Sealed files to see light of day at last.

Byline: Bill Bishop The Register-Guard

A truckload of court records in a consumer fraud case kept secret for nine years will become public soon, after a federal judge in Eugene set up a process Tuesday to meet an appeals court's order confirming the public's right to see such records.

Tuesday's action by U.S. District Judge Michael Hogan is the latest step in a 1994 lawsuit filed by Debbie Foltz against State Farm Mutual Automobile Insurance Co. The suit alleged that the company conducted a phony review of her claim in order to reduce its payment for medical treatment under her auto policy.

While the appellate ruling represents a "thrilling victory" for the public's access to court records, it does not guarantee that a pattern of insurance industry fraud will be found, said Matthew Whitman, attorney for Trial Lawyers for Public Justice, a nationwide group that advocates for the public's interest.

Foltz's lawsuit against State Farm was settled out of court in 1998 with a standard confidentiality clause under which both sides agreed not to disclose terms of the settlement. However, the case caught national interest when consumer groups discovered the entire case record had been kept secret - sealed by Hogan at the request of Foltz and State Farm - so that there was no record the case even existed.

Trial Lawyers for Public Justice appealed on behalf of several groups and won in the 9th U.S. Circuit Court of Appeals in June.

It will be months before lawyers will be able to untangle the record in the Foltz case to determine whether it contains evidence that there ever was insurance industry fraud or whether any fraud continues.

"State Farm has very visibly changed their practice over the past 10 years," Whitman said. "A smoking gun that's 10 years old is not smoking anymore."

But attorney Thomas D'Amore, a Portland lawyer who specializes in litigation against the insurance industry and joined in the appeal to open the record in the Foltz case, is anxious to see what the documents reveal.

"We won't know until we review the documents. It's my opinion the practice (alleged in the Foltz case) is pretty rampant," said D'Amore, who is pursuing several similar lawsuits against State Farm - including class action cases that each include a large number of clients.

D'Amore and Whitman admitted being surprised when State Farm's lawyer, Ralph Spooner of Salem, told Hogan on Tuesday that the company is dropping all efforts to conceal parts of the voluminous record by claiming some of it as trade secrets or proprietary information protected by law from disclosure. In court, Spooner said the passage of time makes the information less important to the company.

State Farm also has agreed to turn over voluminous medical records gathered in preparation for trial of the Foltz lawsuit - with names and other private information marked for deletion from the public record. Spooner said it took three lawyers and support staff nearly three weeks to review all the documents. "It's a truckload," Spooner said.

In the past, Spooner defended the company's stance on confidentiality in the case as an essential part of the settlement. He continuously has denied that State Farm did anything wrong in the Foltz claim.

"State Farm is not trying to hide anything," Spooner said Tuesday.

Hogan indicated that his chief concern is to reproduce an accurate case record that conforms with the appeals court's June ruling, without destroying original documents. The insurance company agreed to pay the cost of a court-appointed lawyer to impartially review the entire case file to ensure that it conforms with the appeals court's June decision and Hogan's subsequent action on Tuesday.

Neither Foltz nor her lawyer, Dan Gatti of Salem, attended Tuesday's hearing.