State Farm appeals Katrina-related whistleblower lawsuit ruling
Published: May 9,2013
Tags: appeal, award, crime, home, homeowner, homeowners insurance, house, insurance, insurer, judge, judicial, judiciary, jury, justice, law, legal, real estate, residence, resident, residential real estate, ruling, whistleblower
GULFPORT — State Farm Fire and Casualty Co. has asked a judge to void a jury’s finding that the company defrauded the government involving a policyholder claim after Hurricane Katrina.
Motions filed in U.S. District Court in Gulfport also seek a new trial
The verdict came in April in a whistleblower lawsuit against the Illinois- based insurer.
The lawsuit was filed in 2006 by Cori and Kerri Rigsby of Ocean Springs, who worked for an Alabama contractor hired by State Farm to provide damage assessments after the August 2005 hurricane.
The jury found State Farm avoided covering a policyholder’s wind losses by blaming damage on storm surge, which is covered by federal flood insurance.
State Farm was ordered to repay $250,000 to the government. Other damages are to be determined.
The Rigsbys have not responded to the appeal motion. Their attorney did not immediately respond to a request for comment.
While the sisters had pursued cases for a number of policyholders, a federal judge limited the initial phase of the case to one State Farm claim case — that of Thomas and Pamela McIntosh whose Biloxi, Miss., home was lost to the storm — because the sisters have firsthand knowledge of how the claim was handled.
The Justice Department was not involved in the case.
State Farm has a counter-claim pending against the Rigsbys over company documents they took after growing suspicious of how the insurer was handling claims.
The sisters alleged the documents showed the insurer defrauded policyholders by manipulating engineers’ reports so claims could be denied.
In its motions, State Farm said it assessed the damage correctly and never instructed its adjusters to wrongly process claims as flood damage, nor did it withhold a report that showed the home had been destroyed by wind as the Rigbys alleged.
“There is incontrovertible photographic, physical, and testimonial evidence that Katrina inundated the McIntosh house with floodwater and testimony by three former FEMA officials demonstrating that the covered flood damage to the McIntosh property plainly exceeded $250,000, and State Farm’s adjustment of the McIntosh property was fully consistent with FEMA claims-handling practices,” the company said in court documents.
State Farm also said if verdict is allowed to stand it could open for examination thousands of post-Katrina flood claims the company handled and paid before reimbursement by the National Flood Insurance Program.
The company claims that would “effectively allowing juries to set their own standards for government contractors and to disregard the reasoned judgments of the government officials empowered by Congress to implement federal programs, even when those government officials testify that the defendant did not violate its guidelines.”
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