Arguments in Katrina Whistleblower Case Set for Feb. 2015Jan 2, 2015
Arguments in a whistleblower case against State Farm Fire and Casualty Co. over how it handled Katrina claims will take place on Feb. 5 2015 in New Orleans, Claims Journal reports. The arguments were scheduled by the 5th U.S. Circuit Court of Appeals.
A jury had found that the insurer defrauded the government in a policyholder claim after Katrina, and ordered it to pay $3 million in legal fees and damages. The company has appealed the order.
The 2006 whistleblower suit was filed by two sisters who worked for an Alabama contractor hired by State Farm to provide damage assessments after the wreckage of Katrina in August 2005. In 2013, the jury found that State Farm avoided covering a policyholder's wind losses by attributing the damage to storm surge, which falls under federal flood insurance. The whistleblowers allege that the fraud against the National Flood Insurance Program was common along the Mississippi coast after Katrina.
The whistleblowers attempted to file cases for many policy holders, but only one was selected because they had firsthand knowledge of how the claim was handled.
Allegedly, State Farm manipulated engineering reports so that the claims could be denied. The insurer says it correctly assessed damage and denies wrongdoing. Based on State Farm's actions, NFIP paid the policy holders the limit of $250,000 and the insurer paid $36,000 for wind damage; that policy provided over $500,000 in coverage, court documents show.
State Farm was ordered to pay $750,000 in damages to the government by U.S. District Judge Halil S. Ozerden. The whistleblowers will each receive 15 percent of the award.