A federal appeals court has dismissed a suit against Allstate and State Farm that alleged the companies fraudulently misrepresented wind claims as flood damage so the federal flood insurance program would pick-up the tab.
On Wednesday, the U.S. Court of Appeals for the 5th Circuit in New Orleans issued an opinion dismissing the suit against Allstate and State Farm, but reinstating it against six insurers and six claims adjusters including Liberty Mutual Fire Insurance Company.
The court's ruling was an appeal of a lower court's decision that dismissed the case against all of the defendants.
The suit, Branch Consultants vs. Allstate Insurance Co. et al (07-31191), was filed in August 2006 against the insurers. The adjusters group alleges the insurers were defrauding the National Flood Insurance Program by "misattributing wind damage and other non-flood losses to the flood policies subsidized or underwritten by the Government rather than correctly attributing such losses to causes that are covered by homeowners policies largely underwritten by themselves."
The suit makes the same allegations as one filed several months earlier in Mississippi against State Farm, Allstate, Nationwide Insurance Company and USAA Insurance Company. That case, Rigsby v. State Farm Insurance Co. et al (CV-433), was brought on April 2006.
In their decision last week a three judge panel said that despite what may appear to be more evidence of misconduct alleged by Branch over the Rigsby case, under the False Claims Act, a second plaintiff can not bring a related action against a defendant in the first lawsuit when "the later-filed complaint alleges the same material or essential elements of fraud" in the first action, the court said.
In response to the court's action, an Allstate Company spokesman said, "Allstate is pleased that the 5th Circuit Court upheld the lower court's ruling."
State Farm issued a statement by e-mail saying, "We are pleased that the appellate court agreed with Judge Beer that Branch had no viable claims against State Farm."
Glenn Greenberg, a spokesman for Liberty Mutual, said the insurer does not comment on ongoing litigation.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.