SISTERS’
WHISTLEBLOWER CASE OVER STATE FARM’S KATRINA CLAIMS NEARS COURT OF APPEALS DATE. THE JURY FOUND IN 2013 THAT STATE FARM
AVOIDED COVERING A POLICYHOLDER’S WIND LOSSES BY BLAMING DAMAGE ON STORM SURGE,
WHICH IS COVERED BY FEDERAL FLOOD INSURANCE.
January 5, 2015
State Farm Fire and Casualty Co. has appealed an order
that it pay legal fees and damages of $3 million in a whistleblower lawsuit
in which a jury found the insurer defrauded the government in a policyholder
claim after Hurricane Katrina.
The 5th U.S. Circuit Court of Appeals has scheduled oral
arguments in the case for Feb. 5 in New Orleans.
Sisters Cori and Kerri Rigsby of Ocean Springs,
Mississippi, worked for an Alabama contractor E.A. Renfroe hired by State Farm to provide damage assessments
after the August 2005 hurricane. Their lawsuit was filed in 2006.
The jury found in 2013 that State Farm avoided covering
a policyholder’s wind losses by blaming damage on storm surge, which is covered
by federal flood insurance.
State Farm seeks to have the verdict overturned and the
Rigsbys’ claims dismissed.
The Rigsbys allege State Farm’s fraud against the
National Flood Insurance Program was widespread along the Mississippi Coast
after Katrina.
While the sisters had pursued cases for a number of
policyholders, a federal judge took to trial only one State Farm claim — that
of Thomas and Pamela McIntosh whose Biloxi, Mississippi, home was lost to the
storm — because the sisters have firsthand knowledge of how the claim was
handled.
The sisters allege documents showed the insurer
defrauded policyholders by manipulating engineers’ reports so claims could be
denied.
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.
At State Farm’s direction, NFIP paid the Macintoshes’
policy limits of $250,000. State Farm initially paid the couple $36,000 for
wind damage on a policy that provided more than $500,000 in coverage, according
to court documents.
State Farm denied any wrongdoing.
On the issue of damages, U.S. District Judge Halil S.
Ozerden ordered State Farm to pay $750,000 in damages to the government. The
Rigsbys will each receive 15 percent of the $750,000 awarded the government.
Ozerden also awarded $2.6 million to the Rigsbys’
attorneys plus expenses in the amount of $303,078.