NU Online News Service, Sept. 29, 11:40 a.m. EDT

Late last week Allstate Insurance Company was informed it is thesubject of a whistleblower lawsuit filed more than three yearsago.

The suit alleges Allstate fabricated insurance documents toinflate the amount of flood loss suffered by three clients thewhistleblower represented in connection with homeowners insuranceclaims disputes against the insurance company.

Attorney John H. Denenea Jr. filed the lawsuit in U.S. DistrictCourt in New Orleans on behalf of the federal government and claimsAllstate "knowingly fabricated" insurance documents to decrease itsown claims payments and inflate flood losses at the expense of thefederal government, in violation of the False Claims Act.

Flood losses are not covered by a standard homeowners policy.Flood insurance is provided by the federal government's NationalFlood Insurance Program.

The lawsuit remained under seal without Allstate's knowledgewhile the government decided whether to take up the case. On Sept.21, an order from Judge Carl Barbier unsealed the case, noting thatthe government "is not intervening at this time." Application bythe government over the years to extend the seal will remain unseenby the public or Allstate and federal authorities can requestdeposition transcripts and intervene at any time as the case moveson, according to court documents.

Mr. Denenea is a "relator" in the suit, and, having direct andindependent knowledge of the allegations, brought the suit onbehalf of the government. He said he gave the government all theinformation he had before filing the lawsuit, according to courtdocuments.

Mr. Denenea could not immediately be reached for comment.

An Allstate spokesperson said, "As a practice, Allstate does notcomment on pending litigation and therefore we will be unable toprovide comment at this time."

Mr. Denenea is seeking a trial and to have Allstate pay threetimes the amount of damages the government has sustained as aresult of the company's alleged fraud plus civil fines and the costof the litigation.

According to the lawsuit, if the government decides to pick upthe case, Mr. Denenea is seeking between 15 percent and 25 percentof the proceeds of the action or settlement of the case.

If the government stays out of the case, Denenea seeks between25 percent and 30 percent of the proceeds.

Allstate is involved in another similar lawsuit with similarallegations brought by insurance adjusters, Branch Consultants, andfiled in the same court. Allstate had been excluded from the case,but in August was added back to the list of defendants, whichincludes others insurers.

A well-known whistleblower lawsuit filed in Mississippi bysisters Cori and Keri Rigsby against State Farm is still pending.The Rigsbys were once represented by prominent "Tort King," RichardScruggs, who is now in federal prison for his role in bribing acircuit court judge.