This is a fascinating story by Anita Lee of the Sun Herald — reacting to the Fifth Circuit’s decision yesterday in Tuepker v. State Farm, outgoing Mississippi Insurance Commissioner George Dale said as follows:
"All these people on the Coast who have criticized me for being in bed with insurance companies and not doing my job only have to look at what the courts have said in the Nationwide case and the State Farm case and see the absolute thousands of claims that were paid that, based on these two cases, were not covered perils," Dale said after the 5th U.S. Circuit Court of Appeals upheld language in State Farm insurance policies.
I have no doubt that preliminary adverse rulings in the Leonard v. Nationwide and Tuepker cases had something to do with the climate where insurance companies were willing to go for mass settlement of litigation and re-evaluate non-litigation claims as well, but let’s remember something important. In neither the Leonard nor the Tuepker case, nor in any other Katrina case I have seen, did the anti-concurrent cause language of the insurance policy serve as the basis for a denial of wind coverage. Although Judge Senter’s finding that anti-concurrent cause language was ambiguous was the main reason these cases were appealed to the Fifth Circuit, it has not played a major role in evaluation of Katrina claims, and has served mainly as a rallying point and a straw man for policyholder lawyers and critics of the insurance companies. I have been saying this for months now, and no one has brought me a case that will show the assertion of anti-concurrent cause language as the reason for the denial. Instead, in each instance that I have seen or that has been called to my attention, the actual reason was that the insurer merely said there was no evidence of wind damage. Because the anti-concurrent cause language and the reasons for its existence are conceptually and philosophically difficult to master even with some concentrated effort, what it is and what it does gets fuzzed up in people’s minds, and it becomes inflated into some slavering beast stalking people by night.
More important was the Broussard v. State Farm case, which was not even remotely about anti-concurrent cause language, and was instead about the very issue that is central to Katrina litigation, allocation of the burden of proof of damages. In that case, State Farm was hit with a $2.7 million bad faith verdict, since reduced to $1.2 million (the case is also on appeal to the Fifth Circuit). You can add in cases like Weiss v. Allstate, where the insurer got ripped up by a jury in Louisiana as contributors to the impetus for settlement, as well as the fact that almost all civil litigation is settled before trial anyway. The harbingers set the price of settlement, it is true, but they don’t necessarily force settlement. And even more important than these cases, I would say, was the anti-insurer climate and political pressure created by folks like Jim Hood and Dickie Scruggs. A combination of criminal investigations, media warfare, Congressional hearings and civil litigation led to an atmosphere that created higher risk for insurers and made settlements at a higher price more palatable.