Drummond says in court filings he hopes to protect Oklahomans from what he alleges is State Farm's fraud scheme around roof hail damage payouts.
State Farm was originally defending itself in Oklahoma County District Court from an alleged breach of contract violation and two other charges related to the Broken Arrow couple Bill and Lacy Hursh's 2023 hail damage claim. The case is known as Hursh v. State Farm.
Now, the company faces allegations of violating the state's consumer protection and racketeering acts from Drummond.
At stake in the April 27 oral arguments and the following decision by the Oklahoma Supreme Court is whether the attorney general has the legal authority to step into a private lawsuit between a client and their insurer on behalf of residents statewide.
State Farm, which asked the state's highest court to weigh in and stop Drummond, is also the largest provider of homeowners' insurance in Oklahoma.
Former state solicitor general and now private Oklahoma City-based attorney, Mithun Mansinghani, argued on behalf of State Farm. He said Drummond is violating the state Constitution's separation-of-powers clause by attempting to regulate beyond the bounds of his elected office.
"When Oklahoma became a state, we doubled down on that separation of powers," Mansinghani said. "Not only did we separate powers between branches of government, we took the most dangerous branch, the executive branch, and separated powers within the executive branch between separately elected officials."
He referred justices to Article Six, Section 22 of the Oklahoma Constitution to make his case that the insurance commissioner alone has the authority to intervene the way Drummond did in the district court.
"There is hereby established an Insurance Department, which shall be charged with the execution of all laws now in force, or which shall hereafter be passed, in relation to insurance and insurance companies doing business in the State," the section reads.
Mansinghani also cited the 1981 case Board of Regents of the University of Oklahoma v. Baker and the 1909 case Trap v. Cook in defense of State Farm, urging the justices to "closely examine" them.
"We relied on both of these cases as the foundation of our argument in our brief," He said.
Gary Gaskins, the current Oklahoma Solicitor General, argued that State Farm's request to the court is a weak attempt to evade accountability.
"State Farm's real complaint is practical, not legal," Gaskins said. "It does not want to face governmental scrutiny of its fraudulent statewide practices."
Drummond's office is also seeking the same discovery documents tied to the private district court case, as part of his related investigation into fraudulent practices at State Farm related to.
Gaskin cited state statute laying out the attorney general's powers to justify intervention in the Hursh's lawsuit. Specifically, Title 74 OK Stat § 18b-A22.
"The legislature directed the Attorney General to, quote, 'represent and protect the collective interest of insurance consumers of this state in rate-related proceedings before the Insurance Commissioner or in any other state or federal judicial or administrative proceeding.'"
The next line in that statute, A23, grants the attorney general the power to "investigate and prosecute any criminal action related to insurance fraud."
"The Attorney General's claims and the plaintiff's claims arise from the same Hail Focus Initiative," Gaskins said. "The same discovery documents and witnesses bear on both the plaintiff's consent to the intervention. The district court considered the briefing, heard the argument and acted well within its discretion."
If the attorney can't protect Oklahomans in a case like this, then the state statute is "dead letter."
For his part, Mansinghani said his argument is based on the state constitution, rather than a statute passed by the legislature.
"Even if the AG can represent consumers before the insurance commissioner, to the extent that this authorizes him to enforce Oklahoma law against insurance companies for their insurance business conduct, it violates the separation of powers and cannot override the constitutional prohibition," he said.
If Drummond were allowed to intervene by the state supreme court and litigate based on violations of the Oklahoma Consumer Protection Act (OCPA) and the Oklahoma Racketeer-Influenced and Corrupt Organizations Act (ORICO), Justice James Winchester noted, the charges against State Farm could rise to criminal.
"So doesn't that complicate things?" Winchester asked Gaskins. "If you're an employee of State Farm, are you going to be fearful of being charged with a crime and exercise your Fifth Amendment right?
"And that could complicate this straightforward trial. Isn't that the danger of the intervention?"
Gaskins said he doesn't think it's a danger.
"I think the State Farm individuals, whoever they're going to testify, would testify truthfully," he said.
"You'd think that those employees would be happy to speak to you, knowing they could face up to ten years in prison?" Winchester said.
"The thing is… if the court were to grant an extraordinary writ here, the attorney general would just simply go and file his own lawsuit in whatever county he chose," Gaskins said. "Because this is such a massive fraud, it affects all 77 counties."
The court could take days or even months to decide on Drummond's potential participation.
