State Farm's Lawyers Admit They Filed Fake AI-Generated Case Law in California Fire Dispute

A law firm representing State Farm got caught filing legal briefs full of court cases that don't exist.

Musick, Peeler & Garrett, the outside firm State Farm hired to fight an insurance dispute in Los Angeles County, submitted motions this month citing a California Supreme Court decision from 1996 involving Pacific Gas & Electric. According to the LA Times, that case doesn't exist. The firm also cited a 2021 government case and a 2014 State Farm case to support its arguments. Neither of those exists either.

Attorney Eric Khodadian, who represents homeowner Fa'alagilagi Meni-Siliga, caught the fabrications and laid them out in a court filing, according to CalMatters. He said the motions contained "cases that do not exist, quotes that do not exist, and holdings that do not exist." Khodadian presented his findings at an August 7 hearing in Los Angeles Superior Court.

What happened next is revealing. Khodadian wrote that a State Farm lawyer, later identified as Kenneth Katel of Musick, Peeler & Garrett, was "visibly enraged" after the hearing and followed him and his co-counsel down the hallway "repeatedly demanding to see the list" of errors, according to CalMatters.

Jacquelene Robinson, another attorney at the firm, took responsibility in an August 11 motion. "I am deeply apologetic for the above-mentioned submissions and my serious lapse in professional judgment," she wrote, according to the LA Times. "As such, I accept responsibility for those inexcusable errors, and offer no excuse, only an apology." Robinson said she used a legal AI tool called Irys and never checked whether the citations were real.

State Farm distanced itself from the mess. Spokesman Tom Hartmann told the LA Times the company is working to make sure "appropriate safeguards are in place to prevent similar errors in the future" and said State Farm "expects its external counsel to conform to the highest level of ethical standards and professionalism, including in their use of AI and confirming the accuracy of all legal filings."

Still, State Farm hired this firm, and the firm's screwup happened on State Farm's behalf, in State Farm's defense. Passing the buck to outside counsel doesn't erase that the company's own litigation strategy relied on invented law.

The underlying case is a mess on its own

Strip away the AI angle and there's a real family caught in the middle. Meni-Siliga, a U.S. Postal Service carrier, filed suit in July 2024 after a 2020 fire made her Carson home uninhabitable, according to CalMatters. While repairs were underway, a storm caused additional water damage. She says delays in getting State Farm's approval meant the work never got finished.

The result, according to her own court filing: she and her husband drained their savings and retirement accounts, declared bankruptcy, and lost the house to foreclosure. "My family and I have lost forever our family home," she wrote. "We do not come from money. It took many years and sacrifice for our family to purchase our home."

State Farm's original answer to the complaint pointed fingers elsewhere, arguing that negligence by Meni-Siliga, her contractor, and a public adjuster caused the damages, and that she missed the one-year window to file her claim. The case is scheduled to go to trial in October.

This isn't happening in isolation. State Farm has faced a wave of complaints from Palisades and Eaton fire victims over what they call stonewalling and refusal to pay for toxin cleanup, according to the LA Times, and the insurer relies on outside firms across multiple wildfire-related disputes.

This is now a pattern, not a one-off

Fabricated AI citations in legal filings are becoming a recognized problem nationally. A database tracked by a Paris-based legal researcher has documented 1,922 legal hallucination cases worldwide, most of them in the United States, according to CalMatters. Stanford law professor Daniel Ho, who has studied the issue, found that some AI legal-research vendors overstated their ability to guarantee hallucination-free citations.

The stakes for lawyers who don't check their AI's work are rising. Last year a California attorney was fined a record $10,000 after filing a brief where 21 of 23 quotes were fabricated by ChatGPT, according to CalMatters. Survey data cited by CalMatters shows 41% of law firms and 47% of corporate legal departments now use generative AI in some form, which means this kind of error has more surface area to occur.

The open question is what happens to Musick, Peeler & Garrett beyond the apology. No sanctions, fines, or disciplinary referrals have been reported yet. The judge overseeing the Carson case will decide whether an apology and a corrected filing are enough, or whether State Farm's outside counsel faces real consequences before the October trial.