Public Adjusters Seek Katrina Suit Reinstatement

Lawyers for a group of public adjusters who worked in Louisiana handling wind-vs.-water claims caused by Hurricane Katrina are asking a federal appeals court to reinstate their suit for damages under the federal whistleblowers law.

Specifically, they said in an appeals brief that a federal district court judge in New Orleans applied the wrong standard in tossing their claim. The claim alleged that insurers mishandled Hurricane Katrina claims in Louisiana under the write-your-own program by fraudulently “misconstruing wind damage as flood.”

In general, the lawyers said in their appeals brief, the write-your-own system under the National Flood Insurance Program “creates a perverse opportunity for WYO insurers to profit by misconstruing wind damage as flood, thereby saving billions of dollars that should otherwise be paid under the homeowners' insurance policies.”

In the appeal of a district court decision throwing out their case, lawyers for the public adjusters said the lower court decision should be reversed because the judge saw in the provision at issue “what no other court, anywhere in this nation, has ever seen.”

The appeal was filed March 24 with the 5th U.S. Circuit Court of Appeals, New Orleans, by Kanner & Whiteley, a law firm based in New Orleans, in Branch Consultants vs. Allstate Insurance Company, et al, No. 07-31191.

Allstate is one of 12 defendants in the case, which includes insurance companies and adjusting firms. The other defendants are State Farm, Liberty Mutual, Fidelity National, American National, Pilot Catastrophe Services, Crawford and Company, NCA Group, Simsol Insurance Services Inc., American Reliable Insurance, Colonial Claims Corporation and the Standard Fire Insurance Company.

Ryan Casey, a lawyer working on the case at Kanner & Whiteley, said that at the time of Hurricane Katrina, Allstate and State Farm had 80 percent of the personal lines homeowners' market in Louisiana.

The case is tied to a similar case filed in Mississippi by now discredited plaintiff's lawyer Richard Scruggs, who two weeks ago agreed to plead guilty to federal charges related to allegations he attempted to bribe a state judge in a case stemming from a dispute regarding fees to be paid in yet another Hurricane Katrina-related class-action lawsuit.

The judge in the Louisiana case tossed out that case last October after the judge in the Scruggs case, U.S. ex rel. Rigsby vs. State Farm Insurance Co., et al, dismissed that case based on the fact that the Mississippi case was deficient.

In their appeal, however, the lawyers for the Branch plaintiffs alleged there were material differences between the two cases.

For one thing, lawyers for the Branch plaintiffs said, the Rigsby sisters, the two plaintiffs in the Mississippi case, were not “claims adjusters, [nor did they] pretend to have any expertise in the allocation of damages between wind and flood.”

Furthermore, the lawyers in Branch said in their appeal, the “transactions in Branch and Rigsby are completed unrelated,” and the district court “further failed to analyze subject matter jurisdiction on a claim-by-claim basis,” as required by a recent Supreme Court decision.

Allstate was not available for comment.

Fraser Engerman, a spokesman for State Farm, said the dismissal by the lower court of the Branch case was appropriate. He said the claim of the public adjusters “was completely groundless.”

He added, “We believe we followed NFIP guidelines correctly in handling these claims. We will continue to defend ourselves in this lawsuit.”