Judge Stops Attorneys From Seizing Louisiana Last-Resort Insurer Funds

(AP)  NEW ORLEANS — A judge Monday stopped attorneys trying to seize bank accounts of Louisiana's property insurer of last resort to collect more than $100 million they won for homeowners who claimed the company dragged its heels in adjusting hurricane claims in 2005.

The money includes a $92.8 million judgment for more than 18,500 Louisiana Citizens Property Insurance Corp. policyholders — plus $11 million in judicial interest. Each plaintiff stands to receive $5,000.

Attorneys had started the seizure process after the Louisiana Supreme Court refused to stop them from collecting for their clients. But state District Judge Henry Sullivan issued a temporary order against them and set a hearing for Feb. 8.

Citizens chief executive Richard Robertson said that although the company has enough to pay the judgment, it intends to appeal to the U.S. Supreme Court.

In a long-running court case, the state Supreme Court ruled earlier that policyholders were entitled to the money because Citizens failed to begin adjusting their claims after hurricanes Katrina and Rita within 30 days as required by law. Citizens provides property coverage to homeowners and businesses unable to obtain insurance from private companies.

After the state Supreme Court refused to rehear the case, Insurance Commissioner Jim Donelon, who acts as a state overseer of Citizens, said an appeal with the U.S. Supreme Court would be filed. Robertson said that appeal was being prepared Monday.

Donelon did not immediately return a call for comment. The governing board of Citizens scheduled a special meeting to discuss the case for Tuesday.

One of the lead plaintiff attorneys, Wiley Beevers, said Citizens — before the initial trial — had turned down a proposed mediation that would have "saved tens of millions of dollars" for the insurer. Two other mediation proposals that would have saved Citizens money after the initial judgment also were rejected, Beevers said.

"It is bizarre and one of the strangest things I have seen in my nearly 40 years of law practice," Beevers said.

Attorney Fred Herman said sheriff's costs and commissions for executing the court judgment would add another $5 million to $6 million to Citizens' bill. Herman said money seized from Citizens' accounts would go into escrow funds to be distributed to policyholders.

The courts have yet to determine attorneys' fees in the case, he said.

Robertson said Citizens would be able to pay the entire judgment without a special assessment of private insurance companies. When Citizens reserves used to pay claims gets low, the company assesses private insurers for each property policy — a cost that is passed on to private insurance customers.

Robertson said Citizens had made a $6 million bond to appeal the judgment several years ago and the company believed that would apply until the company exhausted all appeals — including one to the U.S. Supreme Court. But plaintiff attorneys said that bond expired after final action by the state Supreme Court.

Robertson said Citizens is asking Sullivan to make the bond applicable — thus holding off seizure — until the U.S. Supreme Court rules in the case. The court does not have to agree to hear the case.

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