained in State Farm's papers and declarations. 6. I made a number of inspections of the AIM system with its
operator Richard Churik, with underwriting superintendent Charles
G. "Glenn" Hook, with attorney G. Arthur Meneses of the law
firm of Berger, Kahn, et al, and with a consultant named Don
Winslow. Mr. Winslow was making a film about the AIM for use in
the Taylor case, and was advising us in how we could present the
AIM to a jury in such a way as to maximize its strengths and
gloss over or hide its weaknesses. 7. Mr. Churik verbally explained the workings of the automatic
insertion machine to Mr. Meneses, Mr. Winslow and me. Mr.
Churik explained that after the machine has stopped due to a
failure to pick up a stuffer, the operator can override and
restart even if the operator has not manually corrected the
problem. Mr. Winslow and I discussed the fact that if an
operator became frustrated with the repeated failure of one of
the bins to function correctly, he could simply ignore the
problem and allow incorrectly stuffed envelopes to be mailed out.
Mr. Winslow and I agreed that in reality the machine was only as
good as the operators working it, and that this was a problem we
would have to address in making the film. I worked on "cleaning 3 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht up" the mail room crew for the film. 8. Mr. Winslow and I observed the machine for an extended
period of time on several occasions. We observed the machine
stopping numerous times due to some malfunction. In fact, I
would go so far as to say that I observed this occurring
regularly. 9. Near the machine, Mr. Winslow and I observed a square
receptacle resembling a square bucket in which were a bunch of
crumpled up mailer-type documents. They were covered in
splotches of red ink, for some reason. I asked Mr. Winslow if
this bucket of crumpled up insurance documents concerned him at
al, and he replied, in substance, "We won't take a picture of
that." 10. Posted on one of the walls is a large sign, stating in
substance: "DO NOT LEAVE PREMIUM NOTICES ON THE FLOOR." I
understood this to be evidence that someone had been leaving
important insurance documents lying around on the floor of the
room housing the AIM system. I discussed this matter with Mr.
Winslow because it concerned me. He responded that we take only
close-up shots of the machine operating so that the sign would
not appear in the film. 11. I am myself a State Farm homeowners policyholder. I told
Mr. Meneses that I, personally, had received not once, but on
two separate occasions, renewal certificates belonging to another
policyholder which had somehow been inadvertently stuffed into
envelopes with my own renewal certificates. This caused me
concern. Mr. Meneses did not respond. 12. A State Farm unit called "Administrative Services" has a
manual for operation of the AIM called a "service text, ." which
contains a section or sections pertaining to the AIM system,
dated July 1993. It was responsive to the Taylors' request for
production. Mr. Meneses and I discussed whether to produce it
to plaintiffs' counsel Bernie Bernheim. We decided not to
identify it or produce it. Mr. Churik had informed us that he
had not been in compliance with procedures in the "service text"
pertaining to maintenance of the "control sheets." The "control
sheets" were daily documentation pertaining to the particular
runs made by the AIM system. If there was more than one control
sheet for a particular day, that would show that a "re-run" had
to be performed, indicating that there was a mistake in the
original run. Mr. Churik told me that the failure to maintain
the control sheets as set forth in the service text was a
mistake. I was concerned that if this mistake got out, it would
undermine the credibility of the AIM system. Mr. Meneses voiced
the same concern to me. We decided not to identify or produce
the service text, and instead to keep its existence from
plaintiffs' counsel. 13. I noted that in his declaration, State Farm underwriting
superintendent Charles "Glenn" Hook relied on State Farm PDQ
computer screen printouts for his testimony that offers and
notifications were mailed to the mailing address on the policy.
These PDQ screens require special training to read and interpret.
Based on my training in interpreting these PDQ screens, and on my
review of the exhibits filed in support and opposition the motion
for summary judgement, it is clear to me that the PDQ screen
printouts for the early 1990s on which Mr. Hook relied were
materially inaccurate. 4 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht 14. In my review of the exhibits, I saw that none of the
declarations pages for the Stoneridge policy contained a warning
that there was no earthquake coverage, other than one created
during litigation by Mr. Hook for the 1993-1994 policy period.
This is contradictory to statements Mr. Hook made to me prior to
my separation from the Company. Mr. Hook told me that a
homeowners declaration page for a policy where there is no
earthquake coverage is supposed to have a warning under the
Company's business practices. 15. I was repeatedly told by my supervisor Claim Superintendent
Vanessa Gudelj never to use the word "forgery" in connection with
the forgeries of the signatures of State Farm insureds by State
Farm agents and agency employees. She told me to always use the
term "unauthorized signature" instead, whenever discussing this
subject. I and some of the other SAC unit personnel referred to
the word "forgery" as the "F-word." 16. John Bishop is one of the Company's senior executives at the
corporate headquarters in Bloomington, Illinois. His title is
Senior Claim Consultant. During 1996, he regularly participated
in telephone conference calls pertaining to the Taylors. Sandra
Hobbs is a long-time employee of State Farm agent Harry Gelpar.
During Ms. Hobbs' deposition, I had a very lengthy cellular
phone conference call with Mr. Bishop. Also participating in
the call was my supervisor Vanessa Gudelj, and her supervisor
John Poptanich. No outside attorneys participated in this call,
and in fact Mr. Meneses later expressed to me the sentiment that
he was concerned that he had not been invited. 17. During this call, Mr. Bishop stated that State Farm
witnesses should not admit that forgeries happen, unless and
until they are compelled to do so by Court order. Mr. Bishop
asked us whether we think that the Company will ultimately have
to admit that this happens. Mr. Bishop 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." 18. There is an insurance company called American Home which
provides errors and omissions coverage for State Farm's agents.
There are certain circumstances in which a law suit naming a
State Farm agent is tendered to American Home for a defense and
indemnification. At one point, I questioned whether the Taylors'
suit naming Mr. Gelpar should be tendered to American Home. I
was told that there was no point to doing so, because American
Home would not accept the tender in State Farm agent forgery
cases. I was told that the reason for this was that American
Home took the position that State Farm had ample notice of
conduct of this type by its agents, and that State Farm had taken
no meaningful steps to correct the problem. Therefore, American
Home's position was that State Farm had ratified and authorized
the agents' conduct, so that State Farm was responsible for
claims arising out of this type of conduct. American Home took
the position that State Farm, not American Home, should therefore
be responsible for paying these kinds of claims. 19. I was aware of the existence of a number of documents
pertaining to the Company's practices and procedures regarding
signatures and the taking of applications by agents which were
never produced to plaintiffs in the Taylor case. There is a
series of documents called "communiques" which are sent by the
Company to agents. These are produced by the Education and 5 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht Training Department. There was an entire "communique binder"
which was maintained by Ms. Marci Chairenza of the Education and
Training Department. Before Ms. Chairenza, it was maintained by
Ms. Lenore Hatzenbiler, who now works in public affairs. This
binder contains an index. Among the communiques which may be
relevant to the Taylor case but which have never been produced
are "Signatures on New Applications - Personal & Commercial,"
92-45-F, d. August 25, 1992; "Earthquake Offer Update," 91-14-F,
d. March 19, 1991; and "Earthquake Offer," 92-60-F, d. December
17, 1992. I have heard that there are other policy and procedure
documents sent to agents by the Company called "green sheets." 20. In discovery, the Taylors requested that the Company produce
its claims manuals. The Company calls its claims manuals,
"Operations Guides." The Operations Guides produced to the
Taylors were not a complete set of the Operations Guides, nor
even a complete set of the Operations Guides pertaining to the
handling of earthquake claims. Rather, plaintiffs were given a
carefully created packet from which material had been removed.
The material removed included the index. The tactic behind
producing this "created packet" of Operations Guides was to give
plaintiffs something containing no damaging information, but
which was voluminous enough to distract their attorneys. 21. David Tannenbaum is a Company employee who works in a unit
formerly called "the Discovery Unit," whose task is to locate and
produce documents and other information in response to discovery
requests. This unit is located in Bloomington and is headed by
Ms. Chris Lynch. 22. I was informed by David Tannenbaum that identical, screened
packets of Operations Guides were to be produced in all
earthquake cases in response to discovery requests which asked in
substance for "all policies and procedures regarding earthquake
claims handling," regardless of the specifics of the particular
facts of the case, and that is what I did. In fact, I do not
recall any earthquake case in which I produced anything in the
way of policies and procedures other than the created packet
described above. Not producing the index, for example, would
greatly limit the ability of plaintiffs to request other relevant
operations guides. 23. Prior to my deposition, I was specifically instructed by my
supervisor, Vanessa Gudelj, not under any circumstances to "give
up" the name of David Tannenbaum to plaintiffs' counsel Bernie
Bernheim, nor to reveal Mr. Tannenbaum's role. I received the
same instructions with regard to Mr. Tannenbaum's colleague, Mr.
Tim Crouthamel, who also worked at the corporate headquarters in
Bloomington, Illinois. 24. I produced lengthy memoranda analyzing the discovery
requests made by the Taylors through their counsel, Bernie
Bernheim. I forwarded these memoranda to the Discovery Unit. 25. In discovery responses, the Taylors asked State Farm to
identify the dates on which AIM system runs had to be repeated
due to errors. State Farm informed the Taylors that there is no
such documentation kept. This is not entirely accurate, in that
there are records kept of the postage which is placed on the
envelopes. An unusually high amount of postage for a particular
date would indicate that an AIM run had to be repeated. I
discussed this with Mr. G. Arthur Meneses of Berger, Kahn, et
al, and he dismissed it. 6 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht 26. The Taylors brought a Colonial Life discovery motion, which
was never heard due to the granting of State Farm's summary
judgement motion and the denial of plaintiffs' motion for leave
to file a third amended complaint. This motion sought among
other documents, all Special Handling Unit claims files arising
out of the Northridge earthquake, and all claims files handled by
Tinga Nicholson, Dale Henderson, and Toni Hotzel arising out of
the Northridge earthquake. 27. There were about 2000 SHU files. They were inventoried on a
PC by claims superintendent Tinga Nicholson. My understanding is
that these were primarily kept at the Lindero office. Some may
have been sent to "the pit," which is a claims file storage
facility in Newbury Park. In Shekhter v. State Farm, a Los
Angeles superior court case, I participated in a team which had
to review hundreds of claims files for production pursuant to a
Colonial Life motion and court order. 28. The Company has a computer program on its system called
"Search Express" for locating documents. Search terms can be
inputted to generate lists of responsive documents, in a fashion
similar to the Internet. 29. At the second session of my deposition, the subject of my
separation from State Farm came up. I took a break with G.
Arthur Meneses of Berger, Kahn, et al., whom the Company had
appointed to represent me in the second session of my deposition.
During the break, I told Mr. Meneses that I felt he had a
conflict of interest in representing both me personally and my
former employer at this deposition. I told him that I intended
to fire him as a result. He called my former supervisor, Vanessa
Gudelj, and had a lengthy telephone conversation with her. After
his conversation, he returned with a written script which Ms.
Gudelj had prepared for me to use in answering deposition
questions. Mr. Meneses was apologetic in communicating this to
me. I did not feel it was appropriate for me to respond to
deposition questions with "answers" memorized from a written
script. Moreover, what was in the script was not the truth. We
returned to the deposition room, and I had resolved to testify to
the truth. When the deposition resumed, Mr. Bernheim asked if I
felt uncomfortable discussing the subject of my separation from
State Farm. I said that I did, and he moved to another topic. 30. Giving me this written script to follow at my deposition was
typical of the practices and procedures I observed at the Company
in connection with the preparation of Company witnesses for
deposition. As part of my duties at the SAC unit, I participated
in the preparation of many witnesses for deposition. 31. The Company routinely retained professional witness
consultants to prepare State Farm employees for giving testimony
at deposition and at trial. Over the years, these consultants
have Mr. Steve Herzberg and Mr. Don Winslow. Typically, such
consultants would spend many hours training witnesses on how to
give up as little information as possible at deposition.
Witnesses were trained to answer questions as literally as
possible. An example that was commonly used in training
witnesses was the question, "Where is your car parked right now?"
During preparation, the witness would initially offer an answer
like, "In the parking lot downstairs." The witness would then be
told, in substance, that this was an incorrect answer because the
witness was assuming that the car had not been stolen, or towed
away, or otherwise moved since the time the witness had last seen
his or her car. The witness would be told that the only correct 7 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht answer to this question was, therefore, "I do not know." Other
tactics that were provided to the witness for use in deposition
included not looking directly at the examiner, since eye contact
would tend to facilitate meaningful communication and the giving
of information. Witnesses were taught not to answer a question
with a "yes" or "no," to minimize the likelihood of giving a
truly responsive answer. A yes or no does not give "wiggle room"
to change the answer at a later time. Witnesses were taught to
pretend not to understand the initial deposition admonition, to
throw off the insureds' attorney. 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. 32. At trial, the Company's witness tactics are different.
Consultants like Mr. Herzberg and Mr. Winslow trained the
Company's witnesses to act completely differently for the jury
trial than at deposition. Witnesses were trained to appear
helpful and polite, and to drop the evasive tactics used to keep
information from being disclosed at deposition. 33. Don Winslow prepared underwriting superintendent Charles G.
"Glenn" Hook for his deposition taken by plaintiffs' counsel
Bernie Bernheim in the Taylor case. I referred to Mr. Winslow
as a "spin doctor," because he was talented at helping us mold a
witness' story on a particular topic so that it would become the
story we wanted to tell. In Mr. Hooks' case, the story we
wanted to tell was about the supposed infallibility of the
Company's system for complying with statutory earthquake offers
and notifications. As was sometimes the case in the Company's
witness preparation sessions which I participated in, many people
attended the Hook session and added their input into how the
witness was going to tell the story. The Hook deposition prep
was attended at various times by, among others: Costa Mesa SAC
unit claims superintendent Diane Andrikos, Melody Caplan, AIM
operator Richard Churik, John Poptanich, myself, and spin doctor
Don Winslow. I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct. Executed this
25th day of September, 1996 at Ojai, California. Amy Girod Zuniga Bernie Bernheim (SB #144319)
Kick & Bernheim
201 N. Figueroa Street, Suite 700
Los Angeles, California 90012
(213)975-1588 Lawyers for Plaintiffs
Roderick Taylor and Krista Taylor SUPERIOR COURT FOR THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES 8 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht RODERICK TAYLOR, an individual; and ) CASE NO.:BC 119992
KRISTA TAYLOR, an individual )
Plaintiffs, ) (Case assigned to the Honorable
) Charles McCoy for all purposes)
)
vs. ) DECLARATION OF AMY GIROD
) ZUNIGA IN SUPPORT OF
) PLAINTIFFS' MOTION FOR
) RECONSIDERATION
STATE FARM FIRE AND CASUALTY )
COMPANY, et al., )
Defendants. ) DATE: , 1996
) TIME: 8:30 AM
______________________________________) DEPT.: 24
- )
AND RELATED CROSS-ACTIONS ) TRIAL DATE: Dec. 9, 1996
______________________________________)
- DECLARATION OF AMY ZUNIGA I, Amy Girod Zuniga, declare and state as follows: 1. I am over the age of 18 and not a party to this action. I
make this declaration in opposition to the Motion for Summary
Judgment and could and would competently testify to the facts set
forth herein if called as a witness.
2. I am a former employee of State Farm Fire & Casualty Company
and State Farm Mutual Automobile Insurance Company (collectively,
"State Farm" or "the Company"). I was employed there from 1988
through mid-1996. Since August of 1994, I worked first in the
automobile company's so-called "SAC" unit. These units were
later renamed "litigation units." My responsibilities included
evaluating bad faith suits brought against the company by
insureds, responding to discovery, monitoring litigation,
interviewing witnesses, assisting in the preparation of witnesses
for deposition, reviewing pleadings, responding to inquiries as
to how State Farm's policies were to interpreted as well as
responding to general questions which were raised regarding State
Farm's response to a particular situation. Prior to my
assignment to the SAC unit, I worked as a claims specialist and
claims representative in automobile related claims.
3. As a result of my work with State Farm I became familiar with
the procedures and practices of State Farm, the company policies
and approaches of State Farm to particular types of litigation,
including litigation arising out of automobile accidents which
involved bodily injury. I also became familiar with the methods
of training and materials provided to claims representatives by
State Farm. Finally, as a result of reviewing literally
thousands of State Farm files and of my knowledge of the
procedures at State Farm, I have knowledge and understanding of
what documents and materials are to be included in State Farm
files. THE CLAIMS FILE AND ATTORNEY'S FILE 4. I have reviewed the documents bates stamped LSSF 0001 through
0909. The first page of said documents is a cover letter from an
attorney representing State Farm (Syna N. Dennis at Atkins &
Evans) which states that the enclosure constitutes the "claims
file" in connection with both the accident of November, 1993 and
the accident of February, 1995. 9 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht 5. Her statement was false. The materials provided were
incomplete. Portions of what was expected to be included in the
claims file were not produced and in the documents produced there
was reference to documents in the claim file which were not
included. No list of any items that were privileged was
provided. (I am advised that State Farm contends nothing was
withheld.) The response to the Request for Production seeking the
claim files specified that the claim file would be produced.
This response was false.
6. I have also reviewed the deposition of Chris Arnold, claims
superintendent, which was taken in this matter. That transcript
reveals that Mr. Arnold acknowledged that the entire claims file
had not been provided and that counsel for State Farm agreed to
obtain and provide the remainder of the claims file. 7. I have been provided with documents that have been bates
stamped LSSFS 0001-392 which were purportedly produced as the
remainder of the claim file on or about October 28, 1996.
8. I have also been provided with a copy of the "attorney's
file" produced by State Farm bates stamped KF 1-517.
9. Having reviewed the documents bates stamed LSSF, those bates
stamped LSSFS and those bates stamped KF 1-517, based upon my
knowledge of the practices and procedures of State Farm the
following items were not produced and have never been identified
by State Farm as being part of the claims file or attorney's
file. These items were clearly called for by the first Request
for Production of Documents submitted by the plaintiff in this
matter. a. A key letter (1/31/95) to Mr. Rowell (LS1050) from the Claims
Representative was not in the claims file, nor
in the attorney's file (although a draft from Bartholmew's
office was included). b. Even assuming these claims were classified as a "low
impact"/"low damager" claims, there should have been
evaluations in the file. There were none. c. The "coverage card" on the first loss which was included was not
created until July, 1995 (it should have been created as soon as
the file was transferred to the bodily unit in January of 1995.)
The progress reports show that Mr. Arnold repeatedly checked the
box stating "reserves adequate" which he could not have done
unless a coverage card was opened earlier. This earlier card has
not been produced. d. The following records are not included in either the claims file
or the attorneys file. i. The Allstate Insurance Company records, produced on May 30,
1995 (194 pages). ii. The Leon H. Brooks records, produced on October 18, 1995
(108 pages). iii. The records of Bi-Coastal Payroll Services, produced on
September 28, 1995. iv. The records of Dr. Howard Aaron Aronow produced on October
4, 1995 (20 pages). 10 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht v. The records of Transamerica Insurance Group produced on October 25,
1995 (505 pages). 10. These documents should have been included in one or both
files. The documentation regarding claims handling does not
appear complete, and entries in the attorney's bills reflecting
conversations with claim's people are not reflected in the claims
file. 11. Additionally, after agreeing to a Stipulation and Order Re:
Confidentiality which was provided to me by plaintiff's counsel,
I reviewed the documents which have been bates stamped SFCM
0001-0094. According to the Stipulation and Protective Order
these are all portions of the claims manual and/or claims
handling procedures documents which are responsive to the Request
for Production of Documents submitted by the plaintiff, Request
No. 1, Item No. 2. State Farm did not identify any portion
that was not produced (as required by the stipulation). 12. Based on my own personal knowledge, State Farm's response to
the Request for Production is false and materially incomplete.
13. State Farm maintains extremely detailed "Claims Procedures
Guides" comprised of thousands of pages dealing specifically with
individual coverages under automobile policies and claims
handling procedures with respect to each claim. State Farm also
maintains a smaller document called the "Auto Claims Manual"
which, in most cases, is more general in approach.
14. Although both these documents were requested, State Farm has
only produced two portions of the "Auto Claims Manual" and has
neither produced nor identified other portions of the "Auto
Claims Manual" which are applicable to Mrs. Stoliar's claims.
In particular, the uninsured/underinsured motorists section of
the Auto Claims Manual has not been produced. Additionally, the
miscellaneous section of the Auto Claims Manual referred to in
the bodily injury section dealing with "first call" settlements
(which was apparently attempted with respect to the February,
1995 accident by Ann Spratt) was not produced. State Farm has
not produced nor identified any portion of the Claims Procedures
Guide which is applicable to Mrs. Stoliar's claims. HIDING OTHER DOCUMENTS 15. Further, in connection with my retention as an expert
witness in this case, I have reviewed the deposition transcript
of Chris Arnold and have determined that said witness
misrepresented, either intentionally or inadvertently, the
existence of certain documents. Specifically, I am aware that
State Farm generates and maintains lists of law firms that were
generally used for outside counsel. Mr. Arnold denied the
existence of such a list. There are two such lists, an accepted
group of attorneys for first party claims and an accepted group
of attorneys for third party claims. Claims representatives have
to be certified in writing that claims representatives have been
certified as reviewing the Uniform Claims Practices Act and
regulations promulgated thereunder. State Farm keeps these
records and Mr. Arnold as a superintendent, knows this.
16. Further, Additionally, Mr. Arnold did not identify any
Suits Against Company State Farm representatives as being present
when he was prepared for his testimony. According to well
established policy, a representative of the SAC unit must be 11 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht present when he is prepared for testimony.
17. Based upon my review of the portions of the claims files I
have reviewed (LSSF 1-909, LSSFS 1-302, and the depositions of
certain of the Claims Representatives, I have concluded as
follows: a. Per a State Farm policy adopted in approximately 1993 in my
region, no offer was to be made on the November, 1993 accident because
it was apparently classified as a "minor-impact" or "low damager" claim. b. This categorization was unreasonable since State Farm knew that
there was almost $3,000.00 in property damage from this accident. The
continued use of the curb side eye ball estimate as the damage to the
Stoliar's was also unreasonable because State Farm knew the Stoliar
vehicle had sustained in excess of $1,000.00 in property damage. c. Even the use of the actual repair and amount of property damage
to the insured's vehicle alone as a basis for
determining whether a case was a "minor impact" or "low damager"
was unreasonable since in my experience
as a claims representative the amount of total damage sustained
and repairs performed on both vehicles is a
much more reliable indicator of the severity of the collision. THE COMPANY "LOW DAMAGER" POLICY 18. By company policy "minor impact"/"low damager" claims were
not to be settled. Instead they were to be "fully litigated" and
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. The company policy was to "fully
litigate" such claims by: i. retaining "outside" counsel rather than attempt to resolve
the claims; ii. instructing outside counsel commence formal discovery; iii. retaining biomechanical experts and accident reconstructionists on "low
damager" cases; iv. instructing outside counsel subpoena records instead of using
authorizations to obtain medical and employment records; v. taking depositions of the claimant/insured, even after the insured had
voluntarily given a recorded statement; and vi. forcing the insured/claimant to undergo so-called IME's performed by
doctors the company was confident would give reports unfavorable to the
claimant/insured. 19. I was told of this policy when I was a bodily injury
negotiator by Superintendent Elizabeth Haines in approximately
1993. Haines instructed me to immediately implement this policy
and instructed others to do so as well in my presence. Ms.
Haines instructed me to "broadcast" this unwillingness to settle
and desire to litigate "low damager" claims to all plaintiffs
attorneys offices I dealt with. Ms. Haines told me this policy
was being implemented on a regionwide basis. 20. During this conversation and others Ms. Haines and Angelo
Mazza (Divisional Claim Manager, now two levels above Mr. Arnold
in the chain of command) communicated the "low damager" policy to 12 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht me and others in my presence. 21. The stated goal and purpose of the "low damager" policy was
to make it unprofitable, too expensive and costly, for
plaintiff's attorneys to handle "low damager" cases, even those
in which liability was clear. As explained to me, the results of
the policy were intended to be a short-term increase in legal
fees for the company but a significant long term decrease in
benefits payments once the plaintiffs bar became aware that
handling "low damager" cases would be too costly and
unprofitable. From both personal experience and from what I have
been told at State Farm, this policy was extremely effective.
When I left the comply in August of 1996 the "low damager" policy
was still in effect. THE HANDLING OF THE STOLIAR CLAIMS 22. I have been provided and have reviewed the following
materials at the request of Mr. Rowell: a. I have been provided with copies of the portions of the
claims file transmitted to Mr. Rowell on August 30, 1996, bates
stamped LSSF 1-909. I have also been provided with copies of
portions of the claims file transmitted to Mr. Rowell with a
letter of enclosed dated October 23, 1996 from Robert P. Andris
of the law firm of Ropers, Majeski, Kahn and Bently, bates
stamped LSSFS1-382.
b. I have reviewed the records of American Data Med copied from
Transamerica Insurance Group at the request of State Farm
comprising 505 pages which bear a declaration indicating that the
custodian of records produced said records on October 25, 1995 to
American Data Med.
c. I have reviewed the records of Howard Aaron Aronow obtained
by American Data Med on or about October 4, 1995 according to the
American Data Med declaration submitted therewith.
d. I have reviewed the records of Dr. Lee Sadja obtained by
American Data Med pursuant to declaration on October 4, 1995.
e. I have reviewed the records of Charles Wexler obtained from his
office by American Data Med pursuant to subpena per declaration of
June 2, 1995.
f. I have reviewed the records of Bi-Coastal Payroll Services
obtained from the custodian of records at Bi-Coastal Payroll
Services pursuant to a declaration on September 28, 1995.
g. I have reviewed the records of Dr. Leon Brooks obtained from
his offices by American Data Med pursuant to declaration on
October 18, 1995.
h. I have reviewed the records of Allstate Insurance Company
obtained by American Data Med from the Woodland Hills office
pursuant to declaration on May 30, 1995. i. I have reviewed the records of Physical Medicine and
Rehabilitation from Gerald B. Rosenberg, M.D. obtained by
American Data Med on or about October 23, 1996. j. I have reviewed the deposition of Richard A. Lonie
taken in this matter on September 20, 1996. 13 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht k. I have reviewed the deposition of Seyed Roghani taken on
September 17, 1996 in this matter. l. I have reviewed the deposition of Cathy D. Wright taken
in this matter on October 2, 1996. m. I have reviewed the deposition of Christopher O'Neal
Arnold taken in this matter on October 18, 1996, volume 1. n. I have reviewed volume 1 of the deposition of Traci M.
Bell taken in this matter on September 20, 1996 and volume 2
taken in this matter on October 2, 1996. o. I have reviewed the deposition of Richard Scott Smith
taken in this matter on September 17, 1996. p. I have reviewed the deposition of John D. Rowell and the
exhibits attached thereto taken on August 15, 1996 (volume 1). q. I have reviewed the deposition of John D. Rowell taken
September 6, 1996 (volume 2). r. I have reviewed the deposition of Robert Tessier, Esq.
taken in this matter on October 14, 1996. s. I have reviewed the deposition of Ann Gilmartin Spratt
taken in this matter on September 18, 1996. t. I have reviewed the State Farm attorneys filed together
with the privilege log indicating three pages of documents are
considered to be privileged and have been withheld and bates
stamped KF 1-517 (KF 399-397 were identified as privileged and
not produced and I have not reviewed those documents). u. I have reviewed the deposition of Dr. Lee Sadja, M.D.
taken in this matter on and October 15, 1996. v. I have reviewed the deposition of Jerome Lewis, Ph.D.
taken in this matter on October 8, 1996. w. I have reviewed the deposition of D. Martin Bennet,
M.D. taken in this matter on October 7, 1996. x. I have reviewed the deposition of Dr. Louis Vazquez,
M.D. taken in this matter on October 10, 1996. y. I have reviewed the deposition of Dr. Martin Levine,
M.D., taken in this matter on October 25, 1996. 23. The materials that I have reviewed are the type of materials which are
customarily relied upon by claims representatives, insurance company claim
personnel including those in a supervisory capacity in evaluating the
performance of their claims representatives and the appropriateness of the
handling of claims by their company. This type of evaluation was one of my
functions in the State Farm SAC unit. The following subparagraphs of this
paragraph of my declaration represent my conclusions and opinions based upon
the review referred to in the preceding paragraph: a. On November 22, 1993 Linda Stoliar was involved in an automobile
accident. She was traveling on Benedict Canyon Road in Sherman Oaks
when she stopped because a vehicle was backing into the road in front of
her. After she stopped, she was rear-ended by David Cameron. Mrs.
Stoliar was driving a 1989 Honda Wagovan Mr. Cameron was driving a Toyota
pick-up. At the time of the impact Mr. Cameron was trying to decelerate from a 14 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht speed of 35-40 miles per hour.
b. Linda Stoliar's vehicle was repaired for $1,014.00 by Foreman
Honda. (A shop recommended by Mr. Cameron's insurance company). In
addition to body work, the repair required four hours of frame straightening.
Mr. Cameron's vehicle was also damaged in the accident. He paid
$500.00 (the deductible) and his insurance
company, Allstate, paid approximately $1,400.00 for the repair.
Initially, Linda sought treatment from Dr. Martin Bennett with complaints of
neck pain and right shoulder pain. She was examined and x-rays were taken
of the cervical spine which showed loss of normal cervical lordotic curve in
the neutral lateral position, changes consistent with regional
musculoligamentous spasm. The x-rays were negative for fracture or
dislocation. X-rays of the right shoulder were negative for fracture or
dislocation as well. Conservative treatment was prescribed. However,
conservative treatment did not resolve the symptoms so Dr. Bennett
recommended an MRI of the cervical spine due to Linda's
persistent pain and headaches.
c. On December 14, 1993 Mrs. Stoliar had an MRI of the cervical
spine which showed that there was a 3 millimeter left of center
subligamentous herniation at C5-C6 indenting the anterior aspect of the
cal sac. Dr. Bennett has opined that this herniation was a direct result of
the auto accident. On May 16, 1994 she had an MRI of the head to rule
out intercranial bleeding as she still had prolonged headaches. She was
released on July 7, 1994 by Dr. Bennett who stated as follows:
"The prognosis remains guarded due to the fact that the patient may have
headaches and neck pain for the rest of her life and that the natural history
of musculoligamentous sprains and strains can, in a significant percentage
of people, show patterns of remission and exacerbations over a long
period of time." d. Mr. Cameron's carrier (Allstate) conceded responsibility for the loss and
reimbursed Linda Stoliar for the property damage to her vehicle. One week
after the accident, Richard Lonie, the State Farm Claims Representative
handling the claims, determined that Mr. Cameron was 100% at fault and
that Linda Stoliar was 0% at fault and communicated that information to
her on the same day. According to the Allstate records, Allstate also
determined that Mr. Cameron was 100% at fault and communicated this to
Mr. Cameron. Before any claim was made, State Farm sought and obtained
a signed authorization to copy Linda Stoliar's medical and employment records by
December 3, 1993. A review of the files of
Linda Stoliar's treating doctors show that State Farm never used this
authorization to copy or obtain any medical records until January of 1995
when it was used to obtain a copy of Dr. Bennet's records. No other
records were copied with this authorization.
e. The diagnosis of Mrs. Stoliar's health care providers was cervical sprain,
right shoulder sprain, right sided radiculopathy, cervical concussion, 3mm
subligamentous disc herniation and post traumatic headache, all the
result of the November 22, 1993 accident. Mrs. Stoliar incurred a
total of $14,448.29 in medical specials. f. Mrs. Stolair's State Farm auto policy provided that State Farm
was to pay $10,000.00 of medical payments regardless of fault. In the
summer of 1994, having paid less than the $10,000.00 provided for in the
policy, State Farm commenced denying payment of doctors bills submitted
to it. by Linda Stoliar's healthcare providers. No reason was given for
these denials. g. Subsequently, in January of 1995 State Farm acknowledged by
letter that it knew that the $10,000.00 medical payments coverage limit
had not been exhausted. Still, State Farm did not pay the remaining
medical expenses. It was not until written demand was made by 15 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht plaintiff's counsel in March of 1995 that State Farm finally paid
the remainder of the $10,000.00 medical payments coverage due and
owing. At no time did State Farm ever advise that any medical bill
submitted was considered by it to be unnecessary, unreasonable or
unrelated to the November, 1993 accident. h. Between the date of the accident and January of 1995, State Farm
copied no medical records of plaintiff, consulted with no doctors regarding
plaintiff's condition and had absolutely no basis for denial of these medical
payment benefits. Other than obtaining the medical records of Dr. Bennett
in January of 1995, and the records provided by Mr. Rowell in January of
1995 and again in March of 1995, State Farm did not obtain any medical
records on Mrs. Stoliar until after it had settled in September of 1995. i. After she had been released by Dr. Bennett from treatment regarding the
first accident, on February 7, 1995 Linda Stoliar was involved in a second vehicle
accident. While
stopped at an intersection she was struck in an off-set fashion from the rear
by a car being driven by Jared Tobman. Although the collision did not cause a great
deal of damage to the Stoliar vehicle, because it was an off-set impact from the rear
of the vehicle, the Stoliar vehicle was spun about and she began to experience
increased neck and back pain. Mrs. Stoliar sought medical treatment from Dr.
Bennett again. According to the State Farm claims file, as a result of the second
accident she incurred over $6,900.00 in medical expenses. One of the bills that was
incurred by Mrs. Stoliar was a MRI of the thoracic spine which had been ordered by
Dr. Bennett which was conducted in March of 1995 after her persistent back pain
remained unresolved from conservative treatment. The MRI was ordered as a result
of the second accident. The bill for the MRI was submitted to State Farm
which refused to pay it. After refusing to pay
this bill and those of Linda Stoliar's doctor, Martin Bennett, State Farm's
Claims Representative, Ann Spratt, contacted Dr. Bennett, who advised that the bills
were incurred as a result of the accident of February, 1995. This conversation
occurred on April 19, 1995. Still, State Farm refused to pay the MRI bill. State
Farm then advised it was going to submit the MRI to a doctor for review to
determine whether it was reasonable and necessary. However, State Farm
never asked the doctor is selected, Dr. Martin Levine, to review the MRI or
the medical records to determine whether or not the charge or the
treatment with respect to the MRI was appropriate. At his deposition Dr.
Levine testified that the charge and the treatment was appropriate.
Nonetheless, State Farm refused to pay for the MRI until October
of 1995 and then only on condition that Linda Stoliar settle her bodily injury
claim for $1,000.00.
j. State Farm claims never to have evaluated either of Mrs. Stoliar's claims
before September 14, 1995. However, State Farm determined that the other
driver was 100% at fault with respect to both claims and never offered
anything to settle either claim until September of 1995 when it
offered its policy limits of $10,000.00 with respect to the November 22,
1993 claim and October, 1995 when it agreed to pay the MRI bill and
$1,000.00 of uninsured motorist benefits with respect to the February 7,
1995 claim.
k. The failure of State Farm to evaluate either of these claims within a shorter
time period was a direct result of a company policy that was implemented in
approximately 1993. This policy was applied to this case based on the
fact that the State Farm appraisal of the damage to the Stoliar vehicle was
less than $500.00, even though State Farm knew that the actual damage to the
vehicle exceeded $1,000.00. Pursuant to the terms of the company
policy a "minor impact" or "low damager" designation was applied
to cases where the amount of property damage to the insured's vehicle was
"minimal" (usually $500.00 or less). When a case was so categorized, State
Farm would take a "hard ball" position regardless of the merits of the claim,
refuse to make any reasonable settlement offer and force the matter to a
formal arbitration or litigation. In addition, in order to make handling such 16 of 17 8/6/99 1:29 PM Amy Zuniga's State Farm Declaration http://www.atlanet.org/homepage/stfrmd.ht claims for plaintiffs as costly as possible, State Farm would require its
attorney to employ formal discovery devices, retain biomechanical experts
and accident reconstructionists in all of these "low damager" cases.
l. This policy was coupled with a company directive that the claims
representative personnel were to advise all counsel that State Farm would not
settle these cases and would "fully litigate" them. As indicated in the
evidence submitted herewith the goal and stated purpose of this company
policy, which was disseminated amongst the legal community at company
direction by the claims representatives and other persons working for
State Farm, was to discourage the presentation of such claims and
to discourage attorneys from representing claimants on these "minor
impact"/"low damager" claims by making it virtually financially impossible for
a claimant in such a case to obtain representation. This company
policy had its desired long term effect.
m. According to the State Farm superintendent in charge of the unit
which handled the Stoliar claim, the claim representative who worked on the
claim were well aware that they had an obligation under the insurance code
and their policy of insurance, to attempt to effectuate fair reasonable and
prompt settlements. However, as a result of Mrs. Stoliar's claims being
classified as "minor impact"/"low damager" no effort was made to settle
this case or make any offer or even evaluate the case until the
middle of September of 1995 almost two years after the initial accident and
seven months after the second accident. Further, because the second
accident was classified as a "minor impact"/"low damager" case, no effort
was ever made to evaluate it and no effort was ever made with respect to
settlement, even though over $6,900.00 in medical expenses were incurred by Mrs.
Stoliar as a result of the second accident.
n. Thus, liability was clear, and that State Farm had conceded that
the treatment (with the exception of the MRI of March 1995) was reasonable,
necessary and related to each accident (by paying the medical bills).
Nonetheless, State Farm claims that no evaluation was made and no offer
extended until September 1995. Any reasonable Claims Representative, not
bound by the "low damager" policy would conclude the claim for the
UIM benefits exceeded the policy limits. Further, in my opinion,
the refusal to attempt to settle "low damager" cases in a fair, reasonable and
prompt manner was a deliberate company policy arbitrarily implemented on a
region-wide basis without regard to the merits of individual claims.
o. Additionally, because of plaintiff's psychiatric history and
condition, according to her treating mental health care providers, State Farm's
conduct on this file was much more destructive, contributing to the
deterioration of plaintiff, suicide attempts and psychiatric hospitalizations
during 1995. I declare under penalty of perjury pursuant to the laws of the State of
California, that the foregoing is true and correct. Executed this 11th day of November, 1996 at Glendale, California. Amy Girod Zuniga, Declarant (1) In a signed statement by Mr. Cameron dated December 6, 1993, which was
contained in the State Farm claims file, Mr.
Cameron admitted that he was traveling at 35 miles per hour before the
accident. (2) This was a curb-side "eyeball" appraisal by a State Farm employee. 17 of 17 8/6/99 1:29 PM |
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