Former State Farm Adjusters Now Working For Scruggs, Charge Fraud In Katrina Claims

This story from the Washington Post is a good read, although I think it goes a little overboard in accepting at face value the claims of two sisters who once worked for State Farm in adjusting Katrina claims and are now consultants to plaintiff lawyer Dickie Scruggs. 

The key to the sisters’ charges is that State Farm ordered engineer’s reports and set up a different claims handling procedure for Katrina claims.  That, in and of itself, doesn’t strike me as unusual: Katrina damage was so massive, it seems obvious some new procedures were called for.  State Farm’s interpretation of the anti-concurrent causation clause in its policies, however, played into this perception.  As I wrote here, U.S. District Court Judge Senter, who is overseeing all Katrina lawsuits in Mississippi, rejected State Farm’s interpretation in the Tuepker case, which would have nullified coverage for wind damage if even some flood damage had also occurred.   There were other, better coverage positions to take.  It is worth noting that in the recent Leonard case decided by Senter, Nationwide chose a more moderate coverage position, although it is true the facts and issues of the case were somewhat different from Tuepker.

Judging simply from a public relations standpoint, Scruggs has done a pretty good job of finding the weaknesses in his opponents’ positions and creating a marketable storyline with them.  I’m not sure insurers have yet figured out an effective public response.

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