Yourlawyer.com (State Farm Katrina Claims News)

Witness Says State Farm Didn't Thoroughly Investigate Katrina Claims

Fri, 22 May 2009 00:00:00 -0700

A woman who worked for State Farm on Hurricane Katrina claims has testified that the insurer did not bother to thoroughly investigate property damage for policyholders affected by the 2005 hurricane's storm surge. According to SunHerald.com, Kerri Rigsby said at the time that State Farm held that if a house in the path of Katrina's storm surge was a total loss, it was caused by water, not by wind.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

Rigsby testified yesterday at a hearing in Mississippi to determine if a whistleblower lawsuit against State Farm should go forward. According to SunHerald.com, Kerri Rigsby and her sister, Cori, have accused the insurer of conspiring with two vendors to minimize what the company owed for wind damage by overcharging the federal government for water damage. The sisters worked for independent adjusting firm E.A. Renfro, and Kerri performed work for State Farm after Katrina.

Kerri Rigsby testified that in the weeks following Katrina, she attended a State Farm meeting where adjusters were told to “hit policy limits” on flood claims and tell policyholders an engineer would be sent out to determine whether State Farm owed money for wind damage.

According to insurancenewsnet.com, Rigsby also said the company told her storm surge preceded Katrina's winds. "State Farm indicated there was no question, if (a house) was a total loss, it was caused by flood," Rigsby said. She later added, "I believe that we owe the policyholder a thorough investigation. I don't believe we did a thorough investigation down here to determine how much was wind and how much was water."

According to SunHerald.com, she also repeated allegations that a State Farm claims manager ordered reports changed if they failed to conclude that water was the cause of a policyholder’s damage. Finally, Kerri Rigsby alleged that the insurer canceled inspection reports "en masse" if too many reflected wind damage.

State Farm Convinces Some Weary Policyholders to Settle Hurricane Katrina Lawsuits

Tue, 13 May 2008 00:00:00 -0700

State Farm Insurance has settled with more than a dozen policyholders who were suing the nation's largest insurer over Hurricane Katrina damage claims. The settlements were reached with plaintiffs who only last month learned that their lawyers had been barred from representing them because of ethics violations.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

Last month, U.S. District Judge L.T. Senter barred attorneys working with Ricky Scruggs, the well-known lawyer who pled guilty in March to conspiring to bribe a judge, from representing Hurricane Katrina victims in Mississippi. Judge Senter made the ruling because of what he deemed to be “improper payments” made to Cori and Kerri Rigsby. The two sisters were employed by E.A. Renfroe & Co., an Alabama-based firm that State Farm contracted. The sisters supplied Scruggs with piles of documents they had secretly copied while employed by Renfroe. Scruggs touted the sisters as whistleblowers, but hired them as consultants and agreed to pay them $150,000 each. Payments to non-expert witnesses are limited by law, Senter said. “The payments Scruggs made to the Rigsby sisters bears no reasonable connection to any work they performed or to any expenses they incurred in testifying,” the judge wrote. “These payments were clearly improper.” The plaintiffs in the cases against State Farm were given a mere 45 days to find new counsel.

State Farm, which faces more than 200 Katrina-related lawsuits in Mississippi, quickly took advantage of Judge Senter's ruling, and made settlement overtures in letters it sent to policyholders. According to a court filing last Thursday, at least 13 homeowners were representing themselves, without an attorney, when they agreed to settle their suits for undisclosed terms. At least one lawyer representing former Scruggs clients told The Houston Chronicle that any settlement overture made by State Farm should be at least reviewed by an attorney. But it is understandable that, three years after Katrina, some policyholders would want to get their claims resolved. Clearly, State Farm is taking advantage of that sentiment.

Meanwhile, hundreds of others who haven't yet accepted State Farm's offer of a negotiated settlement may want to wait a bit longer. That's because Mississippi state insurance regulators are wrapping up a long-awaited report on State Farm's handling of policyholder claims after Katrina. According to The Houston Chronicle, the 18-month study should be completed by the end of May. Hopefully, the report will shed some more light on State Farm's conduct in the wake of Hurricane Katrina. The imminent release of the report could also be a factor behind State Farm's rush to settle Hurricane Katrina lawsuits.

Judge Dismisses Lawyers from Mississippi State Farm Hurricane Katrina Lawsuits

Mon, 07 Apr 2008 00:00:00 -0700

Lawyers representing State Farm Insurance policyholders in Mississippi suing the insurer over Hurricane Katrina damage claims have been dismissed from the case. Citing ethical concerns, U.S. District Judge L.T. Senter Jr. in Gulfport dismissed a group of attorneys affiliated with Richard "Dickie" Scruggs, the well-known lawyer who pleaded guilty last month to conspiring to bribe a judge. Judge Senter has given plaintiffs involved in the State Farm lawsuits 45 days to retain new lawyers.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

Judge Senter barred attorneys working with Scruggs from representing Hurricane Katrina victims in Mississippi because of what the judge deemed to be "improper payments" made to Cori and Kerri Rigsby. The two sisters were employed by E.A. Renfroe & Co., an Alabama-based firm that State Farm contracted. The sisters supplied Scruggs with piles of documents they had secretly copied while employed by Renfroe. Scruggs touted the sisters as whistleblowers, but hired them as consultants and agreed to pay them $150,000 each. Payments to non-expert witnesses are limited by law, Senter said. "The payments Scruggs made to the Rigsby sisters bears no reasonable connection to any work they performed or to any expenses they incurred in testifying," the judge wrote. "These payments were clearly improper."

While Scruggs had withdrawn from the State Farm litigation following his indictment on bribery charges late last year, members of his legal team went on to form the Katrina Litigation Group and continued representing plaintiffs in the Hurricane Katrina lawsuits. But the judge said that any attorney affiliated with Scruggs shared in the responsibility for his ethical lapses, as they were aware of the payments to the Rigsby sisters and did nothing to stop them.

Senter's ban applies to Barrett Law Office, Nutt & McAlister, the Lovelace Law Firm and Hesse & Butterworth and also applies to any cases against Renfroe, the firm that employed the Rigsby sisters. The judge also said the documents that the Rigsby sisters gave Scruggs can't be used as evidence unless the plaintiffs lawyers can show they were obtained through "ordinary means of discovery." Neither of the sisters will be allowed to testify for the plaintiffs.

State Farm Adjustment Firm Settles with Katrina Victims in Civil RICO Lawsuit

Wed, 14 Nov 2007 00:00:00 -0800

State Farm Insurance Company policy holders whose Hurricane Katrina damage claims were denied have reached a settlement with a firm that helped the company prepare damage adjustments. Under the terms of the settlement, claims against Forensic Analysis and Engineering Corp. will be dropped from a federal lawsuit that accuses State Farm of racketeering when it denied thousands of Hurricane Katrina insurance claims.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

But many Gulf Coast policyholders claim that the tactics used by State Farm and other insurers to avoid paying claims went far beyond denying payment for water damages. They assert that insurers colluded with adjusters like Forensic Analysis and Engineering to alter damage reports in a way that favored insurance companies. Earlier this summer, one engineer who examined damaged Gulf Coast homes for insurance companies told Bloomberg.com that some of his reports were altered by the companies to say that homes were damaged by flood, and not by wind. By altering these reports, the insurance companies saved tens of thousands of dollars. In response to this despicable behavior, more than 1000 Katrina homeowners have sued their insurance companies over claims.

Forensic Analysis and Engineering agreed to the settlement following a court decision that would have allowed one of the attorneys suing State Farm to furnish a copy of the firm’s employee computer hard drive to a grand jury. That attorney is suing State Farm for violations of the Racketeer Influenced Corrupt Organization Act (RICO). Civil RICO allows victims of criminal racketeering to be compensated for their losses, although a criminal conviction is not necessary to make the civil claim. A plaintiff who proves a civil RICO claim would automatically receive judgment in the amount of three times their actual damages and would be awarded their costs and attorneys' fees. The terms of the settlement with Forensic Analysis and Engineering are being kept confidential, but an attorney for some of the State Farm plaintiffs said the agreement would make the RICO case easier to prosecute.

Hurricane Katrina caused more than $80 billion in damage along the Gulf Coast, making it the single most expensive natural disaster in US history. The tactics used by insurance companies like State Farm have also led to the most insurance lawsuits to ever follow a natural disaster in the US.

State Farm Settles Hurricane Katrina Claims With 103 Mississippi Policyholders

Tue, 18 Sep 2007 00:00:00 -0700

More than two years after Hurricane Katrina devastated the Gulf Coast, some State Farm Insurance Company policy holders in Mississippi have finally settled claims with the insurer.   But the 103 policy holders who were finally able to resolve their claims represent just a small fraction of homeowners who sued insurance companies following Hurricane Katrina.   In fact, State Farm alone still faces nearly 2,000 lawsuits in Mississippi, Louisiana and Alabama over its handling of Katrina claims.

The terms settlement, which covers 103 Mississippi homeowners, are confidential.   But the lawyer representing all of the policy holders told the Associated Press that the settlement is proof that “small individuals can stand up to large insurance companies and still have a resolution that is acceptable to them”.   Of the 103 policyholders involved in the settlement, forty-seven had already filed suit against State Farm, while the rest where preparing to do so.

State Farm was the largest insurer in Mississippi when Katrina made landfall in 2005 along the state’s Gulf Shore.   Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane.   Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims.   Some insurance companies initially made offers to settle claims for onlyn pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

On January 11, 2007 a federal judge ordered State Farm to pay $223,292 in damages to a couple whose home was damaged by Hurricane Katrina. The judge also awarded the couple $2.5 million in punitive damages for State Farm's failure to pay the claim. Less than two weeks after this ruling, State Farm entered into an agreement to settle hundreds of other suits brought by angry policyholders. That same month, State Farm agreed to pay out more than $80 million to settle with another 640 Mississippi policyholders.   And in April, State Farm agreed to pay out another $50 million after re-evaluating the claims of 35,000 Mississippi residents.   In regards to this latest settlement, a representative from State Farm told the Associated Press that it was “pleased with this settlement in that it spares our customers and our organization from time-consuming and expensive litigation.”

Hurricane Katrina caused more than $80 billion in damage along the Gulf Coast, making it the single most expensive natural disaster in US history.   The tactics used by insurance companies have also led to more insurance lawsuits than any other disaster.

Miss. Attorney General to Sue State Farm

Tue, 01 May 2007 00:00:00 -0700

Mississippi Attorney General Jim Hood said Tuesday he plans to sue State Farm Fire and Casualty Co. because he believes the insurer failed to honor the terms of their agreement for a mass settlement of policyholder claims over Hurricane Katrina damage.

Hood, who agreed in January to drop State Farm from a civil suit his office filed less than a month after Katrina, said his office is in the "final stages" of drafting a new complaint that accuses State Farm of breach of contract.

"They can't just enter into an agreement and back out of it," Hood told The Associated Press during a telephone interview Tuesday.

State Farm spokesman Phil Supple said the company met its legal obligations in the proposed settlement and is disappointed that Hood plans to sue.

"We are at a loss to understand Mr. Hood's motives for his actions," Supple said.

Hood, however, said the Bloomington, Ill.-based insurer hasn't adhered to the terms of a deal that called for the attorney general to drop State Farm from the lawsuit he filed against several insurers for refusing to cover damage from Katrina's Aug. 29, 2005, storm surge.

State Farm agreed to pay at least $50 million to roughly 35,000 southern Mississippi policyholders who hadn't sued the company but could have their claims reopened. The deal fell apart after a federal judge refused to endorse it.

At the time, U.S. District Judge L.T. Senter Jr. said he needed more information about how many policyholders would benefit from the mass settlement and how much money they would be guaranteed.

Hood said his deal with State Farm isn't satisfied by the company's separate, more recent agreement with Mississippi Insurance Commissioner George Dale. State Farm's deal with Dale also calls for the company to pay at least $50 million to 35,000 policyholders whose claims would be reopened and possibly paid, but it isn't subject to judicial oversight.

"It doesn't have all the protections for the insureds that the judge's requirements would have," Hood said. "They're still going to have to put in some of the protections that (Senter) pointed out."

Hood said he isn't seeking to stop State Farm from consummating its deal with Dale.

"If they're actually giving money to their insureds, I'm happy to let them continue that," he said. "We're just trying to make them do what they said they would do. The program that they've got going on with Dale doesn't do that."

Last month, Hood had asked Senter to let him intervene in the settlement between State Farm and policyholders' attorneys so he could enforce his end of the agreement. Senter, however, said Hood's request was moot because the plaintiffs' lawyers had withdrawn their request for the judge's support.

Supple said State Farm is "disappointed Mr. Hood would take this action as we prepare to distribute millions of dollars to our policyholders, particularly since Mr. Hood repeatedly showed support for (January's proposed settlement) when it was submitted."

Hood said the suit will be filed in the "next couple of weeks," but he refused to say in which court.

Hood also agreed in January to end a criminal investigation of State Farm's claims handling practices after Katrina. A grand jury was hearing testimony when Hood and State Farm reached their agreement.

Hood wouldn't say if he is considering reviving his office's criminal investigation of State Farm, but he noted, "The grand jury is still there and available."

E-mails may aid Katrina homeowners' case

Wed, 11 Apr 2007 00:00:00 -0700

E-mails sent by officials of an engineering firm that assessed Hurricane Katrina claims suggest that State Farm Insurance Co. wanted engineers to blame damage on flooding so that it could make minimum settlements with policyholders.

The e-mails, obtained Tuesday by The Associated Press, indicate that State Farm was threatening to dismiss Raleigh, N.C.-based Forensic Analysis & Engineering Corp. less than two months after Katrina hit on Aug. 29, 2005.

Attorneys for homeowners suing State Farm claim the e-mails support their argument that the insurer pressured its engineers to alter their reports on storm-damaged homes so that policyholders' claims could be denied.

State Farm denies that the company pressured engineers to alter their conclusions.

State Farm and other insurers say their homeowner policies cover damage from wind but not rising water, including wind-driven storm surge.

The e-mails between Forensic president and CEO Robert Kochan and Randy Down, the firm's vice president of engineering services, outline complaints about the firm's work from Alexis "Lecky" King, a State Farm manager in Mississippi.

In an e-mail dated Oct. 17, 2005, Kochan says the firm will continue working with State Farm, but discusses needing to "redo the wording" of a report after a discussion with King "such that the conclusions are better supported."

It also says King didn't want local engineers to inspect properties because they were "too emotionally involved" and were "working very hard to find justifications to call it wind damage when the facts only show water induced damage." She was also apparently upset that a report was based upon eyewitness accounts, the e-mail said.

In a reply dated Oct. 18, 2005, Down questioned the insurer's motivations and questioned if there was an ethical problem with State Farm telling the firm what to put in reports. He also suggested that on another occasion, State Farm asked the firm to remove information from a report because "they would then have to settle."

"I really question the ethics of someone who wants to fire us simply because our conclusions don't match hers," Down wrote in an e-mail dated Oct. 18, 2005.

"But what about the obvious fact that SF would love to see every report come through as water damage so that they can make the minimum settlement," he wrote.

A Tampa, Fla.-based attorney who has sued State Farm on behalf of dozens of homeowners, said the e-mails are "the first paper evidence we've got where you can see engineers expressing concern about being pressured to change reports."

"Whoever Randy Down is deserves a gold star on his forehead for being one of the most ethical individuals," the Florida attorney stated.

Another attorney who is part of a legal team that sued State Farm on behalf of hundreds of homeowners, said Forensic turned over the e-mails as part of the pretrial discovery process for one of the lawsuits. The e-mails, he added, "confirm everything that we have always suspected."

Kochan, in an interview, said plaintiffs' attorneys are taking the e-mails out of context. King "just felt like we weren't doing a technically accurate job," but she wasn't pressuring Forensic to change conclusions so that claims could be denied, Kochan said.

Down, who has since left Forensic and started his own engineering company, said in an interview Tuesday that he was relying on "secondhand" information about State Farm's complaints and wasn't directly involved in Forensic's work on Katrina claims. He said the threat to fire the firm came "out of the blue."

"The question was why," Down added. "The initial internal discussion I heard is that they didn't like our reports."

State Farm spokesman Phil Supple rejected the notion that the company pressured engineers to alter their conclusions on storm damage so that claims could be denied.

"Our employees are committed to conducting themselves in an ethical and appropriate manner," he said. "Any suggestions to the contrary are simply wrong."

Judge Says No to Class Action Against State Farm

Fri, 23 Mar 2007 00:00:00 -0700

A federal judge Thursday refused to allow a class action against State Farm Insurance Cos. over the insurer's denial of claims on Mississippi's Gulf Coast after Hurricane Katrina.

State Farm policyholder Judy Guice had asked U.S. District Judge L.T. Senter Jr. to permit her to join other policyholders whose homes were reduced to slabs by the August 2005 storm in a class action against the Bloomington, Ill.-based insurer.

But the judge, who heard testimony on the proposal during a Feb. 28 hearing in Gulfport, Miss., ruled Thursday that a class action for "slab cases" is "inconsistent with the requirements of due process."

"While each of the many 'slab cases' has in common the fact that the insured property was totally destroyed during Hurricane Katrina, the many other factual differences between the cases preclude the relief that Guice is seeking," Senter wrote in his three-page ruling.

In a class action, a court authorizes a single person or a small group of people to represent the interests of a larger group.

A trial for Guice's individual lawsuit against State Farm is scheduled to start in Gulfport in May.

During last month's hearing, several policyholders pleaded with Senter to find a speedy way to resolve hundreds of lawsuits that have been filed against State Farm and other insurers after Katrina.

The insurers say their policies cover damage from wind but not rising water, including storm surge.

Senter has expressed strong support for using court-ordered mediation to clear a backlog of federal lawsuits over Katrina damage. He said last month that a court-ordered mediation program, which has settled at least 47 of 88 cases heard so far, has exceeded his early expectations.

The judge, however, has solicited ideas on other ways to resolve cases in a "just, speedy and inexpensive" manner.

One of Guice's lawyers, argued during the hearing that the facts in each "slab case" against State Farm are essentially the same and should be heard together. State Farm says the cases must be tried separately because the facts of each claim are different.

Senter held a separate hearing Feb. 28 on the terms of a proposed settlement that calls for State Farm to pay at least $50 million to roughly 35,000 policyholders who didn't sue the company but could have their claims reopened.

After the hearing, a team of lawyers withdrew their request for Senter to sign off on the agreement, citing a legal "stalemate" and the judge's apparent reluctance to approve the settlement. Senter hasn't ruled on that earlier request to approve the deal.

Meanwhile, Mississippi Insurance Commissioner George Dale announced Monday that his office has reached a separate agreement with State Farm that calls for the company to re-evaluate and possibly pay thousands of claims.

In January, Senter presided over the first jury trial for a Katrina insurance lawsuit. He sided with policyholders Norman and Genevieve Broussard in that case, saying State Farm acted in a "grossly negligent way" by denying their claim.

Senter ruled that State Farm has the burden of proving how much damage resulted from flood water.

Settlement reached in Katrina lawsuit

Wed, 21 Mar 2007 00:00:00 -0700

State Farm settled out of court with a Biloxi, Miss., couple whose lawsuit over Hurricane Katrina damage was scheduled to be tried next week in federal court, a lawyer for the homeowners said Tuesday. Terms were not disclosed.

State Farm's settlement with John and Ann Untershine marks the fourth time this month that the Bloomington, Ill.-based insurer has settled out of court with policyholders whose homes were destroyed by Katrina.

An attorney who represented homeowners in all four cases set for trial this month against State Farm Fire and Casualty Co., said settlements are becoming easier to broker as more Katrina insurance cases are tried.

"Our hope all along is that once we tried a few of these cases, it would put both sides in a better position to evaluate these claims," he said.

State Farm spokesman Phil Supple said of the latest settlement that "we're pleased we were able to come to an agreement before trial and avoid potentially lengthy and costly litigation for our customers as well as our company."

Hundreds of policyholders in Mississippi coastal counties filed lawsuits after State Farm denied at least part of their claims. State Farm and other insurers say their policies cover damage from wind but not from water, including wind-driven storm surge.

Regulator: State Farm will re-examine Katrina claims

Tue, 20 Mar 2007 00:00:00 -0700

State Farm Fire & Casualty Co. will re-examine more than 35,000 policyholder claims filed after Hurricane Katrina and "make millions of dollars available" for additional payments, Mississippi Insurance Commissioner George Dale said Monday.

Dale said the agreement between his office and State Farm covers homeowners, renters and commercial claims in Mississippi's three coastal counties.

The agreement with the Bloomington, Ill.-based insurer includes claims that are in mediation, those that are the subject of pending lawsuits and those that have been settled.

"If they feel like they were mistreated and not handled properly, they, too, can have their case reopened and looked at by additional adjusters," Dale said of customers who already have settled.

Dale said State Farm agreed to the re-examination based on his agency's examination of its handling of Katrina claims and the recent withdrawal of a proposed class-action settlement involving the insurer.

On March 12, a team of lawyers who helped negotiate the proposed settlement withdrew their request for U.S. District Judge L.T. Senter to approve the deal.

Senter had been asked to approve a settlement calling for State Farm to pay at least $50 million to policyholders who haven't sued the company. That deal, reached in January, called for State Farm to reopen, review and possibly pay 35,000 to 36,000 claims.

"When I learned that the proposed class-action settlement had stalled, I felt it presented an opportunity to negotiate with State Farm to bring closure for coastal policyholders," Dale said Monday.

State Farm spokesman Phil Supple said the company's agreement with Dale "generally follows" the same terms as the agreement that Scruggs presented to Senter in January. The company has agreed to pay a minimum of $50 million, but "there's no ceiling" on the total amount paid, he said.

One key difference between the two deals, according to Supple, is that Dale's mediation program would aim to resolve any lingering disputes between State Farm and policyholders.

Katrina claims reopened

Tue, 20 Mar 2007 00:00:00 -0700

State Farm will "reopen and adjust" more than 35,000 Katrina claims, state Insurance Commissioner George Dale said Monday, including those still in litigation and mediation and those that were previously settled.

Dale said he took advantage of a break in class action litigation to craft a new deal with State Farm Fire and Casualty Co. Lawyers representing plaintiffs recently withdrew a proposed settlement agreement with State Farm.

State Farm spokesman Phil Supple on Monday said the main reason the company reached an agreement with Dale was that it "wants to avoid costly and lengthy litigation for our customers and ourselves." He said that while those who already settled claims "won't make more money than they actually lost," many will receive more money than previously offered.

"It will be new adjusters looking at it with fresh eyes and the luxury of hindsight," Supple said. "And there's another big motivating factor we want to resolve these claims."

Unlike the proposed court settlement, Supple said, the agreement with Dale would not include "binding arbitration," and "if you don't like what you hear, you can resume your litigation this is designed to open up a lot of options."

The agreement includes all residential and commercial policies in Hancock, Harrison and Jackson counties.

Supple said the company will be contacting policyholders directly by mail and running advertisements and talking with the news media within a couple of weeks. He said no 1-800 number has yet been established, but probably would be soon.

Supple said his company has agreed to set aside a minimum of $50 million for policyholders, but "there's no ceiling on that."

Dale, who is running for re-election this year, said, "This plan presents a consumer-friendly way to resolve these disputes and quickly put substantial amounts of money into the hands of those waiting to rebuild their homes and lives on the Coast."

Dale, in a press release on Monday, said the State Farm agreement and legislation passed last week by the state Legislature to fund and reform the state-sponsored insurance wind pool are steps "toward a more stable insurance environment."

Dale in the press release took credit for the wind pool legislation "that was presented by my office." But lawmakers and others who helped craft and pass the wind pool bill have criticized Dale, saying he was sluggish in providing any help. They accused his office of causing delays by not providing numbers or estimates key to drafting legislation. During one legislative hearing, he suggested lawmakers hold off on passing any wind pool legislation during the regular 2007 session.

Some have suggested Dale is only now - nearly two years after the storm trying to serve as a consumer advocate with insurance companies because he is running for re-election and faces a formidable opponent, state Sen. Mike Chaney, R-Vicksburg. Dale, the longest serving politician in the state after eight terms, has denied his re-election goals enter into any of his policy decisions.

Dale said Monday that he is continuing discussions with State Farm, which has stopped writing new homeowner policies in Mississippi, about reopening its market here and that "further announcements that will aid in stabilizing the Mississippi insurance market could come in following weeks."

New Orleans residents scramble to beat deadline for filing claims over Katrina levee failure

Tue, 27 Feb 2007 00:00:00 -0800

Residents scrambled to beat a deadline for filing court claims against the federal government and the Army Corps of Engineers for damage resulting from the failure of levees following Hurricane Katrina.

The corps says Thursday 1½ years after the storm hit is the deadline for the Katrina litigation claims to be submitted. Roughly 30,000 residents already had filed a claim as of late last week, but Thursday's deadline surprised many others whose homes and businesses were damaged or destroyed in the flooding following the storm.

On Monday, a steady procession of people stopped by the corps' Leake Avenue office to drop off their claims in person. Charles Brown, 47, said he didn't know about the deadline until Sunday.

“A lot of people aren't going to get their claims in,” said Brown, who has been living in a government-issued trailer since his Gentilly home was damaged by the storm.

Another claimant, Janet Long, 45, used the camera in her cell phone to photograph herself inserting the form in the drop box to prove that she filed a claim on her mother's behalf.

“It's aggravating, but it's worth it,” said Long, whose mother's home in the city's Lakeview neighborhood was flooded.

While many Mississippi homeowners harmed by Katrina are suing their insurers, much of the legal wrangling in Louisiana is over whether flooding from the failed levees was manmade rather than from a natural disaster.

One of the plaintiffs' attorneys, asked a federal judge to consider postponing the filing deadline. The plaintiffs argue that federal officials were reneging on an agreement to let claimants file until Aug. 29, 2007, the two-year anniversary.

“There is much anguish and uncertainty among all Hurricane Katrina victims concerning their rights,” the plantiffs' attorneys wrote. U.S. District Judge Stanwood Duval didn't immediately rule on the request.

Judge: Corps can be sued over flood

Sat, 03 Feb 2007 00:00:00 -0800

The Army Corps of Engineers can't assert immunity in a lawsuit over the catastrophic flooding following Hurricane Katrina, because of the plaintiffs' claim that flooding stemmed from the agency's negligence in fixing defects in the Mississippi River-Gulf Outlet navigation project that it had known of for years, a New Orleans federal court judge ruled Friday.

U.S. District Judge Stanwood Duval's ruling cleared the way for WDSU-TV anchorman Norman Robinson, a Lower 9th Ward couple and two St. Bernard Parish residents to press for trial of a lawsuit blaming Army Corps of Engineers negligence for the flooding that destroyed their homes in Hurricane Katrina.

The plaintiffs' legal team said the case could go to trial by early next year, after Duval rejected corps arguments that the case should be tossed out because federal law makes the agency immune from lawsuits over its flood control projects and policy decisions.

Duval said the suit brought by Robinson and his fellow plaintiffs targets not a flood control project but what it calls the corps' negligent failure to fix defects in a navigation project it built years ago, the 70-plus-mile-long Mississippi River-Gulf Outlet shipping channel.

That inaction, the suit claims, caused destruction of more than 100 square miles of wetlands that once protected the area from storms and turned the channel into a superhighway that funneled Katrina's levee-bursting tidal surges into their homes.

"This is a landmark victory for Katrina victims in New Orleans and St. Bernard Parish," said one of the plantiffs' lawyers, who heads the team of lawyers from 20 firms around the nation that filed the case last spring.

"In a courthouse in New Orleans, because of Katrina, a judge has stood up and said the (U.S.) Constitution means what it says the government can't take your property without just compensation," the attorney said.

Individuals hoping to share in whatever compensation the corps may be ordered to pay must, by Aug. 31, send the corps what's called a Form 95 signaling their intent to sue the agency.

One of the plaintiffs'attorney representative on a committee helping plan for trial of all Katrina-related case on Duval's docket, said the MR-GO case ruling will be useful for court challenges to more than 100 corps-built levees around the nation that a recent study deemed unsafe.

But in the near term, a plantiffs' attorney said, Friday's ruling in the MR-GO case could buttress his plans for a new federal lawsuit aimed at holding the corps responsible for the 17th Street Canal floodwall break that left 80 percent of New Orleans flooded after Katrina.

One of the plantiffs' attorneys said the suit will claim that the corps gave the city Sewerage & Water Board a permit to dredge the 17th Street canal, work that allowed water to undermine soil beneath the floodwall, ultimately causing the wall to break.

"We believe (the canal dredging) was a navigation project and not a flood control project," said a plaintiffs' attorney.

Judge OKs Katrina flood suit vs. Corps

Fri, 02 Feb 2007 00:00:00 -0800

Residents whose homes were flooded during Hurricane Katrina can sue the Army Corps of Engineers over claims the agency ignored warnings about defects in a nearby navigation channel, a federal judge ruled Friday.

The ruling, one of the first significant decisions in a set of cases over what caused the flooding, may force the Corps to hand over documents about the management of the channel.

"Now we will have an opportunity to see what goes on behind closed doors," said a trial lawyer for the plaintiffs.

Eugene Pawlik, a Corps spokesman in Washington, said the agency's lawyers are reviewing the ruling but did not have any immediate comment.

The Corps and federal government had argued they were immune to legal challenges because decisions about the waterway were based in policy.

But U.S. District Judge Stanwood Duval said there is no way to know that at this point, and said plaintiffs should get a hearing for their allegations.

At issue is a 76-mile shipping channel built in the early 1960s as a shortcut to New Orleans. For years, environmentalists and others have criticized the Mississippi River-Gulf Outlet because it has eroded enormous tracts of wetlands and increased the threat of flooding.

During Katrina, storm surge traveled up the channel and overwhelmed levees protecting St. Bernard Parish and eastern New Orleans, according to scientists. The Corps of Engineers has acknowledged that the channel contributed to the region's flooding and the agency wants to guard against future flooding by building flood gates.

Judge Rejects State Farm Settlement

Mon, 29 Jan 2007 00:00:00 -0800

In another apparent legal blow to State Farm Fire & Causalty Co., U.S. District Judge L.T. Senter rejected a Mississippi class-action settlement related to Hurricane Katrina damage, claiming that the proposed settlement favored the needs of the insurance company over those of the policyholders.

Senter asked for more information before he would approve the deal. “In the absence of substantially more information than I now have before me, I am unable to say, even preliminarily, that the proposed settlement establishes a procedure that is fair, just, balanced, or reasonable,” he said in his decision.

The initial agreement submitted to Senter for approval called for $80 million to be used to settle the 640 existing lawsuits in Mississippi, with an additional amount of at least $50 million earmarked for settlement of reopened claims. (There are roughly 35,000 policyholders who are eligible to have their claims revisited.) However, the two parts of the agreement were submitted as separate settlements. Senter hinted that the class-action settlement should include both current litigants as well as other policyholders.

“There is no evidence that State Farm will evaluate the class members’ claims in any way different from the way these claims have already been evaluated by State Farm in the past adjustment process for these claims,” Senter said.

He added, “To be a true global settlement, any proposed arrangement should take all of the State Farm claims into consideration, and such a settlement agreement should represent a realistic compromise that both parties will find attractive. It would be wise for the parties who have proposed the current class settlement to broaden the scope of the settlement discussions to include the representatives of those parties currently engaged in litigation.”

Mississippi Attorney General Jim Hood had been working with State Farm representatives to reach the settlement. Hood filed a major civil suit against the insurer for fraudulently denying claims and was also overseeing a criminal investigation undertaken by the state.

“Although it was contemplated that the federal court was better prepared to handle this type of process, our office did not negotiate the terms of the proposed federal court class action. In fact, our office had reservations about some of the terms of the class agreed to by the plaintiffs and State Farm,” Hood said in a statement.

“Nevertheless, I knew that Judge Senter would make sure that the class was a fair procedure for all. I am confident that Judge Senter will make the plaintiffs and State Farm fix the problems he has raised in his order.”

State Farm agrees to pay up for Katrina in Mississippi

Wed, 24 Jan 2007 00:00:00 -0800

State Farm has agreed to pay thousands of Mississippi homeowners hit by Hurricane Katrina likely hundreds of millions of dollars in a landmark settlement that's expected to reverberate across the storm-ravaged Gulf Coast.

The company agreed to a deal under which it will reopen thousands of homeowners' claims and is likely to pay as much as $500 million, Mississippi Attorney General Jim Hood announced Tuesday. There's no cap on the payout. The insurer will have to pay at least $50 million under the deal negotiated.

In a related development, State Farm will settle more than 600 individual Mississippi homeowners' Katrina claims for roughly $80 million, according to a person with direct knowledge of the negotiations who didn't want to be named because the settlement is confidential.

The settlement applies only to Mississippi homeowners not to the thousands in Louisiana who are suing State Farm and other insurers, arguing that wind and rain ravaged their homes. Homeowners' policies cover wind and rain damage, but not flood damage, which is covered by federal flood insurance.

Homeowners could begin receiving insurance checks within a few weeks, after the class-action settlement is approved, as expected, by U.S. District Court Judge L.T. Senter Jr. As part of the agreement with State Farm in Mississippi, Hood agreed to drop a criminal probe against the insurer related to its claims-handling process.

Phil Supple, a spokesman for State Farm, the USA's largest home insurer, said its goal has always been to "reach a just, speedy and efficient resolution to these matters." A settlement "is in the best interest of our policyholders," Supple added.

About 35,000 Mississippi homeowners are eligible to have their claims reopened. For about 1,000 Mississippi residents whose homes were reduced to slabs by Katrina, State Farm will offer at least 50% of the homeowner's insurance on the property structure. The average house in Mississippi costs about $200,000, Hood estimates. Thousands more will receive lower amounts.

Homeowners who don't want to settle with State Farm can still sue the insurer. But the deal "gives a new opportunity for thousands of people to recover their insured losses through a quick process.

State Farm is fighting hundreds of other Katrina-related lawsuits along the Gulf Coast, including in Louisiana. Attorneys in those cases said they hoped the Mississippi development would cause State Farm and other insurers to settle quickly.

State Farm to pay millions for Katrina

Wed, 24 Jan 2007 00:00:00 -0800

State Farm Insurance has agreed to pay hundreds of millions of dollars to owners of Mississippi Gulf Coast homes destroyed by Hurricane Katrina.

The agreement settles lawsuits filed by 640 homeowners and allows thousands of others to reopen damage claims that State Farm previously closed, The New York Times reported.

The agreement does not apply to New Orleans, where the failure of the levees left much of the city underwater for days.

State Farm the nation's largest home insurer and the biggest in Mississippi will pay an initial $130 million and perhaps several hundred million dollars more by the end of the year, depending on how many policyholders request their claims be reopened, the Times said.

About 35,000 homeowners along Mississippi's 70-mile-long coast are eligible.

The deal, which insurance executives said would likely be copied by other carriers, ends a public relations headache for State Farm.

The company had given just a few thousand dollars and sometimes nothing to residents whose houses were destroyed in the storm.

Since Hurricane Katrina struck, insurance companies have paid $5.3 billion to Mississippi homeowners and $10.3 billion in Louisiana.

State Farm settles suit on Katrina

Wed, 24 Jan 2007 00:00:00 -0800

State Farm Mutual Automobile Insurance Co. on Tuesday agreed to settle a class-action lawsuit that will give thousands of policyholders another shot at having their Hurricane Katrina claims evaluated and that could cost the insurer as much as $500 million, according to one estimate.

The deal with Mississippi Atty. Gen. Jim Hood and lawyers for thousands of policyholders in the state resolves a civil lawsuit, as well as a criminal probe that Hood had initiated against the Bloomington, Ill.-based insurer for allegedly refusing to adequately cover Katrina-related damages in 2005.

"It's in the best interest of our policyholders, State Farm and the effort to rebuild Mississippi," State Farm spokesman Fraser Engerman said of the settlement, which covers the three counties most affected by the hurricane.

The settlement, which came only weeks after State Farm was ordered to pay $2.5 million in punitive damages to one Mississippi couple, enables as many as 35,000 policyholders to ask the insurer to re-evaluate their claims. If they choose, they can have their claims resolved through binding arbitration.

Hood said State Farm must pay a minimum of $50 million to the policyholders after their claims are reviewed, The Associated Press reported.

But depending on how many policyholders qualify, the company could end up paying hundreds of millions of dollars more than that because there isn't a cap on the amount.

Bloomberg News estimated that the settlement could ultimately cost State Farm as much as $500 million.

State Farm's settlement came only weeks after it was ordered by a jury to pay a Biloxi couple $2.5 million in punitive damages. A judge in the case said State Farm was liable for $223,000 in compensatory damages.

Policyholders with other lawsuits pending against State Farm are excluded from the settlement, State Farm said.

"I hope that this settlement with State Farm will encourage other insurers to join the settlement, so that we can get a quick flow of capital into our coastal counties at this critical time," Hood said in a statement.

U.S. District Court Judge L.T. Senter in Gulfport, Miss., has more than 200 other Katrina-related suits on his docket.

"We believe the settlement works towards Judge Senter's goal of a just, speedy and efficient resolution of these matters," State Farm said.

Industry watchers disagree on whether State Farm's settlement of the case puts pressure on other insurers, including Northbrook-based Allstate Corp., to settle cases more broadly in areas ravaged by Katrina.

"This puts a lot of uncertainty behind State Farm," said Robert Hartwig, chief economist for the Insurance Information Institute.

However, he added, "while this is damage to just one insurer and while specifics of other cases may differ, it boils down to insurers [that] could be forced to pay tens of millions in flood losses that are excluded from homeowner's policies and for which they've never collected a dime in premiums."

State Farm Agrees to Major Settlement of Mississippi Katrina Cases

Wed, 24 Jan 2007 00:00:00 -0800

After several weeks of negotiation, State Farm Fire & Casualty Co. has reached an agreement to settle all of its Mississippi lawsuits stemming from Hurricane Katrina. The settlement must now be approved by Judge L.T. Senter, the federal judge who ruled against the company in a damage-liability suit earlier this month. The settlement does not address damages to neighboring states.

The agreement calls for an initial payment by State Farm of $130 million, a tab that may grow several times larger depending on the number of policyholders who decide to reopen their claims. About $80 million will be used to settle the more than 600 existing lawsuits in Mississippi, with an additional amount of at least $50 million earmarked for settlement of reopened claims. There are roughly 35,000 policyholders who own homes on the Mississippi coast and are eligible to have their claims revisited.

State Farm attorneys finalized the agreement with Mississippi Attorney General Jim Hood, who had previously filed a major civil suit against the insurer for fraudulently denying claims. The new settlement will most likely preempt that civil suit and put an end to any criminal investigation undertaken by the state.

Under the terms of the settlement, as reported by the Associated Press, policyholders will receive offers from State Farm in writing and be given 18 days to respond. If an offer is accepted, it would close the door on future legal action; if it is rejected, the policyholder is free to pursue a personal lawsuit. State Farm promises payment on accepted offers within five days. Those whose homes were completely destroyed will receive minimum offers of 50 percent of their total policy value.

To be sure, negative publicity lodged against the company played a role in spurring the settlement, but Judge Senter’s ruling against State Farm earlier this month certainly had an effect as well. On January 11, Senter held State Farm liable for damages to a couple’s Biloxi home following Hurricane Katrina. The company was responsible for paying $223,292 in damages to the home, plus an additional $2.5 million in punitive damages, after Senter ruled that the company failed to prove that flooding caused most of the damage. State Farm and other insurers had argued that they were not responsible for water damage.

State Farm Moves to Address Katrina Claims

Wed, 24 Jan 2007 00:00:00 -0800

The insurance company State Farm has agreed to pay hundreds of millions of dollars in additional money to Mississippi residents whose homes were damaged by Hurricane Katrina. The deal is an attempt to settle part of the huge backlog of legal cases pending from the storm. And Mississippi officials, who negotiated the settlement, hope other big insurance companies will also sign onto the deal.

Of the thousands of lawsuits against major insurance companies that followed in Katrina's wake, two have gone to trial and a third is getting under way. The federal judge hearing the cases, L.T. Senter, has urged the parties to try to reach some kind of global settlement.

Tuesday, after weeks of tough bargaining, a settlement was announced by Mississippi Attorney General Jim Hood.

"It's been like a death roll with an alligator for the last two months in these negotiations," Hood said. "I would have tried 10 capital murder cases, one after another, than to have to go through these difficult negotiations."

Most of the disputes with policyholders involved the question of wind versus water. Insurers insisted that homes were destroyed by flooding, which wasn't covered under people's homeowners policies. Homeowners argued they were damaged by wind, which was covered.

Under the settlement, State Farm agreed to reopen residents' claims and review them using new engineers and adjusters.

The company also will hand over any documents used to deny coverage the first time around. If homeowners are still unhappy with the way their cases are resolved, they can go to binding arbitration.

In cases where homes were completely destroyed, leaving it difficult to determine what damaged them, State Farm will pay half the structural value of the building. The settlement won't resolve all sides of disputes, but it will provide an alternative way to clear up some of these cases. It could also end what has become a major embarassment for the insurers.

State Farm spokesman Phil Supple said he believes the agreement meets Judge Senter's stated goal for a "speedy and efficient" settlement.

"It's good for policyholders, it's good for the rebuilding of the coast and it's good for State Farm," Supple said.

The company declined to speculate about what the settlement might cost it. But Attorney General Hood said State Farm could end up paying at least half a billion dollars. And Hood said he hoped other big companies will use this settlement as a template.

Insurer admits wind led to hurricane damage

Wed, 24 Jan 2007 00:00:00 -0800

A historic agreement with State Farm Fire & Casualty Co. means up to $500 million in payments to Mississippi policyholders previously dissatisfied with their Hurricane Katrina insurance settlements.

Mississippi Attorney General Jim Hood said Tuesday that State Farm will pay 50 percent of policy limits to certain homeowners left with only slabs. State Farm previously had denied those claims, maintaining water led to the destruction and the company was unable to find any separate wind damage covered under its policies.

The two sides signed a settlement agreement filed Tuesday in Hinds County Chancery Court, which also brings an end to the lawsuit Hood filed shortly after Katrina to seek coverage for policyholders whose homes were subject to tidal surge.

"It's not the best thing since sliced bread," Hood said. "I wanted to get everybody 100 percent. This is a settlement option primarily for the 8,000 people hit by storm surge who don't have lawyers."

Hood said State Farm has about 800 slab claims on the coast and about 9,000 policyholders whose homes were hit by storm surge. The company, by its own count, had a total of more than 32,000 Coast Katrina claims filed as of February 2006.

He later summed up what he sees as the benefits of the settlement. "This is just an option. It will get some money on the ground quick. It will stabilize the insurance market and it will help in our economic development. We've got to rebuild our homes and the people's lives."

State Farm released a statement that read, in part, "We believe this is in the best interests of our policyholders and State Farm, and the effort to rebuild Mississippi."

Under the settlement, State Farm has agreed to review the claims of any Coast policyholder who opts in. The settlement also gives policyholders the right to see their State Farm file. If a policyholder is dissatisfied with State Farm's offer, they can go to binding court arbitration with the company.

The settlement

Here's a glance at Mississippi's settlement with State Farm Fire & Casualty Co. in a lawsuit over Hurricane Katrina damage, according to Attorney General Jim Hood:

For a homeowner left only with a slab, State Farm is to make an initial offer to pay at least 50 percent of the homeowner's policy value. Policy holders with less damage are to receive offers for other levels of payment.

The offers are to be made in writing. Each policyholder is to have 18 business days, from the date of the offer, to either accept or reject it.

Those who accept the offer agree not to pursue further legal action in the claim involved. State Farm then has five business days to pay the agreed upon amount.

Those who reject the offer retain the option to pursue their own lawsuit in hopes of getting more money.

Those who neither accept nor reject the offer within the 18 days may still pursue their own lawsuit, but they may not seek punitive damages.

State Farm Reaches New Settlement in Katrina Case

Tue, 23 Jan 2007 00:00:00 -0800

Perhaps shaken by a ruling against them earlier this month, State Farm Fire & Casualty Co. announced that they’ve agreed to a settlement in another Katrina-related case in Mississippi. Although the terms of the settlement were not disclosed, legal analysts believe that the insurance company agreed to pay roughly $1 million to settle.

On January 11, a federal judge in Mississippi declared that State Farm was liable for damage to a couple’s Biloxi home following Hurricane Katrina. In a case brought by Norman and Genevieve Broussard, the company was not only responsible for paying $223,292 in damages to the home, but more significantly, a jury awarded $2.5 million in punitive damages to the Broussards.

At issue in that case was whether the damage to the Broussards’ home was caused by excessive winds (covered by insurance) or by flooding (insurers are claiming they are not liable for water damage). But the ruling, by Judge L.T. Senter, clearly and definitively put the burden of proof on State Farm to show that water was the primary cause of the damage.

The newly settled suit was considered very similar to that of the Broussards, and State Farm, likely fearing a similar result, acted just days before the trial was set to begin. In this case, Richard Tejedor of Long Beach, Mississippi, originally had asked for $5 million, most of which would have been in punitive damages.

State Farm is still negotiating a settlement of more than 600 Katrina lawsuits in the state of Mississippi, but in light of the recent ruling, plaintiffs may be more aggressive in seeking compensation.

State Farm Loses Benchmark Katrina Case

Sat, 13 Jan 2007 00:00:00 -0800

In a ruling that may have ramifications on hundreds of other lawsuits, a federal judge in Mississippi declared that State Farm Fire & Casualty Co. is liable for damage to a couple’s Biloxi home following Hurricane Katrina. While the insurance company is responsible for paying $223,292 in damages to the home, the key part of the ruling was the award by a jury of $2.5 million in punitive damages.

The ruling by U.S. District Judge L.T. Senter Jr. may be troubling news for State Farm and other insurers who are claiming that they are not responsible for damage caused by flooding. In the case of Norman and Genevieve Broussard, State Farm had contended that they were not responsible for the damages because they were caused by water. However, the judge sided with the Broussards, who claimed that the damage was mostly due to excessive winds. Senter left the decision about punitive damages to a jury, and the jury decided to award punitive damages because State Farm had initially (and illegally) denied the Broussards’ insurance claim.

Senter’s ruling put the burden of proof on State Farm to show that water was the primary cause of the damage. In Senter’s mind, the company failed to establish that fact and therefore is liable for the damages. With hundreds of Katrina-related lawsuits still pending, the outcome of this case may eventually cost insurance companies billions of dollars in payout.

As reported earlier this week, State Farm is also currently negotiating a settlement of more than 600 Katrina lawsuits in the state of Mississippi, to the tune of $80 million or more. Today’s ruling may give more leverage to the plaintiffs in negotiations.

State Farm Told to Pay Gulf Claim

Fri, 12 Jan 2007 00:00:00 -0800

A federal jury ordered State Farm insurance yesterday to pay a $2.5 million penalty for refusing to cover damages to a Mississippi couple’s house that was destroyed in Hurricane Katrina, throwing into question settlement talks intended to resolve hundreds of lawsuits filed after the 2005 storm.

The eight jurors in Federal District Court in Gulfport, Miss., reached a unanimous decision yesterday less than three hours after Judge L. T. Senter Jr. ruled that State Farm failed to prove that the damage to the house in Biloxi had come from surging floodwaters and, thus, was not covered by the homeowner’s policy.

Lawyers for the homeowners, had argued that the house was knocked off its foundation and torn apart by high winds a hazard covered as a fundamental part of home insurance coverage and that a wall of water driving in from the Gulf of Mexico had scattered the debris.

In a statement from the bench, Judge Senter said that State Farm had presented no “legal or arguable reason for refusing to pay the plaintiffs’ claim,” Bloomberg News reported.

The judge then ordered State Farm to pay the full value of the policy, $233, 292, and told the jury to determine whether the insurer should pay punitive damages and, if so, how much. The homeowners had sought $5 million in addition to their coverage.

Yesterday’s decision was the first by a jury in a sprawling dispute that sprang up after thousands of homes were damaged or destroyed by Hurricane Katrina and the insurers were accused of narrowly interpreting coverage and vastly underpaying claims. More than 2,000 lawsuits have been filed.

The verdict came as State Farm acknowledged it had started settlement talks with 639 other homeowners in Mississippi. The homeoener's lawsuit was not included in those discussions. Those talks continued yesterday amid signs that progress was being made.

But, lawyers following the talks said the midafternoon announcement of the $2.5 million verdict was like a lightning strike captivating, but not immediately easy to interpret.

A spokesman for State Farm, Phil Supple, said the insurer was “surprised and disappointed” by yesterday’s decision.

“We believe the expert testimony” of State Farm witnesses “supported a different result,” Mr. Supple said, adding that “an appeal of the decision is likely.”

Mr. Supple acknowledged that State Farm had been sued after it had refused to pay the family anything for their loss.

After Hurricane Katrina, State Farm and other insurers balked at paying claims, arguing that much of the damage to houses was caused by flooding, which is not covered by a typical homeowner policy. Many insurers also contended that if any damage to a home had come from water, it nullified the basic coverage for wind damage.

Judge Senter agreed in a ruling that the insurers were not obligated to pay for flood damage. But he said that when both wind and water damaged or destroyed a house, it was the burden of the insurance company to prove how much of the loss was because of water and pay for any wind damage.

A clerk for Judge Senter said in a telephone interview from Gulfport that experts for State Farm acknowledged in court documents that some damage to the homeowner’s home had come from wind. But, he said, “they did not offer evidence during trial” showing how much of the damage was from water and how much from wind, as Judge Senter had required.

Ultimately, he said, the judge ruled that State Farm was liable for all the damage because the insurer had not provided enough evidence “the jury could use to segregate” the wind from the water damage.

State Farm would not comment on the impact of the verdict. But lawyers who have been following the talks said they expected strong reactions from the participants that could accelerate the negotiations or to blow them apart.

But one lawyer who spoke on condition of anonymity, called the decision a “very unsettling” and “potentially destabilizing event” that could drive State Farm from the bargaining table.

The jury decision could also lead policyholders to conclude that instead of settling they should hold out in the hope that a jury would award them millions of dollars in punitive damages, said Randy Maniloff, a lawyer in Philadelphia who represents insurance companies.

Many lawyers and insurance executives have said in interviews that a settlement by State Farm, the largest insurer in Mississippi and the nation, would probably lead other insurers to follow suit. That would potentially bring hundreds of millions of dollars into the hands of homeowners to start rebuilding.

A settlement would probably yield less money than many homeowners thought they could get from a jury, but with the huge number of pending cases, it could be years before they got their day in court.

The Mississippi attorney general, Jim Hood, has filed a civil lawsuit against State Farm and other insurers and had began investigating possible criminal charges against State Farm for the way that it handled claims.

As a part of the settlement of the 639 lawsuits alreadybrought by other lawyers, the attorney general’s lawsuit and criminal investigation would be dropped.

Jury: Punitive damages in Katrina case

Thu, 11 Jan 2007 00:00:00 -0800

A jury on Thursday awarded $2.5 million in punitive damages to a couple who sued State Farm Fire & Casualty Co. for denying their claim after Hurricane Katrina, a decision that could benefit hundreds of other homeowners challenging insurers for refusing to cover billion of dollars in storm damage.

A federal judge only hours earlier had taken part of the case out of jurors' hands before they awarded punitive damages to State Farm policyholders Norman and Genevieve Broussard.

U.S. District Judge L.T. Senter Jr. ruled Thursday morning that State Farm is liable for $223,292 in damage Hurricane Katrina caused to the Broussard's home. Senter left it to a jury to decide whether to award punitive damages.

Senter's decision to make a directed verdict rather than let the jury decide the entire case appeared to surprise everyone in the courtroom. After he explained his ruling, Senter ordered a recess to give attorneys time "to get over the shock."

Some of Senter's earlier rulings in other Katrina cases have favored the insurance industry, but his decision Thursday calls into question the companies' refusal to cover billions of dollars in damage from Katrina's storm surge.

The homeowers sued State Farm for refusing to pay for any damage to their home, which Katrina reduced to a slab. The couple, who wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages, claimed that a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina's storm surge.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm's rising water.

Senter, however, ruled that State Farm couldn't prove that Katrina's storm surge was responsible for all of the damage to the Broussards' home. The judge also said the testimony failed to establish how much damage was caused by wind and how much resulted from storm surge.

"We are surprised and disappointed by the court's ruling," said State Farm spokesman Phil Supple. "The expert testimony supported a different result. After the conclusion of this case, we will evaluate our next steps in this lawsuit."

In his closing argument Thursday, one of the homerowners attorneys, said State Farm had breached their contract "in a bad way" by denying their claim. State Farm "acted like a chiseler," he said, adding, "The pocketbook is what they listen to."

State Farm attorney John Banahan urged jurors to "use your head and your heart" in deciding on punitive damages and to reject an attempt by the Broussards' attorney to demonize the company as an "evil empire."

Robert Hartwig, chief economist for the Insurance Information Institute in New York, said before the jury announced its decision that a punitive damage award would be "distressing" for insurers.

"It adds even more cost and more uncertainty to the other problems that already exist in the Mississippi homeowners insurance market," he said.

The homerowners' case isn't directly involved in recent settlement talks between State Farm Fire & Casualty Co., Mississippi Attorney General Jim Hood and policyholders' lawyers.

People with direct knowledge of the settlement talks told The Associated Press this week that State Farm, Mississippi's largest home insurer, is considering paying hundreds of millions of dollars to settle more than 600 lawsuits and resolve thousands of other disputed claims.

Jury awards $2.5 million in punitive damages

Thu, 11 Jan 2007 00:00:00 -0800

A jury awarded a Mississippi couple $2.5 million in punitive damages in their case against State Farm Fire and Casualty on Thursday afternoon. Today's ruling is considered a sweeping decision for policyholiders along the Coast but State Farm doesn't see it that way.

State Farm has indicated it will not be handling its other claims any differently because of the situation and have another case set for trial shortly.

Earlier in the day, U.S. District Court Judge L.T. Senter Jr. ordered State Farm Fire and Casualty Co. to pay policy limits to a Biloxi policyholder because the company failed to prove how much damage was caused by Hurricane Katrina's storm surge.

Senter also denied State Farm's motion to dismiss the possibility of punitive damages against the company. Although attorneys for the Broussards were only able to establish that wind may have damaged the property and State Farm conceded there could have been wind damage to the roof, the Broussards will be able to argue State Farm should be punished for not meeting its obligation to fully investigate what was owed under the policy.

State Farm attorneys retired to a conference room where they're discussing what happened.

About an hour after the decision, State Farm released this statement: "We are surprised and disappointed by the court's ruling. The expert testimony supported a different result. After the conclusion of this case, we will evaluate our next steps."

State Farm's own expert said Wednesday there was a 75 percent chance the wind had caused anywhere from no damage to 35 percent damage to the roof shingles. State Farm told the jury Wednesday the company was unable to determine what the cost of wind damage might have been.

It was State Farm's burden to show what portion of damage it could attribute to storm surge.

Everyone appeared surprised by the sweeping decision in a case that was being closely monitored by attorneys for both sides but did not appear to be going well for the policyholders.

Policyholders' attorneys expected the sweeping decision to affect not only cases against State Farm but also against other insurance companies.

About 1,000 cases are pending in U.S. district court.

State Farm must pay $2.5M in Katrina case

Thu, 11 Jan 2007 00:00:00 -0800

A Mississippi jury has ordered State Farm to pay $2.5 million in punitive damages to a Broussard, Louisiana, couple whose house was destroyed during Hurricane Katrina, according to a spokesman in the judge's office.

State Farm had initially denied the couple's insurance claim.

Earlier in the day, Judge L. T. Senter Jr. determined that the plaintiffs were entitled to policy benefits for the loss of their home and its contents in the amount of more than $200,000, the spokesman said.

The decision could set the tone for future Katrina cases in Senter's courtroom. Judge Senter has more than 300 Katrina-related insurance cases on the docket, said his spokesman, who did not want his name used. The next case is scheduled to be tried starting Jan. 22, and the trial schedule is expected to pick up in the next few weeks, according to the spokesman.

State Farm said it had not expected the decision.

"We are disappointed and surprised by the court's ruling," a company spokesman remarked. "The expert testimony supported a different result. After the conclusion of the case, we will evaluate our next steps."

Parker Waichman Alonso LLP Retained by Hundreds of Hurricane Katrina Victims Whose Insurance Claims Have Been Denied

Thu, 11 Jan 2007 00:00:00 -0800

Parker Waichman Alonso LLP (www.yourlawyer.com) announced that it has been retained by hundreds of clients in Alabama, Florida, Louisiana and Mississippi whose insurance claims related to damage caused by Hurricane Katrina were denied. Under state and federal laws, insurance companies are required to resolve claims with their insureds in good faith and with fair dealing. Unfortunately, thousands of insurance policyholders are unable to put their lives back together because of widespread improper damage claim denials. Parker Waichman Alonso LLP is assisting policyholders whose property insurance claims have been denied, or who have not yet filed a claim but who plan to in the future. The firm is providing legal representation to these policyholders in order to quickly obtain the compensation their insurance coverage provides.

If your Katrina-related insurance claim was denied, or if you plan to file a claim, you can request a free case evaluation by visiting http://www.katrinaclaimdenial.com or http://www.yourlawyer.com/topics/overview/Katrina_Insurance_Claims . Case evaluations are also available by calling Parker Waichman Alonso LLP at 1-800-LAW-INFO (1-800-529-4636).

Alabama, Louisiana, Mississippi, and a majority of other states, have laws governing how insurance companies must deal with claimants. In fact, Louisiana makes it mandatory for insurers to make a written offer to resolve a property damage claim within 30 days after receipt of a "satisfactory proof of loss" for the claim. If the insurance company fails to do this, the company may be liable for penalties of up to 25% on the amount due. Other states have similar laws punishing insurance companies that unfairly deny or delay payment on valid claims.

"Insurance companies often use their own narrow interpretations of policy language to deny legitimate claims from individual policyholders," said Jerrold Parker, founding partner of Parker Waichman Alonso LLP. "Unfortunately, the insurance industry has been successful in convincing many claimants that their damage is not covered by their insurance policy. Policyholders should not rely on the conclusions of their insurance company without having their claim and insurance policy thoroughly reviewed by an attorney. Insurance companies tend to treat claimants more fairly when they are being represented by an attorney."

About Parker Waichman Alonso LLP

Parker Waichman Alonso LLP is a leading consumer fraud, products liability and personal injury law firm that represents plaintiffs nationwide. Parker Waichman Alonso LLP has assisted thousands of clients in receiving fair compensation for denied insurance claims, securities fraud, and injuries resulting from defective medical devices and medications. In addition to representing victims of bad faith insurance denials, Parker & Waichman, LLP represents thousands of individuals injured by Guidant Defibrillators, Drug Coated Coronary Stents, Vioxx, Fosamax, Ketek, ReNu with MoistureLoc, Ortho Evra and many other defective drugs and medical products. For more information on Parker Waichman Alonso LLP, please visit: www.yourlawyer.com or call (800) LAW-INFO.

CONTACT: Parker Waichman Alonso LLP
          David Krangle, ESQ.
          (800) LAW-INFO
          (800) 529-4636
          info@yourlawyer.com
          www.yourlawyer.com

Attorney General Jim Hood's statement on State Farm settlement

Mon, 01 Jan 2007 00:00:00 -0800

Attorney General Jim Hood put out the following press release Tuesday after the settlement with State Farm was reached:

"After months of heated negotiations, I am happy to announce that our office has reached a settlement agreement with State Farm in our state court litigation," said Attorney General Jim Hood. "The settlement agreement will give Coastal policyholders an expedited alternative to waiting for a jury trial. In this litigation my goals were to require full disclosure of information in the claim files to the policyholders, change State Farm's unfair claims handling practices, require the reevaluation of the claims without the use of adjusters and engineers previously used, make a minimum offer to the slab owners and a new offer to those with lesser damage, provide an administrative process of arbitration where the arbiters are chosen fairly by both sides, and preserve the option of policyholders to opt out of the process and file a suit in court."

State Farm has agreed to the following demands in the Settlement Agreement filed in the Chancery Court of Hinds County: (1) upon request of the policyholder, provide full disclosure of all documents in their claim files, including multiple engineering reports; (2) upon request of the policyholder, independently reevaluate claims based on terms in our state court agreement without using previous adjusters and engineers; (3) in approximately 1,000 claims involving slabs, make a minimum offer equivalent to 50% of the structural policy limits, less payments previously made; (4) pay the costs of arbitration conducted by arbiters chosen by both sides; and (5) provide annual notice to policyholders that clearly explains that storm surge is not covered by homeowner or windstorm residential policies.

This administrative process will be carried out in a class action settlement under the supervision of the Honorable Judge L. T. Senter in the United States District Court for the Southern District of Mississippi. The process will require State Farm to send out a notice of the class, an opt out form, and a table showing the percentage of policy coverage limits a policyholder may receive based upon the amount of damage to the structure. The notice will clearly provide that the policyholder will receive $200 for simply returning a registration form. The policyholder may opt out without the loss of any rights and pursue a remedy in court.

If the policyholder chooses to stay in the class, then State Farm will reevaluate the claim following the requirements set forth in our state court Settlement Agreement and make a new offer based upon the percentage of damage and the policy coverage limits. State Farm will not assert as a ground for the total denial of a claim that water contributed to the loss if wind damage occurred. State Farm will be required to show by a preponderance of the evidence that any damage denied was caused by an excluded peril. We believe that Judge Senter will enforce this standard based on his prior rulings.

Where only a slab or piers remain, then State Farm shall make a minimum offer of an amount equivalent to 50% of the structural policy limits. If the policyholder accepts the offer, then payment is made immediately. If the policyholder rejects the offer, then the case will quickly proceed to binding arbitration before fairly chosen arbiters. In cases where policyholders do nothing or fail to send back the opt out form, they will then be included in the class; however, they may later opt out, but lose their right to seek punitive damages.

State Farm has agreed to pay out a minimum $50 million dollars to the members of the class. There is no cap on the amount that may be awarded. A rough estimate indicates that the minimum offers on the slabs alone will cost State Farm approximately $80 million. State Farm will pay all costs associated with the arbitration process, except that policyholders will be required to pay their own expert and attorney fees.

"I hope that this settlement with State Farm will encourage other insurers to join the settlement, so that we can get a quick flow of capital into our Coastal Counties at this critical time," said Attorney General Hood. "This will help stabilize our economic recovery and the insurance market on our Coast, so that we can rebuild the lives, hopes and dreams of our beloved Coastal families and businesses. I just pray it all works quickly!"

The criminal investigation of State Farm's claims handling practices is now complete. "Although their activities warranted criminal investigation, our career prosecutors found that the matter would be better handled in civil court and in the United States Congress," said Attorney General Hood. "I believe that the election of the Democratic Congress forced the insurance industry to the bargaining table. I am confident that Congressmen Bennie Thompson, Gene Taylor and Barney Frank, along with Senator Trent Lott, will conduct a full Congressional investigation with hearings and hopefully pass a National Insurance Reform bill."

" We will continue to closely monitor how well State Farm handles the claims process," said Attorney General Hood. "Should any violation of the Settlement Agreement occur, then we will seek to enforce the terms in court."

Sisters blew whistle on Katrina claims

Fri, 25 Aug 2006 00:00:00 -0700

Who are the moles? The question was like a parlor game for employees of State Farm Insurance Co. after Hurricane Katrina, one they nervously played during coffee breaks or in the parking lot after work.

A prominent lawyer created a stir by announcing in March that two "insiders" were helping him build cases against insurers for denying claims for Hurricane Katrina losses. Their identities remained a mystery until the day in early June when Cori and Kerri Rigsby employees of a company that contracted with State Farm told a supervisor they were cooperating.

That startling admission and their subsequent resignations ended a risky charade. The Rigsbys say they spent months collecting reams of internal State Farm reports, memos, e-mails and claims records before they gave them to Scruggs and state and federal authorities.

The sisters, who managed teams of State Farm adjusters, say the documents show that the insurer defrauded policyholders by manipulating engineers' reports so that claims could be denied.

"I think we've given him the smoking gun," Cori Rigsby, 38, told The Associated Press during a recent interview at the home she shares with her sister near Ocean Springs.

State Farm spokesman Phil Supple said the Bloomington, Ill.-based company is reviewing the sisters' allegations but hasn't been allowed to question them.

"State Farm's employees are committed to conducting themselves in an ethical and appropriate manner," Supple said. "Any suggestions to the contrary are simply wrong."

Hundreds of homeowners on Mississippi's Gulf Coast have sued their insurance companies for refusing to pay for millions of dollars of damage from Katrina. A judge who presided over the first Katrina insurance trial ruled this month that Nationwide Mutual Insurance Co. must pay for damage caused by wind but not from flooding, including storm surges.

The Rigsby sisters were both eight-year employees of E.A. Renfroe, a firm that helps State Farm and other insurers adjust disaster claims. Although they weren't State Farm employees, the company issued them computers and business cards that identified them as State Farm representatives. They also had confidentiality agreements with State Farm.

"We have always been proud to work with State Farm," Cori Rigsby said.

The sisters say that pride faded, however, as they began to suspect the company was pressuring engineers to alter their conclusions about storm damage so claims could be denied.

Kerri Rigsby says her suspicions grew in November after finding a handwritten note attached to an engineer's report that read: "Put in Wind file. DO NOT pay bill. DO NOT discuss."

She said the engineer's report, dated Oct. 12, concluded that Katrina's wind caused most of the damage to a Biloxi policyholder's home. That should have been good news for the policyholder, she noted, since State Farm's policies cover damage from wind but not water.

But when Kerri Rigsby pulled the policyholder's file, she said she found a subsequent report based on a second inspection of the home Oct. 18. This time, the same engineering firm concluded that water caused most of the damage, according to the report, which the AP reviewed.

"The policyholder did not get a copy of the one that said wind," said Kerri, 35. "He should have gotten lots more money."

It wasn't the only case in which State Farm's engineers drafted conflicting reports on storm damage, according to the Rigsbys. They say managers were surprised and disappointed that many initial engineering reports blamed damage on wind.

"That's when they went into a frenzy and started mass-canceling all these engineering reports," Cori said.

Kerri says "the bible" for State Farm adjusters was a "cookie-cutter" report, prepared by Haag Engineering Co. of Dallas, which concluded that rising water, or wind-driven storm surge, was responsible for most of Katrina's damage in Mississippi.

"If it didn't match the Haag report, then it wasn't accurate," Kerri said.

Supple, the spokesman for the insurance company, said State Farm ordered engineering reports for less than 2 percent of the more than 100,000 claims it received in Mississippi after Katrina. State Farm also says it made payments on more than 60 percent of the claims involving engineers. Supple rejected the allegation the company pressured engineers to change their conclusions.

"State Farm's claims-handling practices have been in a public fishbowl," he said. "With the world watching, we've done what we do every day, and that's be fully up front in all aspects of our claims work."

The Rigsbys say they didn't know what to do with the information they had gathered. The sisters say they ultimately printed out and copied roughly 15,000 pages of claims records.

Hood, whose office is investigating whether State Farm fraudulently denied claims, declined to comment on the Rigsbys' allegations. A spokeswoman for Lampton also would not discuss the matter.

In March, a state judge ordered State Farm to turn over copies of its Katrina engineering reports to Hood.

State Farm Denied Katrina Claims Lawyer

Fri, 25 Aug 2006 00:00:00 -0700

State Farm Insurance - Denied Katrina Claims

On January 11, 2007 a federal judge ruled that State Farm must pay $223,292 in damages to a couple whose home was damaged by Hurricane Katrina. The judge also ordered State Farm to pay $2.5 million in punitive damages for the company's failure to pay the claim. Less than two weeks after this ruling, State Farm entered into an agreement to settle hundreds of other suits brought by angry policyholders. Under the settlement, 300 homeowners who lost everything will receive their full insurance coverage. It has also bee reported that 1,000 other policyholders would receive at least half of their full coverage amounts, with an opportunity to negotiate for more.

State Farm and other insurers have argued that their homeowner policies only cover damage from wind but not from water. These companies further argued that that their policies exclude damage that could have been caused by both wind and water. Most of the homes devastated by Hurricane Katrina were initally damaged by hurricane-force winds and then further savaged by Katrina's flooding.

Parker Waichman Alonso LLP is currently evaluating hundreds of cases involving Hurricane Katrina claims that were denied by State Farm. PWAM is aggressively investigating these cases in Mississippi, Louisiana, Alabama, Florida and Texas.

If your Katrina-related insurance claim was denied by State Farm or any other insurance carrier, or if you plan to file a claim, you can request a free case evaluation by visiting by completing the case evaluation form located on the right side of this page. You can also request a free case evaluation by calling Parker Waichman Alonso LLP at 1-800-LAW-INFO (1-800-529-4636).