In the midst of what is becoming a never-ending string of legal motions, complaints, and filings, the Scruggs Katrina Group filed yet another law suit in Mississippi that alleges a pattern of collusion and fraud between State Farm, an engineering firm, and an independent adjusting company. The suit was filed in the U.S. District Court for the Southern District of Mississippi under the federal Racketeer Influenced Corrupt Organization Act ("RICO").

The Glenda Shows case, which consists of 21 property owners whose homes were damaged or destroyed by Hurricane Katrina, alleges that State Farm proactively sought to avoid paying claims. The company is accused of working with third-party providers Forensic Engineering and E.A. Renfroe to create and use false engineering and inspection reports that would attribute losses to water and storm surge, which is traditionally an uncovered peril under most homeowners' policies.

"The case is important because it exposes a scheme that has existed in the insurance industry between hired gun adjusters and unscrupulous engineering companies long before Katrina came along," said Scruggs, in a release. "Some of the same company people behind the Katrina inspection scheme were involved in cheating homeowners who were tornado victims in Oklahoma, and earthquake victims in California."

State Farm spokesperson Phil Supple called the filing an act of deflection, due in part to a recent negative ruling from U.S. District Court Judge Acker last week. Acker legitimized ethical questions that were raised about the way Scruggs obtained confidential company documents when he formally recommended that a government attorney prosecute Scruggs' criminal contempt.

"Clearly [Scruggs] is stung by U.S. District Court Judge Acker's criminal contempt charge and surprised by the evidence that could disqualify him from other cases, and now is trying to deflect it all," said Supple. "As he said himself last summer, 'If you don't win it, spin it.'"

Supple reiterated that State Farm has paid more than $3 billion in Katrina claims, and more than 99 percent of all Katrina claims have been paid and settled. The company is still working with the Mississippi Insurance Department to settle slab cases and reopen some 35,000 claims that had already been satisfactorily settled.

"The Scruggs' law firm's current effort is a regurgitation of every wild charge he and his firm have made to date," said Supple. "Clearly his PR machine is working overtime."

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This article was updated on June 21, 2007.

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