Days after settling an individual lawsuit brought by Mississippi Republican Sen. Trent Lott, State Farm was "disappointed" to learn that the state's attorney general plans to sue over a failed class action settlement, a spokesperson said.
The firm believes it lived up to its legal requirements, said Phil Supple speaking for State Farm last week.
Mr. Supple said he understood that Mississippi Attorney General Jim Hood was finalizing a draft of a breach of contract suit, "claiming that we did not adhere to the terms of the agreement," referring to a proposed agreement for policyholders with Hurricane Katrina damage claims.
The proposed class settlement was tossed out in March by U.S. District Court Judge L.T. Senter Jr. in Jackson, Miss.
As originally announced in January, the agreement would have applied to homeowners in three coastal Mississippi counties, and Mr. Hood estimated the insurer might have to pay up to $500 million to 1,000 homeowners.
Most of the disputed claims involved damage that the insurer initially rejected, saying that such claims were barred by policy language excluding damage from flooding or storm surge.
The settlement talks in addition to Mr. Hood had included a combine of attorneys, the Scruggs Katrina Group that represented hundreds of policyholders. The judge initially rejected the settlement, saying it was not "fair, just, balanced or reasonable."
After the judge held a hearing on its provisions, members of the Scruggs Katrina Group said they could see he was not inclined to approve it, and they dropped their effort.
Mr. Supple said the proposed agreement "makes clear that a claim reevaluation would be submitted to the federal court. That plan was submitted and we feel that fulfills our legal obligation to the proposed settlement."
"We are disappointed Mr. Hood would take this action," he said.
He said the company was going ahead with an agreement it worked out with Mississippi Insurance Commissioner George Dale to reevaluate Hurricane Katrina claims, which he said "mirrors the settlement that was before Judge Senter."
Mr. Hood, when the proposed class action settlement was announced in January, dropped State Farm as defendant in a civil action and ended a grand jury probe of the insurer's claims handling.
Mr. Hood's office did not immediately respond to a call for comment last week.
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