NU Online News Service, April 10, 8:35 a.m. EDT
The Louisiana Supreme Court has ruled against the state’s last-resort insurer again.
The most recent ruling from the state’s highest court lifts a stay on a judgment of more than $100 million against Louisiana Citizens Property Insurance Corp. in favor of more than 18,500 policyholders.
The policyholders say Citizens did not act quickly enough to adjust claims following hurricanes Katrina and Rita in 2005. The number of policyholders joining the class could grow.
“We will proceed immediately to complete the seizure and collect the judgment and we will also move quickly to set the pending claims for hearing before the trial court,” says plaintiff’s attorney Fred Herman, in a statement.
This is not the first time the state’s highest court has ruled against Citizens. Last December it overruled a state appeals court and reinstated an award of about $93 million to policyholders by the district court in March 2009.
The amount Citizens owes to policyholders has grown to around $105 million with interest and has the potential of growing more as additional policyholders come forward to join the class.
Citizens has tried every avenue in an attempt to delay or stop the judgment against it. Insurance Commissioner Jim Donelon called the award to policyholders a “potentially devastating event” because it puts the last-resort insurer of coastal properties at a disadvantage heading into the hurricane season this year.
Donelon has said he agrees that Citizens was lax in handling claims after the 2005 storms within a state-mandated 30-day window, but he disagrees with giving the maximum award of $5,000 to each policyholder in the class.
After the judgment was reinstated, Citizens tried to work out a settlement for less money to the policyholders. The insurer also tried to file court papers to delay, or stay, payment to policyholders while it appealed the state Supreme Court’s ruling. The insurer was denied a stay by the state high court on Jan. 27. Four days later, the U.S. Supreme Court refused to hold up the state’s judgment.
Though the U.S. Supreme Court blocked a stay of the judgment, Citizens could still seek an appeal of the country’s highest court. But in an interview with Out of the Storm News—a web publication of the Heartland Institute’s Center on Finance, Insurance and Real Estate—Donelon says the case will not go to the U.S. Supreme Court.
Louisiana lawmakers are considering legislation that would have made the judgment against Citizens moot. Legislation proposed could have retroactively made it impossible for the policyholders to collect a dime because the bills would make it unlawful to recover penalties in class-action suits against Citizens.
But Herman says, with this latest state Supreme Court ruling in hand, the judgment of more than $100 million is executable. Additionally, Herman says plaintiffs’ attorneys “will continue to vigorously oppose any legislation that would take away the right of policyholders.”