State Farm is preventing the Oklahoma Lawyer Common over his potential to intervene in a State Farm dangerous religion case. This dispute will not be actually about intervention, separation of powers, or civil process. The true dispute is about discovery of secret paperwork and, extra exactly, whether or not policyholders, courts, and regulators ever get to see how State Farm truly decides hail harm claims behind the scenes.
Within the Oklahoma hail case,1 the Lawyer Common moved to intervene after studying that the case implicated what State Farm internally calls its “Hail Focus Initiative.” In line with the pleadings, this was not only a guideline or greatest follow, however a structured inside program that allegedly substituted State Farm’s personal secret requirements for what the insurance coverage coverage truly promised. That allegation goes to the center of what insurance coverage is meant to be: a contract of indemnity ruled by coverage language, not inside company scorecards. I wrote about this final month in What Insurance coverage Firms Don’t Need You to Know About Their Secret Claims Initiatives.
State Farm’s response was telling. Relatively than welcoming the chance to exhibit that its claims practices are truthful, clear, and in keeping with coverage language, State Farm went straight to the Oklahoma Supreme Court docket in search of extraordinary aid. It requested the courtroom to ban the Lawyer Common from intervening. That transfer alone ought to trigger policyholders and the general public to query why it’s so afraid of the legal professional common’s intervention.
Insurance coverage firms routinely inform regulators, legislators, and the general public that claims selections are made one declare at a time, based mostly on the details and the coverage. But when a case threatens to show company-wide initiatives, inside directives, efficiency metrics, vendor steering protocols, or adjustment guidelines that function exterior the coverage language, out of the blue the problem turns into existential. Discovery should be stopped. Intervention should be blocked. Extraordinary writs should be sought.
Why? As a result of claims recordsdata hardly ever inform the entire story.
A declare file exhibits what occurred to at least one policyholder. Inside claims initiatives present what occurs to 1000’s. They reveal whether or not adjusters are subtly steered towards sure outcomes. They present whether or not engineers or consultants are chosen, educated, and evaluated in ways in which favor denial over protection. They expose whether or not cost-control targets quietly override the promise to pay what’s owed.
That is exactly why discovery into inside claims packages issues a lot, and why insurers battle it so aggressively. It is usually why conventional market conduct exams so usually miss systemic issues. Whereas insurance coverage regulators overview recordsdata, they fail to overview the playbook that tells adjusters how these recordsdata are supposed to finish. I raised this problem and mentioned it in larger element in The Regulatory Blind Spot: How Insurance coverage Departments Fail to Detect Systemic Unhealthy Religion Claims Practices.
In State Farm’s current submitting, it argues that the Oklahoma Lawyer Common has no enterprise intervening in a non-public insurance coverage dispute. It says insurance coverage regulation belongs to the Insurance coverage Commissioner. That will sound tidy as a matter of institutional design, nevertheless it ignores actuality. When alleged misleading or unfair practices hurt massive numbers of shoppers, state attorneys common have lengthy acted as the general public’s lawyer. Shopper safety statutes exist exactly as a result of non-public litigation and specialised regulators don’t all the time uncover or appropriate systemic misconduct.
What actually unsettles State Farm will not be who brings the case. As an alternative, it’s what the case would possibly publicly uncover.
The Lawyer Common made clear that intervention was needed partially as a result of confidentiality rulings, protecting orders, and discovery limits within the non-public case may decide whether or not the State ever features entry to proof of statewide misconduct. That’s a unprecedented admission, and an trustworthy one. Discovery is energy. Discovery in civil lawsuits reveals fact. And as soon as the reality is understood, it can’t be simply unlearned or ignored.
State Farm warns of prejudice, delay, and burden. However these arguments ring hole when weighed in opposition to the choice of defending secret claims practices harming 1000’s. If State Farm believes its inside claims initiatives are in keeping with coverage language and good religion, why not clarify them to policyholders and share them brazenly? Why not publish how hail claims are evaluated, what requirements are used, and the way adjusters and distributors are instructed? Why not transparency?
The reply is apparent. Transparency would invite scrutiny. Scrutiny would invite accountability. And accountability would invite change.
As an alternative, State Farm selected to ask the best courtroom in Oklahoma to close the door earlier than anybody can look inside. That call speaks louder than any transient. Firms assured of their practices don’t worry discovery. Firms with nothing to cover don’t search extraordinary writs to stop questions from being requested.
This battle issues far past Oklahoma. If insurers can efficiently block discovery into inside claims initiatives by characterizing each such effort as regulatory overreach or procedural mischief, then policyholders will stay perpetually confined to arguing about particular person claims whereas systemic practices stay safely hidden. That isn’t justice. That isn’t accountability. And it’s actually not what policyholders suppose they’re shopping for after they pay premiums yr after yr.
Insurance coverage is meant to be a promise. A promise stored in good religion, based on the phrases of the coverage. When insurers substitute that promise with secret packages and undisclosed requirements, the regulation should be allowed to look backstage. Discovery will not be a nuisance in that effort. It’s the level.
Thought For The Day
“Daylight is alleged to be the perfect of disinfectants.”
— Louis Brandeis
1 Hursh v. State Farm Hearth & Cas. Co., No. CJ-2025-2626 (Okla. Dist. Ct. – Okla. Co.).