State Farm is seeking a new trial with two sisters, independent adjusters, who accused the insurer of defrauding the federal government following 2005's Hurricane Katrina.

At the start of April after seven years of legal wrangling, a Mississippi jury found that the Bloomington, Ill.-based insurer committed fraud against the government's National Flood Insurance Program by submitting a fraudulent flood claim following the hurricane.

Apparently—and not surprisingly—the legal wrangling is not over.

State Farm on May 6 filed new documents in U.S. District Court for the Southern District of Mississippi asking the judge to set aside the verdict and grant the company a new trial with whistleblowers Cori and Kerri Rigsby, who filed a False Claims Act suit against the insurer in April 2006.

Though it was originally much larger in scope, the case was limited to the home of Thomas and Pamela McIntosh of North Biloxi, Miss., because a judge had previously ruled it was the only home in which the Rigsbys had firsthand knowledge of the alleged fraud by State Farm. After a two-week trial and about three hours of deliberation, the jury found that State Farm overcharged the NFIP $250,000, which the carrier will have to repay. That amount—the full flood policy limit—was paid to the McIntoshes, along with $36,000 for wind damages covered by their State Farm homeowners policy.

“The jury's verdict in this case—no covered flood damage to the McIntosh home—is manifestly unreasonable when viewed against [the] factual backdrop [of evidence presented at trial],” says State Farm's motion.

State Farm says the Rigsbys needed to prove the insurer knowingly presented a false or fraudulent claim to the NFIP. “The Rigsbys failed to prove this, State Farm asserts, adding, “No reasonable jury could find that the McIntosh flood claim was false.”

A jury could not find the McIntosh home suffered no flood damage, especially when Kerri Rigsby and other witnesses—engineers—testified there was damage from storm surge, or flooding, State Farm says.

Simultaneously, the Rigsbys have filed to compel State Farm to produce evidence to prove its alleged fraud went far beyond the McIntosh home. A motion from the sisters ask “for an opportunity to conduct discovery regarding the full extent of State Farm's fraud upon the government,” according to court records.

The Rigsbys are also asking the judge to impose a maximum civil penalty of $11,000 against State Farm and to treble the jury's $250,000 damages award. The sisters are entitled to up to 30 percent of the money, if awarded, as filers of the FCA suit.

Additionally, the Rigsby ask the judge to award them more about $5.8 million in legal fees and about $937,000 in legal expenses and costs billed to them. About $1.2 million in fees and $287,000 in expenses is from the sisters' current legal counsel. Another $4.6 million in fees and $650,000 in expenses was billed to them by their previous counsel, Gilbert LLP, according to the court motion. Gilbert filed a lien against the Rigsbys, they say.

Special Reports /

State Farm Seeks New Trial Against Rigsbys in Katrina-Related Whistleblower Case

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