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Louisiana Citizen Property Insurance to Propose $80M Settlement for Hurricane Katrina Claims

Source: A.M. Best

Posted on 13 Feb 2012

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Louisiana Citizens Property Insurance Corp. Chief Executive Officer Richard Robertson said the corporation has proposed an $80 million settlement to resolve the ongoing lawsuit stemming from claims filed after Hurricane Katrina. Courts in the state have held Louisiana Citizens liable for $100 million after determining the corporation failed to properly handle claims in the wake of Katrina.

The settlement proposal was put forward during a Feb. 9 meeting of the corporation's board. Of the $80 million the corporation is offering, a maximum of $25 million would be set aside for attorneys' fees, Robertson told Best's News Service.

Plaintiffs have sought a settlement of $124 million, Robertson said. "We are currently working to schedule a meeting for [Feb. 10] to see what the plaintiffs' reaction to the proposed settlement is," he said.

The settlement talks came after State Judge Henry Sullivan denied Citizens' request to enforce an order from Aug. 24, 2009, which allowed it to take an appeal from the money judgment. Sullivan said the denials by the state and U.S. Supreme Courts, who considered the same order, support his ruling to deny Citizens' request.

Fred Herman, a plaintiffs' attorney involved in the case, said his legal team is also preparing for the possibility Citizens will petition the U.S. Supreme Court to hear the case.

Earlier this month, U.S. Supreme Court Justice Antonin Scalia denied Citizens' request for an emergency petition to stay the execution of the judgment against Citizens. Louisiana Citizens' lawyer Theodore Olson, a partner with Gibson, Dunn & Crutcher, argued the stay would give the corporation time to file a petition to have the Supreme Court consider whether to examine the case, which centers upon how claims were handled in the wake of Katrina.

In December, the Louisiana Supreme Court held in a 4-3 decision that Citizens should be held liable for $92.8 million in damages because it was untimely in initiating of loss adjustment, even though there was no evidence that the corporation had acted in bad faith. The court determined the plaintiffs in the case were each entitled to up to $5,000 in penalties for that inaction when damages are not proven to be higher. The court also held Citizens should also have to pay roughly $11 million in interest. The state Supreme Court denied a rehearing in January.