Mississippi Department of Insurance releases results of State Farm exam after Katrina
On Oct. 30, 2008, the Mississippi Insurance Department (MID) released the results of its two-year examination of State Farm's post-Katrina claim handling.
The MID's report confirms what we have always maintained - State Farm settled the vast majority of policyholder claims quickly and satisfactorily despite their enormous volume and complexity.
The report clearly shows that examiners found no violations of state law or regulations, allegations of "fraud and abuse" were baseless, and, where mistakes were discovered in claims handling, we corrected them.
State Farm's actions following Katrina were driven by one overarching goal - keeping our commitment to our policyholders. Our employees and agents have remained dedicated to our policyholders during Katrina's aftermath and throughout this long process, and that commitment will continue.
Our goal now is to ensure that we have addressed all of the MID's concerns so we may focus on continuing to serve our policyholders, and so the rebuilding of the Coast and the strengthening of Mississippi's economy may continue.
Read more here about the market conduct exam, our response, and more about the report's finding that allegations against State Farm were baseless.
Broussard v. State Farm settled
State Farm settled the Broussard case on April 25, 2008. More information about the settlement is available in this Associated Press article. Background on the case is available here...
Judge dismisses fraud claim in McIntosh v. State Farm®
State Farm received a ruling yesterday from the U.S. District Court, Southern District of Mississippi. Judge L.T. Senter issued a summary judgment in McIntosh v. State Farm, dismissing plaintiffs' claim of fraud regarding the use of engineering reports in the handling of their claim. More...
State Farm Asks Court to Dismiss False Claims Act Suit and to Hold Accountable Plaintiffs and Their Lawyers for Unlawful Conduct
On April 8, 2008, State Farm filed a series of motions asking the Court to dismiss a lawsuit brought by Cori and Kerri Rigsby, two independent adjusters who handled claims for State Farm following Hurricane Katrina, and has filed a counter claim against the Risbys for conspiracy and computer fraud. More...
Appellate court reverses district court ruling in Broussard
On April 7, 2008, the U.S. Court of Appeals for the 5th Circuit issued a favorable ruling in a Mississippi case, Broussard v. State Farm. Broussard was the first Hurricane Katrina-related jury trial involving State Farm. More...
Judge rules for State Farm: bars attorneys from litigation and disallows Rigsby testimony (4/7/08)
U.S. District Judge L.T. Senter ruled Friday that Katrina Litigation Group (KLG) attorneys cannot represent plaintiffs in McIntosh v. State Farm or any other Katrina litigation filed against State Farm in Mississippi federal court. He also barred testimony from Cori and Kerri Rigsby, two independent adjusters who handled State Farm claims following Katrina, in any cases involving KLG or the Scruggs Katrina Group (SKG). State Farm is pleased with the judge’s ruling. More...
Favorable ruling in State Farm v Hood (02/07/08)
State Farm® has received a favorable ruling in State Farm v. Hood. State Farm entered into an agreement with Mississippi Attorney General Jim Hood on January 23, 2007, wherein he agreed to conclude his criminal investigation of “State Farm’s handling of Hurricane Katrina claims.” In late August, State Farm received a grand jury subpoena indicating Hood was reopening this investigation, in violation of the earlier agreement. State Farm filed this action in September seeking to hold him to his agreement. More...
Scruggs continues fight against being questioned (01/04/08)
On Dec. 27, trial attorney Richard “Dickie” Scruggs renewed his battle to avoid being questioned by State Farm attorneys in a lawsuit he filed on behalf of Thomas and Pamela McIntosh of Biloxi, against State Farm Fire and Casualty Co. Scruggs asked another judge to overturn Federal Magistrate Robert Walker’s ruling that Scruggs should face questioning. More...
State Farm's two motions: remove Scruggs-affiliated attorneys, compel Rigsbys' documents (01/04/08)
State Farm has asked a federal judge a second time to disqualify lawyers from the Katrina Litigation Group (formerly members of the Scruggs Katrina Group) from representing plaintiffs in McIntosh v. State Farm. A similar motion was filed by the company in December in the GlendaShows v. State Farm case. As in the previous one, State Farm’s memorandum to the court says the lawyers have engaged in a pattern of unethical and in some instances, illegal, tactics in Katrina-related litigation. More information can be found in this Associated Press article. More...
State Farm seeks to disqualify former Scruggs Group lawyers (01/03/08)
State Farm has filed a motion to disqualify law firms that were part of the former Scruggs Katrina Group (SKG) from Katrina litigation. The firms involved have reformed as the "Katrina Litigation Group" (KLG).
Citing ethical violations by these firms, the motion and a supporting memorandum were filed on Dec. 18 in Glenda Shows v. State Farm, a RICO case SKG previously filed. In that suit, SKG alleged that State FarmŽ engaged in illegal business activities to avoid making claim payments to policyholders impacted by Hurricane Katrina.
Further support for State Farm's motion was provided by Charles Wolfram, renowned expert on attorney ethics.
Richard "Dickie" Scruggs and his law firm withdrew from other Katrina litigation following the indictment of Scruggs, his son Zach, and another member of the firm.
Media coverage of State Farm's filing is available in this article from Best's Insurance News.
To learn more about other developments in Katrina litigation, visit the statefarm.com 2005 Hurricane Response site.
Scruggs pulls out of Katrina cases (12/7/07)
Following his recent indictment for allegedly bribing a Mississippi judge, prominent attorney Richard "Dickie" Scruggs' law firm has pulled out of the group of lawyers representing Gulf Coast residents with Katrina claims disputes. The group of lawyers, formerly known as Scruggs Katrina Group, will now be known as the Katrina Litigation Group.
The group said it represents 1,132 families involved in legal disputes with their insurance companies. 200 of those cases involve State Farm.
More information is available in this recent media article. More...
A Real Insurance Fraud
When Hurricane Katrina hit our southern coast, it was the worst natural disaster in American history, killing 1,800 people, forcing more than a million to evacuate the area, and putting four-fifths of New Orleans under water. In the struggle to recover from this event, people turned to their insurance companies for help. Thousands of claims were handled, but for some people there wasn't any coverage. The problem was they were not insured against flooding. More...
Appellate ruling upholds State Farm’s ACC policy language (11/7/07)
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit yesterday issued a ruling upholding State Farm’s water damage exclusion and anti-concurrent causation language in our homeowners policies. The original Tuepker v. State Farm ruling by the trial court upheld our water damage exclusion but said our anti-concurrent causation language was ambiguous and unenforceable.
This ruling affirms the clarity of our policy language. While we’re pleased the court resolved these issues, State Farm is working to settle remaining outstanding claims in the Gulf. As of Nov. 2, an additional $55 million have been paid to State Farm policyholders as part of the Mississippi Insurance Department re-evaluation agreement. More...
State Farm gives $1.5 million to help Mississippi kids (10/2007)
Washington Legal Foundation calls out rogue lawyers, Scruggs
On Sept. 24, Daniel J. Popeo, Chairman of the Washington Legal Foundation, ran this advertorial in the New York Times regarding recent legal action taken against trial attorneys and judicial officials. He sited several examples, including the criminal contempt charges against Richard “Dickie” Scruggs. A similar article by Mr. Popeo recently ran in the Chicago Examiner.
Special prosecutors charged Mr. Scruggs and his law firm with criminal contempt in August in a Hurricane Katrina insurance dispute. A motion to summon Scruggs and the Scruggs Law Firm was also filed by the prosecutors, who requested that the court schedule an arraignment in the contempt of court case. More...
Court ruling favors insurer, industry
On August 30, 2007, the 5th Circuit U.S. Court of Appeals ruled in favor of insurers and the industry in Leonard v. Nationwide saying Nationwide’s anti-concurrent causation (ACC) clause is not ambiguous, and Mississippi law does not pre-empt its application to hurricane claims. More...
State Farm® urges court to honor contract language
In a similar case, State Farm urged the 5th U.S. Circuit Court of Appeals in New Orleans on Sept. 6, 2007 to uphold policy language excluding coverage from a combination of wind and storm surge/ tidal flooding. This issue arose following Hurricane Katrina's storm surge flooding in Mississippi where thousands of policyholders did not have separate federal flood insurance. More...
State Farm motion to disqualify Scruggs denied on technicality
On Sept. 12, a judge denied a motion filed by State Farm lawyers that would have disqualified attorney Richard "Dickie" Scruggs, his law firm, the Scruggs Katrina Group and affiliate firms from representing plaintiffs in McIntosh v. State Farm. The judge questioned why it took State Farm a year to file such a motion. In an Associated Press story, State Farm spokesman Phil Supple said the judge's ruling is apparently based on a "technicality and doesn't appear to consider the merits of our argument that Mr. Scruggs violated several ethical provisions." Details may also be found in a Memorandum of Law in Support of Motion to Disqualify.
“Mr. Scruggs blatantly, seriously and repeatedly departed from the standard of conduct that would be followed by a lawyer of ordinary care and prudence,” said Professor Charles W. Wolfram, a nationally-recognized expert in the field of legal ethics, a former acting dean of Cornell Law School and author of Modern Legal Ethics, who is quoted in State Farm’s motion. For more information, please read Professor Wolfram’s entire declaration.
Scruggs charged with criminal contempt
On June 15, U.S. District Judge William M. Acker requested that an attorney for the government prosecute Mr. Scruggs and his law firm for criminal contempt for willfully violating the court's Dec. 8, 2006, preliminary injunction in a Hurricane Katrina insurance dispute. For more information, please read the Memorandum Opinion. On July 27, Judge Acker named Charles E. Sharp and Joel Williams to serve as special prosecutors after U.S. Attorney Alice Martin declined the judge's request to prosecute Scruggs and his firm. This development only further supports our motion to disqualify Mr. Scruggs from the McIntosh case.
McIntosh v. State Farm is a case resulting from damage in Mississippi related to Hurricane Katrina. The plaintiffs in the case, whose home was insured by State Farm, contend State Farm chose to reject an engineering report indicating moderate damage to their home was due to wind, and instead chose to evaluate their claim based on an engineering report indicating the majority of damage was due to flooding.
State Farm blasts Bloomberg, PBS for selective use of facts and inaccuracies
The September 2007 issue of the Bloomberg Markets cover story, "The Insurance Hoax" was used as the basis of a NOW PBS segment, “Home Insurance 9-1-1” that aired this weekend. Both reports present many inaccuracies and selective use of facts.
Insurance Information Institute President Dr. Robert Hartwig and State Farm Vice President-Public Affairs Mike Fernandez sent separate responses to Bloomberg outlining concerns. Fernandez also posted a similar response on the PBS Internet site.
All three of these responses can be found in the Newsroom of statefarm.com®.
Judge denies class action status
On March 22, 2007, a federal judge refused to allow a class action against State Farm for the denial of claims for policyholders on Mississippi's Gulf Coast after Hurricane Katrina.
State Farm policyholder Judy Guice asked U.S. District Judge L.T. Senter Jr. to join other policyholders whose homes were reduced to slabs by the August 2005 storm in a class action.
According to an Associated Press story covering the development, “the judge, who heard testimony on the proposal during a Feb. 28, 2007 hearing, ruled a class action for ‘slab cases’ is ‘inconsistent with the requirements of due process.’”
State Farm dismissed from Branch qui tam lawsuit
We are pleased that the appellate court agreed with Judge Beer that Branch had no viable claims against State Farm.
Branch's allegations are groundless. The lower court's decision dismissing the suit was the correct one based on the law and the facts. More...
Provost-Umphreys Group Settlement
A settlement has been reached in the Provost-Umphreys Group/RICO case (RICO stands for Racketeer Influenced and Corrupt Organization Act), originally filed in Mississippi in June 2007. The majority of the claims are individual cases and other "Scruggs" cases leftover after his disqualification. More...
Attorney General Hood dismisses lawsuit against State Farm
On August 6, 2008, Mississippi Attorney General Jim Hood dismissed with prejudice the lawsuit he filed against State Farm in June 2007. More...
Groundless allegations made of insurers pressuring engineers
Media reports have claimed that State Farm pressured a structural engineering firm to alter reports on Hurricane Katrina claims. State Farm provided critical details to the reporters who inquired about this story which demonstrated the allegation is groundless. Unfortunately, those details were not used in the stories.
Read more about the real story behind these media reports.
HR 3121 ignores basic problems with NFIP
On Sept. 27, the U.S. House of Representatives passed H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007. On Oct. 17, the U.S. Senate Banking Committee voted unanimously to reform federal flood insurance, but refused to follow the lead of the House of Representatives and expand the program to cover wind damage.
In addition to expanding the program to cover wind damage, the House version of the legislation:
Reauthorizes the National Flood Insurance Program (NFIP) for 5 years
Alters flood mapping
Bans insurers who offer NFIP policies from excluding wind coverage if wind and flood destroy a home at the same time
In State Farm’s view the Senate approach is preferable. It's essential to first complete reforms to the NFIP before expanding the program. According to the Towers-Perrin study commissioned by the American Insurance Association, if wind coverage is added to the NFIP, "program deficits from catastrophic wind events in a single year could be $100 to $200 billion." More...
Scruggs deflects contempt charges with RICO suit
Stung by a judge's criminal contempt charge and evidence that could have him removed from Hurricane Katrina cases, Richard "Dickie" Scruggs' legal team announced June 20, 2007, it has filed federal racketeering lawsuit against State Farm.
This is Scruggs using one of the oldest tricks in the books. If attacked, deflect. As he's said before, "If you don't win it, you spin it." The truth is catching up to Scruggs. State Farm has paid more than $3 billion in Katrina claims and more than 99 percent of claims resulting from the hurricane have been settled. The Scruggs law firm's current effort is a regurgitation of every wild charge he and his firm have made to date. Clearly, his PR machine is working overtime.
The suit purports to assert claims under the Racketeer Influenced and Corrupt Organizations Act, commonly called the RICO Act. As the name suggests, the RICO statute is intended to combat systematic and continuing criminal enterprises by allowing persons damaged by a pattern of racketeering activity to recover three times their damages.
AG files another suit; delays recovery again
Mississippi Attorney General Hood filed a suit against State Farm in June 2007 alleging "bad faith." State Farm originally agreed to re-evaluate the claims of more than 30,000 policyholders living in the three coastal Mississippi counties as part of the Woullard agreement. Hood simultaneously agreed to drop a civil suit against State Farm.
Once the Scruggs Katrina Group inexplicably dropped out of the Woullard agreement, State Farm reached a similar agreement with the Mississippi Department of Insurance (MID). Hood believes the MID agreement violates the original Woullard agreement, when in fact it has led to an additional $39 million in payments to policyholders since it began.
Public Affairs Vice President Mike Fernandez said, "It appears that Mississippi's attorney general is more interested in making headlines in an election year than in making headway" for Mississippians.
Leland Speed, former head of the Mississippi Development Authority, called on Hood to drop his suit. Speed told the Madison County Journal, "We don't enjoy the reputation of having the finest business climate in America, and this isn't going to help it a damn bit."
To read Mr. Speed's letter to the Biloxi Sun-Herald, please visit their site and search for "Non-binding mediation is a swift and smart first step" published on May 14, 2007.
"We've been digging into the gory details, which also reveal how one more AG has teamed up with the trail bar to squeeze law-abiding companies into dubious settlements," reported the Wall Street Journal in March. The same paper reported in February after the Woullard settlement announcement: "In Mississippi, Attorney General Jim Hood has bludgeoned insurer State Farm into a gigantic settlement over hundreds of dubious claims."
Read more from the Wall Street Journal in these editorials:
"Mississippi Justice," March 15, 2007
"Robin Hoods," February 2, 2007
(Note: The Wall Street Journal requires an online subscription)
State Farm suspends writing commercial and homeowners business in Mississippi
Uncertainties in the Mississippi environment prompted State Farm to suspend writing all new commercial and homeowners business in the state. State Farm Senior Vice President Bob Trippel said, "We came to this decision reluctantly. But it is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable. When there's more certainly, we will reassess the situation."
The decision prompted Attorney General Hood to propose legislation that would require State Farm to continue writing homeowners business in the state. State Farm responded by saying Hood's proposal underscored the legal and political challenges in Mississippi
Scruggs withdraws from settlement
State Farm reached an agreement concerning a proposed class action consisting of more than 30,000 policyholders in the three coastal counties in Mississippi in Woullard v. State Farm in January 2007. These policyholders allegedly suffered damages from Hurricane Katrina. At the same time, Hood agreed to drop his civil suit against State Farm. Although Judge L.T. Senter did not grant preliminary approval of the settlement, he asked all parties to continue to work toward an agreement.
In March, Scruggs, the attorney of record in Woullard, abruptly filed a motion to withdraw from the settlement. The motion surprised State Farm after the company had worked hard to address Senter's concerns and were awaiting further direction from the court.
Even after Mr. Scruggs pulled the rug out from under a settlement negotiated with State Farm, we continued to responsibly work with the Mississippi Department of Insurance (MID) to settle foundation-only cases and re-evaluate others at the request of our policyholders. To read more about this agreement, refer to information at left.
Although Attorney General Hood originally called the Woullard settlement "an example for other insurance companies to do their part in rebuilding the lives of families on our Gulf Coast," he filed a "bad faith" suit against State Farm in June 2007 claiming that the MID agreement does not address his concerns about State Farm's claim handling in the wake of Katrina.
State Farm appeals judge's order of punitive damages in Broussard
State Farm was surprised by a verdict by U.S. District Judge L.T. Senter in Broussard v. State Farm that took the wind versus water case away from a jury and ordered State Farm to pay policy limits and $1 million in punitive damages to a Mississippi couple whose home was damaged by Hurricane Katrina. The judge reduced the original jury award of $2.5 million.
State Farm contends the Broussard home was destroyed by flood, which is not a covered peril under the homeowners contract. Arguments for State Farm's appeal will be heard on Dec. 5 in the Fifth U.S. Circuit Court. Read State Farm's appellate brief. More...
Insurance Dept examines small number of claims
In fall 2006, Mississippi Insurance Department (MID) announced market conduct examinations of several major insurers related to their handling of policyholders' claims after Hurricane Katrina. State Farm is the largest homeowners insurer in the state and was selected to undergo the exam first. More...
Prominent Mississippi plaintiff attorney Richard "Dickie" Scruggs filed suit on behalf of his brother-in-law, Senator Trent Lott, in December 2005. Lott's Pascagoula, Miss., home suffered damage during Hurricane Katrina that State Farm determined was a result of flooding, not wind , and denied Lott coverage. Senator Lott has since settled his suit with State Farm.
Kimberly A Strassel characterized Lott's actions in the wake of Katrina in "Potomac Watch: Senator Lott Floods the Zone" in an editorial published on February 23, 2007. It is available to Wall Street Journal subscribers online.
Mississippi Congressman Gene Taylor, another vocal critic of State Farm and the insurance industry, filed a similar suit in January 2006 that has since been settled.
Hood's lawsuit filed against Mississippi's five largest insurers sought to void long-standing flood exclusions in insurance contracts that were approved by insurance officials in Mississippi. The lawsuit came just as claim adjusters were being allowed into areas most damaged by Hurricane Katrina, distracting insurers and customers from the process of recovery.
An editorial in the February 2, 2007 edition of the Chicago Tribune correctly stated: "...Mississippi wants insurance companies to cover homeowners' damage from Katrina's surging floodwaters. There's just one problem with that. Private insurance companies don't cover damage caused by floods or storm surge."
In a piece on it's Business section's front page, the New York Times observed on February 24, 2007: ".in Mississippi, the insurance contract has been largely tossed aside by the power of litigation - and the belief that the insurance companies, especially State Farm, should pay up no matter what the cause of the damage." More...
Facts on the Gulf Coast after Katrina
More than 5,600 employees and independent adjusters were assigned to the Gulf Coast states impacted by Katrina.
State Farm call centers answered more than 1.1 million calls following Katrina.
Nearly 15,000 State Farm associates contributed more than $2.6 million to the American Red Cross Relief Fund following the hurricane. In total, State Farm and its associates donated nearly $6.2 million to the relief effort.
State Farm's Response
Hurricane Katrina blasted the Gulf Coast on August 29, 2005, and changed the lives of thousands of Gulf Coast residents – many of whom are State Farm policyholders, agents and employees.
State Farm’s response was unprecedented in the wake of the devastation, and, despite the stark realities of today’s business environment, we continue to keep our promises to our customers along the Gulf Coast.
State Farm re-evaluation gets money in hands of policyholders (02/01/08)
In 2007, State Farm Insurance Company’s agreed to voluntarily re-evaluate Hurricane Katrina claims for eligible policyholders in three coastal counties in Mississippi. As of January 23, 2008, State Farm has exceeded the $50 million committed to the program, paying more than $76 million additional dollars in claim payments since the re-evaluation process began. We have made over $88 million in offers to the Mississippi policyholders who participated.
State Farm is also re-evaluating claims from Hurricanes Katrina and Rita in the state of Louisiana. We have paid almost $8.2 million in claim payments and we’ve made over $8.2 million in offers to participating policyholders in Louisiana.
New Katrina laws and policies hurt the public (11/30/07)
"New laws and policies in the wake of Hurricane Katrina seem intended to scapegoat insurance companies rather than protect the public" says an article in the Fall 2007 issue of Regulation, a publication by the Cato Institute, an organization seeking to broaden the parameters of the public policy debate.
The article goes on to say the current attack on the insurance industry is "severe, misguided and could have potentially disastrous consequences for many Americans."
Additional information about Cato is available on their Internet site.
State Farm keeps promises to policyholders
Preparing, protecting Americans from future catastrophes
State Farm agrees with Howard Kunreuther’s assessment in the August 25, 2007, edition of the New York Times: “We need a new approach to financing the costs of natural disasters and to encouraging individuals in hazard-prone areas to undertake mitigation measures.” State Farm has joined ProtectingAmerica.org, a coalition of businesses and organizations working to prepare and protect United States citizens from natural catastrophes.
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