- The Washington Times - Tuesday, January 23, 2007


State Farm Fire & Casualty Co. agreed yesterday to settle hundreds of lawsuits by policyholders and reopen thousands of other disputed claims, a deal potentially worth hundreds of millions of dollars to homeowners devastated by Hurricane Katrina, a company spokesman said.

State Farm spokesman Phil Supple said the company will reopen and review claims for policyholders on Mississippi’s Gulf Coast whose claims were denied but have not sued the company.

That part of the settlement could be worth hundreds of millions of dollars for roughly 35,000 policyholders, a person with direct knowledge of the settlement said.

“The agreement greatly reduces the time, the risk and the expense of defending multiple claims in individual litigation,” Mr. Supple said.

State Farm’s agreement with Mississippi Attorney General Jim Hood and lawyers for more than 600 policyholders resolves a civil lawsuit that Mr. Hood filed against the company for refusing to cover damage from Katrina’s storm surge nearly 17 months ago.

The accord also resolves Mr. Hood’s criminal probe of charges that the Bloomington, Ill., insurer fraudulently denied claims after the August 2005 storm.

“I hope that this settlement with State Farm will encourage other insurers to join the settlement, so that we can get a quick flow of capital into our coastal counties at this critical time,” Mr. Hood said.

The settlement calls for State Farm to pay about $80 million to 639 policyholders, including Sen. Trent Lott, Mississippi Republican, whose claims were denied after Katrina, according to the source with knowledge of the settlement. These policyholders — all represented by a legal team led by high-profile lawyer Richard “Dickie” Scruggs — will receive an average of $125,000.

Mississippi’s mass settlement, the first of its kind since Katrina spawned hundreds of lawsuits against State Farm and other major insurers, does not involve any claims in other states.

The deal was expected to be presented to U.S. District Judge L.T. Senter Jr. in Gulfport yesterday afternoon.

Mr. Supple said State Farm will review claims filed by policyholders in Mississippi’s three coastal counties whose claims were denied but didn’t sue the company. They can have their claims “re-evaluated, and, if they choose, have their claims resolved by binding arbitration,” he said.

“This settlement works toward Judge Senter’s goal of a just, speedy and efficient resolution of these matters,” Mr. Supple said.

The settlement comes less than two weeks after a federal jury in Gulfport awarded $2.5 million in punitive damages to a couple who sued State Farm for denying their claim after Katrina. A judge took part of that case out of jurors’ hands, ruling that State Farm is liable for $223,292 in storm damage to the Biloxi home of Norman and Genevieve Broussard.

Mr. Scruggs, a Gulf Coast native whose own home in Pascagoula was destroyed by Katrina, rose to national prominence when he helped negotiate a multibillion-dollar settlement with tobacco companies in the mid-1990s.

After Katrina, his legal team sued several major insurers on behalf of hundreds of Gulf Coast policyholders, including Mr. Lott, his brother-in-law, whose Pascagoula home was demolished by the storm.

Mr. Scruggs’ legal team also sued Nationwide Mutual Insurance Co., Allstate Insurance Co., Metropolitan Property and Casualty Insurance Co. and United Services Automobile Association. Besides State Farm, Mr. Hood sued Allstate, Mississippi Farm Bureau Insurance Co., USAA and Nationwide.

In addition, Mr. Hood has investigated accusations that State Farm and other insurers have fraudulently denied claims after Katrina. Last week, a grand jury in Pascagoula began hearing testimony on those charges.

State Farm attorneys say a federal grand jury has been probing similar accusations.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide