NU Online News Service

Travelers Insurance, the subsidiary of St. Paul, Minn.-basedinsurer St. Paul Travelers, has been hit with a $28.7 millionlawsuit for breech of contract over its refusal to pay for repairsto St. Charles General Hospital in New Orleans in the aftermath ofHurricane Katrina.

In a lawsuit filed May 23 in U.S. District Court in New Orleans,the hospital charged that Travelers failed to provide payments toBuilding Concepts & Designs Construction Inc. (BCDC) to makethe required repairs.

BCDC, based in Florida, was contracted by the hospital to repairthe building and handle the insurance contacts.

The lawsuit claims that Travelers owes about $6.5 million torepair the building, $14.6 million in damages and $8.4 million inattorneys' fees, due to its breach of contract, which includes lossof income.

Identified as defendants in the lawsuit were Travelers; RickSparks, a company representative; Norman Taylor, an adjuster forTravelers; William Schoenborn, a company vice president; andWilliam Schaefer, a vice president in charge of major claims.

According to court filings, BCDC prepared a preliminary invoiceto begin work at close to $2 million, which it submitted on Nov. 15to Mr. Sparks after many attempts to contact the company. Travelerssent two checks totaling $700,000 as an advance to begin repairspending detailed documentation and proof of loss.

On Feb. 10, a more detailed invoice was submitted to the insurerfor less than $6.5 million. BCDC said it made more attempts tocontact Travelers for several weeks, to no avail.

Finally, Travelers sent Mr. Taylor to the site, but he wasaccused of being "aggressive, abusive and shockinglyunprofessional..." Mr. Taylor is alleged to have been uncooperativewith Stephen D. Vaughan, president and chief executive officer ofBCDC, for weeks.

Mr. Vaughan eventually requested another adjuster be sent.

After many weeks of making the request, Mr. Vaughan reached Mr.Schoenborn, who, the suit said, accused Mr. Vaughan of being anout-of-state contractor looking to take advantage of the situation.Mr. Schoenborn is alleged to have said that a "reduced settlementoffer" would be made by the company at its leisure.

Mr. Vaughan later contacted Mr. Schaefer, who showed the BCDCchief executive "hostility and apathy," according to thecomplaint.

The suit alleged, "[Mr.] Schaefer's interaction with [Mr.]Vaughan made clear that Travelers--even their executive staff--weredisinterested, rude and steadfast in their refusal to providereasonable customer support and assistance."

Jennifer Wislocki, a spokeswoman for the company, said, "While Ican't discuss the details of this situation due to pendinglitigation, I can tell you that we are committed to meeting theneeds of our policyholders and considering all claims with care toachieve a fair and equitable resolution."

The carrier, she said, has not yet seen the suit, but "St. PaulTravelers is proud of its response to such an unprecedented eventas Hurricane Katrina, helping thousands of individuals and familiesrebuild their homes and businesses.

St. Charles ' suit was filed by attorneys Jacques F. Bezou andRichard R. Ray.