State Farm Ethics Challenged In Engineer's E-Mail

An executive with an engineering firm that was evaluating Mississippi Hurricane Katrina claims for State Farm wrote in a 2005 e-mail that he was concerned about the ethical behavior of the insurer.

In response to that message and other e-mails, which were posted on a law firm's Web site yesterday, a State Farm spokesman pointed to sworn testimony from Robert Kochan, the engineering firm's president, in which he denied State Farm had acted improperly.

Two internal e-mails from the Forensic Analysis and Engineering Corp. of Raleigh, N.C., were placed on the Web site of the Scruggs Katrina Group, a team of Mississippi attorneys who have brought hundreds of Katrina lawsuits against State Farm.

One message that was sent on Oct. 15, 2005, by Randy Down, a Forensic Analysis vice president, made particular mention of the behavior of State Farm claims manager Alexis 'Lecky" King.

Ms. King, during deposition questioning for one of the Katrina lawsuits against State Farm, has invoked her Fifth Amendment right against self-incrimination, citing state and federal investigations, as a reason not to answer.

Fraser Engerman, a State Farm spokesman, said it was "old news" that Ms. King, who still works for the company, had invoked the Fifth Amendment.

Mr. Down in his e-mail wrote to Mr. Kochan challenging the actions of Ms. King, who wanted to dump the firm over reports they had written evaluating the cause of hurricane damage to homes.

"I really question the ethics of someone who wants to fire us simply because our conclusions don't match hers...," he wrote.

If State Farm was going to tell the firm what to put in reports, Mr. Down wrote, it was his opinion "we need to find a more rational and ethical client to be dealing with."

Mr. Down, responding to a suggestion by Ms. King that one of the firm's engineers might have emotional bias in finding for a homeowner, asked in his e-mail: "What about the obvious fact that SF would love to see every report come through as water damage so that they can make the minimum settlement?"

"I now see why the [State] Attorney General's office is already involved [with a grand jury investigation] down there. She [Ms. King] needs to be careful about what she is doing and saying," he added.

In response, Mr. Kochan wrote back on Oct. 17, 2005, that State Farm felt an engineer had done a report relying "on eyewitness testimonies of others who were trapped in their attics and panic stricken....Very biased opinions of folks who may or may not have actually seen a significant portion of the storm's effect on the subject house."

A year later, during a deposition, Mr. Kochan confirmed--as he had said in the e-mail--that engineer Brian Ford had been taken off State Farm work "because Lecky King was upset with the quality of his work"

Mr. Kochan said that Ms. King, "had absolute authority to say, I don't want that engineer or that engineer on my job. That's a normal process in the engineering environment."

He said Mr. Ford had made mistakes and "improper technical judgments in my opinion. And that's why we reacted to it."

Mr. Kochan denied a suggestion that Mr. Ford was fired, and said he had left the firm because "he didn't want to be in the--a marketing/sales role."

The executive said he had only "advised" that a report's conclusion be altered to indicate a combination of wind and rain, "not primarily the wind" had damaged a house.

Mr. Kochan said he wanted the report "adjusted to more technically represent what the information--the evidence showed."