Miss. Mediation Program Protested

A mediation program developed by the Mississippi Insurance Department to help settle damage claims to residential property from Hurricane Katrina is being called a "band-aid" by a famed plaintiff lawyer.

Richard Scruggs has filed a class action lawsuit against insurance companies on behalf of families whose homes were damaged or destroyed by the deadly Gulf Coast hurricane.

The lawsuit is currently tied up in litigation over jurisdiction, with efforts being made by the insurance industry to have the suit tried in federal court--Mr. Scruggs wants the suit tried in state courts, however.

"This is non-binding, just another avenue to give insureds help in settling their claims," Mississippi Insurance Commissioner George Dale said in disclosing the new program.

Mr. Scruggs said mediation only "sounds warm and fuzzy," because the results reached in mediation conferences are not binding on insurance companies, and the mediators will be paid by the insurers.

"Would you go to trial with a judge who is being paid by the defendants?" he asked in a telephone interview.

Moreover, Mr. Scruggs said that to his knowledge only three judges have been named as potential mediators. He added that 50,000 claims by homeowners have been denied by insurers.

"Three mediators are like a drop of water in the Gulf of Mexico, given all those claims," Mr. Scruggs said.

The mediation process will be done at the expense of insurers, who are responsible for paying the mediator and the mediation administrators at no costs to the insured, Mr. Dale said.

Anyone who has a claim related to Hurricane Katrina will be sent a notice by their carrier on Jan. 6 to notify them that they are eligible for the mediation program, Mr. Dale explained.

Those who have already cashed a check labeled as a final payment are not eligible, but any claims still under dispute are, he said.

The program is not open to commercial property or vehicle insurance claims.

"This is a delay tactic to stall the inevitable lawsuit," Mr. Scruggs said, adding that the tactics are George Dale's attempt to make hurricane victims feel he is doing something to help them.