E-mails cited in insurance lawsuit

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NEW ORLEANS (AP) -- Attorneys for homeowners suing State Farm Insurance after Hurricane Katrina have long accused the insurer of pressuring engineers to alter reports on storm-damaged homes so that policyholders' claims could be denied.

Now, some of these lawyers assert that they have evidence to prove their accusation -- internal e-mails from an engineering firm that helped State Farm adjust claims after the Aug. 29, 2005, hurricane destroyed thousands of homes on the Mississippi Gulf Coast.

State Farm denies pressuring engineers to change their conclusions, but the e-mails, obtained Tuesday by the Associated Press, indicate the company was threatening to dismiss Raleigh, N.C.-based Forensic Analysis & Engineering less than two months after Katrina.

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

Zach Scruggs, 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 "confirm everything that we have always suspected," Mr. Scruggs said. "What it says is pretty shocking. This outlines the whole scheme of theirs."

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

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

The e-mail also said Ms. 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, Mr. 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."