Posted on 08 Aug 2008
Mississippi Attorney General Jim Hood announced that he has settled with State Farm over a lawsuit he filed against the insurer.
State Farm fulfilled obligations from a January 2007 agreement with the attorney general in state court which required State Farm to re-evaluate some claims following Hurricane Katrina and make new offers for no less than 50% of coverage limits to slab or pier only claims, Hood said in a statement. Hood had filed a lawsuit against the insurer, which claimed State Farm was not complying with the agreement.
Though he expressed disapproval of the fact that State Farm set up a resolution process with the Mississippi Department of Insurance to re-evaluate the claims, Hood's office reviewed some of the settlements State Farm has made with policyholders and came to the conclusion that "State Farm has complied with making the minimum 50% offers." Hood said the original agreement required supervision by the federal court.
State Farm has paid an additional $74 million to policyholders as a result of the lawsuit he brought against State Farm, Hood said in his statement. State Farm's opinion of the matter differs.
"We find it perplexing that Mr. Hood would take full credit for a program he was opposed to and which was the reason for a lawsuit he filed against State Farm," said Fraser Engerman, a spokesman for State Farm. "We are pleased Mr. Hood has realized State Farm met its obligation under the agreement in January 2007. It is clear that the attorney general recognizes we did the right thing. The resolution process works well."
Hood said if the terms of the original agreement had been followed, "a lot more money would have been paid out" because arbiters would have been used. His office estimated State Farm would have paid between $50 million and $400 million under the original terms, Hood said.
"Nevertheless, the additional $74 million paid by State Farm pursuant to the Mississippi Department of Insurance re-evaluation program apparently meets payments required under our original state court settlement agreement," Hood said.
As part of this most recent settlement, State Farm has agreed to send notices to the remaining 148 slab- or pier-only policyholders who have not sued or settled with the company, Hood said.
"We will continue to reach out to them to talk settlements," Engerman said.
In February, State Farm agreed to settle a lawsuit it filed against Hood. The insurer also had a restraining order against the attorney general. State Farm and Casualty Co. and State Farm Mutual Automobile Insurance Co. sued Hood for allegedly violating the January 2007 agreement to end an investigation into State Farm's handling of Hurricane Katrina claims. Hood tried to lift the restraining order to open another investigation of State Farm. The insurer said the act contradicted the terms of the settlement, which also included a promise from Hood to not file criminal charges against the company.
In a letter to State Farm, Hood indicated he sought to investigate State Farm for reasons other than what was included in the January 2007 settlement agreement. According to court records, it appeared Hood was investigating State Farm's payments or reimbursement requests to the National Flood Insurance Program following Katrina.
State Farm's lawsuit against Hood accused the attorney general of ethics violations for his alleged cooperation with attorney Richard "Dickie" Scruggs, whose law firm filed a large number of civil lawsuits against the company. State Farm said it once received a letter from the Scruggs law group, which said cooperation in a civil settlement would reduce the chance Hood would indict the insurer.
Scruggs is scheduled to report to prison later this month. He was sentenced to a five-year term after pleading guilty to a charge of conspiracy. Scruggs admitted he had a role in the attempted bribery of a state judge last year.
Court records showed State Farm and Hood confidentially settled the lawsuit and it was dismissed with prejudice. Details of the settlement remain under seal but it came before Hood or Scruggs were to take the stand, as State Farm had requested. Hood filed court papers to stop both depositions.