A federal judge in Mississippi has ruled that Attorney GeneralJim Hood cannot investigate State Farm's handling of hurricaneclaims after agreeing last year to drop his probe of theinsurer.

Under the January 2007 agreement, State Farm agreed to reopen30,000 hurricane claims from 2005 and pay out a minimum of $50million to settle the claims. In return, Attorney General Hoodagreed to drop his criminal probe of State Farm's handling of theclaims.

U.S. District Judge David Bramlette in Natchez, Miss., ruledthat State Farm's agreement with Mr. Hood, which settled aclass-action lawsuit stemming from the claims dispute, is “valid,unambiguous and enforceable,” State Farm spokesman Fraser Engermansaid today.

“We are pleased with the outcome,” he added.

A spokesman for Attorney General Hood was not available forcomment.

Terms of the settlement are confidential.

After the settlement deal failed, according to Mr. Engerman,State Farm reached an agreement with then Insurance CommissionerGeorge Dale “to implement the spirit of the agreement.”

As a result of the deal between State Farm and the plaintiffs,U.S. District Court Judge L.T. Senter Jr. dismissed the case,Woullard vs. State Farm, in April 2007.

The latest decision by Judge Bramlette says that even though thecase was ultimately dismissed, the agreement reached to end thecriminal probe of State Farm in return for agreeing to reopen thecases is still valid.

The judge's decision ended a massive class-action lawsuit byhomeowners against State Farm that was supposedly settled inJanuary 2007 through an agreement between State Farm and AttorneyGeneral Hood.

It came at a hearing requested by State Farm on a motion todismiss the case that the insurer filed. The motion accusedAttorney General Hood of using the threat of criminal charges toforce settlements in civil lawsuits.

In a motion filed with the court on the eve of the hearing,Attorney General Hood said the State Farm allegation is based on“lies, speculation and innuendo.”

The class-action lawsuit pact was never signed because JudgeSenter declined to approve it, citing concerns about the terms ofthe deal.

A little while later, Richard Scruggs, the plaintiff's lawyerwho was the lead counsel in the case, dropped out. Mr. Scruggs isfacing trial soon on federal charges.

Mr. Scruggs is accused by the government of conspiring withseveral associates to bribe a judge in an unrelated dispute over$26.5 million in fees from a mass settlement of Katrina claims.

He also faces contempt charges in Alabama for allegedlyviolating a federal judge's order by giving leaked Katrinaassessment documents to Attorney General Hood rather than returningthem to the company from which they were taken.

Mr. Scruggs has denied wrongdoing in either case.

The lawsuit that led to the agreement with Attorney General Hoodwas filed by Mr. Scruggs and other lawyers on behalf of 30,000State Farm customers in three coastal counties in Mississippi hithard by Hurricanes Rita and Katrina.

Mr. Engerman said that as of Jan. 23, State Farm has paid outmore than $76 million to settle those claims and has offers on thetable that would require the insurer to bring the total cost of thesettlement so far to $88 million.

“The big difference between the original agreement and theagreement with the commissioner is that policyholders are gettingthe money directly,” Mr. Engerman said. Under the prior agreement,the policyholders would have to pay attorneys' fees, heexplained.