WASHINGTON–The U.S. Chamber of Commerce jumped into the Hurricane Katrina insurance claims battleground today with criticism of Mississippi Attorney General Jim Hood's lawsuit against State Farm.
Mr. Hood's legal action claiming bad faith by State Farm related to the collapse of a federal class action settlement for policyholders with Hurricane Katrina claims in three coastal counties is more about ensuring that plaintiff's lawyers "get their cut of the compensation money" than it is about reimbursing Mississippi homeowners for Katrina losses, a Chamber unit announced.
"With this newest lawsuit, the bottom line is not whether the people of Mississippi will get fair compensation on their losses; it is whether or not the state attorney general can subvert a fair process in order to give trial lawyers a cut–ultimately at the expense of Mississippi homeowners," according to Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform.
Ms. Rickard said Mr. Hood agreed to a settlement with State Farm last year, but when plaintiffs' attorneys of the Scruggs Katrina Group withdrew the settlement offer, the Mississippi Insurance Department brokered an agreement between homeowners and the insurer, "effectively cutting out Hood and his trial lawyer friends from the deal," she said.
"Mr. Hood deputized three outside plaintiffs' trial lawyers in this most recent case," Ms. Rickard said. "The combined total campaign contributions of these lawyers and their law firms to Mr. Hood's last campaign was nearly $70,000, according to publicly available campaign finance records," she added.
The lawsuit by the attorney general was filed in Hinds County, Miss., and seeks compensatory and punitive damages for more than 30,000 Gulf Coast policyholders "who have suffered for nearly two years because of State Farm's inaction," he said in a statement.
He said the re-evaluation procedure through the Department of Insurance used by State Farm to deal with the claims has only resulted in a little more than 300 new offers, he said.
In response, State Farm, based in Bloomington, Ill., called Mr. Hood's action "a headline-making move that would not do much for policyholders" and said the separate agreement to cover such claims that it arranged with the state insurance department is working well.
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