NU Online News Service, Feb. 13, 11:30 a.m. EST

Insurance Commissioner Jim Donelon says the state’s last-resort insurer has some options left in its pursuit to either stop or negotiate down a hefty multimillion-dollar judgment against it.

“We still have several arrows left in our quiver,” says Donelon during an interview.

Citizens Property Insurance Corp. says it will take an $80 million settlement offer to attorneys currently representing more than 18,500 Citizens policyholders who argue the state-run insurer was late in adjusting their claims after Hurricane Katrina in 2005. No more than $25 million of the offer is to go to attorneys, says Donelon.

The state’s last-resort insurer has a class-action lawsuit judgment against it—from the state’s highest court—for at least $104 million. Add interest accruing each day and the possibility of more people joining the class, and the payout increases tens of millions of dollars more.

Donelon says the state can still make a case for a rehearing before the state Supreme Court, appeal to the U.S. Supreme Court, pass a legislative fix, or negotiate the award.

And Donelon says he’d rather squeeze Citizens’ legal budget dry “before paying a penny to the plaintiffs.” At least not until all options are tapped because there’s too much on the line, he adds.

Negotiations have not started out well. Attorneys for the plaintiffs criticized Citizens and Donelon for taking their offer to the press before introducing it to the class of policyholders, and they reminded state officials that it had a judgment for much more than $80 million in its pocket.

A settlement offer from the class stands at $123 million—still a discount, say the plaintiffs’ attorneys.

At stake is the financial stability at Citizens, which means all policyholders in Louisiana can be affected since Citizens has the ability to levy assessments so it can pay claims.

Therein lays the point sticking in Donelon’s craw.

Insurers, Citizens included, did not start the adjusting process within the guidelines of the law following Katrina. Donelon doesn’t argue the fact. Conditions may have played a large role after the unprecedented storm, but “the law is the law,” says Donelon, who sued his own insurer.

The difficulty in accepting the ruling against Citizens is the guaranteed $5,000 each class member is slated to receive.

“That’s the maximum penalty,” Donelon says. “One penalty doesn’t fit each person. One day over the statute or much more than that—you get the same amount under this judgment. It is unconscionable.”

Policyholders of private insurers had attempted to form a class and sue, but were told by judges that they were not deemed applicable for class-action status.

“And they [judges] were right in that ruling,” concedes Donelon. “But the same is not being applied here in this case.”

Now, Donelon says 95 percent of Louisianans—many of whom had the same thing happen to them after Katrina—are at risk of having to pay assessments due to a judgment in favor of Citizens policyholders who are able to pursue a class-action case—the same type of case policyholders of private carriers were prevented from pursuing.

Citizens has the money on hand to satisfy the judgment against it, Donelon says, but paying the full amount would mean the insurer is at risk of not having enough funds to pay claims following a decent storm this hurricane season—at least not without levying assessments.

“We’ve got our sleeves rolled up trying to figure out a way to make this right,” Donelon says. “Right now we think it isn’t right.”

A special meeting of the Citizens’ board approved Sen. Eric LaFleur, D-Ville Platte, chairman of the insurer’s litigation committee, to take its $80 million offer to plaintiffs’ attorneys.

Donelon says Citizens is also assisting its bank in efforts against actions by the class attorneys to seize funds to begin doling out awards.