A class-action lawsuit with 669 plaintiffs was filed against State Farm Insurance Co. last month, alleging improper denial of insurance claims in Southern Mississippi. Richard Scruggs, most famous for his success in the Big Tobacco lawsuits, brought the complaint.
According to the document he filed, all of the plaintiffs listed had homes that were completely destroyed after Hurricane Katrina made landfall last year. Following the destruction, the complaint alleges that State Farm and its captive engineering firm, Haag Engineering, prepared and circulated a generic, one-size-fits-all engineering report to its adjusters that concluded all damage was due to storm surge, which is excluded in most homeowners' policies. The complaint alleges that State Farm referred to the report as the "Bible" and expected and coerced all of its adjusters to reach conclusions consistent with it.
The complaint also states that many of the initial adjusters first sent out by State Farm found that damages were caused by hurricane wind — not storm surge — and that many of those adjusters communicated this information to State Farm, only to have those findings overruled. The complaint further alleges that those adjusters often were terminated, transferred, or reassigned.
"It's clear that Mr. Scruggs' characterizations, like those he's made before, have no merit," said Phil Supple, spokesperson for State Farm. "[We] have evaluated every Mississippi claim individually, and we are committed to paying what we owe based on our contract with each policyholder."
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