State Farm Appeals Katrina Fraud Ruling in Mississippi

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State Farm Fire and Casualty Co. is asking a judge to void a jury’s finding that the company defrauded the government in a case involving a policyholder claim after Hurricane Katrina.

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, Miss., 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’ attorney, August J. Matteis Jr. of Washington, D.C., said on May 9 in an email that over the past seven years, State Farm has filed scores of motions in its attempt to prevent the Rigsbys’ case from going to a jury.

“Now, after a unanimous jury from the coast decided in less than three hours that State Farm intentionally committed fraud against the United States government, State Farm is making the same arguments that have failed repeatedly prior to trial. The jury’s verdict should stand,” Matteis said.

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.

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 motions filed in U.S. District Court in Gulfport, Miss., 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.

State Farm is also seeking a new trial.