Superstorm Sandy litigation revealed altered engineering
reports concerning damage to homes ravaged by the storm, and now allegations of
altered engineering reports in other flood events are surfacing.
Mississippi’s Attorney General, Jim Hood, has filed suit on
behalf of the state to hold State Farm’s feet to the fire for its part in
maliciously denying Hurricane Katrina wind claims.
To understand the specifics of the allegations, it must be noted that the State of Mississippi had a Homeowners Assistance Program (HAP) in place. HAP compensated qualified homeowners for losses that the insurance companies did not cover. However, the complaint alleges that State Farm delayed payments to policyholders so the HAP grants would cover the losses and State Farm could hold on to the homeowner policy funds as profits.
In the aftermath of Katrina, HAP and the State of Mississippi paid out $522 million just to State Farm’s customers. That breaks down to $76,673.59 per State Farm policyholder. But State Farm only paid out $98.7 million—or $14,494.62 per policyholder.
Regarding the altered engineering reports, Metropolitan Engineering Consulting and Forensics (MECF) has been posting about this fraud in Superstorm Sandy in our web pages and in our blogs.
To understand the specifics of the allegations, it must be noted that the State of Mississippi had a Homeowners Assistance Program (HAP) in place. HAP compensated qualified homeowners for losses that the insurance companies did not cover. However, the complaint alleges that State Farm delayed payments to policyholders so the HAP grants would cover the losses and State Farm could hold on to the homeowner policy funds as profits.
In the aftermath of Katrina, HAP and the State of Mississippi paid out $522 million just to State Farm’s customers. That breaks down to $76,673.59 per State Farm policyholder. But State Farm only paid out $98.7 million—or $14,494.62 per policyholder.
Regarding the altered engineering reports, Metropolitan Engineering Consulting and Forensics (MECF) has been posting about this fraud in Superstorm Sandy in our web pages and in our blogs.
Mississippi’s Attorney General alleged that similar altering
was happening with Katrina when the engineers were determining what caused the
loss and the damage to the home.
In the Mississippi lawsuit, the allegation is made that State Farm made efforts to downplay the wind damage and improperly classify the Katrina damage as a water event, and refuse to pay for damage citing the Tidal Surge exclusion.
The Chicago Tribune reported a response from State Farm that is not surprising:
In the Mississippi lawsuit, the allegation is made that State Farm made efforts to downplay the wind damage and improperly classify the Katrina damage as a water event, and refuse to pay for damage citing the Tidal Surge exclusion.
The Chicago Tribune reported a response from State Farm that is not surprising:
State Farm spokesman Phil Supple said the Bloomington-based
company is “still reviewing the lawsuit,” which "was not expected
considering what we have done in resolving claims as a result of Hurricane
Katrina.”
It sounds little bit like State Farm thought it was in clear
and was finished responding to claims from Katrina. Did this company think it
had gotten away with shorting its customers? Maybe State Farm didn’t realize
there is no statute of limitations that applies to the State of Mississippi.
Jan Schaefer, spokeswoman for the attorney general's office stated:
Jan Schaefer, spokeswoman for the attorney general's office stated:
We haven’t ruled out future lawsuit against those other
insurers. We are filing this suit against State Farm because we now have the
proven evidence of its fraud and because, as the nation’s largest property insurance
company, its activities harmed Mississippi more than any other insurer.
The allegations in the complaint include fraud, negligence
and breach of contract. A jury trial has been requested and the damages being
sought include the repayment for the HAP payments issued that should have been
payments from State Farm’s wind coverage, punitive damages, court costs,
interest and attorneys’ fees.
We will follow this litigation and post updates as they become available.
We will follow this litigation and post updates as they become available.
We would like to point out that similar behavior we observed
in the Irene flood claims processing in PA, NJ, NY, CT and elsewhere.