Arguments in Katrina Whistleblower Case Appeal Scheduled for February

Date Published:

Whistleblower_Advisor_Arguments_Katrina_Whistleblower_Case_Appeal_for_FebruaryOral arguments have been scheduled for February in the 5th U.S. Circuit Court of Appeals in State Farm Fire and Casualty Co.’s appeal of an order that it pay legal fees and damages of $3 million in a whistleblower lawsuit. The jury found the insurer defrauded the government in a claim after Hurricane Katrina.

The case was brought in 2006 by Cori and Kerri Rigsby, sisters from Ocean Springs, Mississippi, who worked for an Alabama contractor that provided damages assessments to State Farm after the August 2005 hurricane, The Associated Press (AP) reports.
In 2013, a jury found that State Farm avoided covering a policyholder’s wind losses by categorizing it as water damage from the storm surge, which is covered by federal flood insurance.

The sisters pursued cases for a number of policyholders, but only one came to trial, the case of Thomas and Pamela McIntosh. The McIntoshes lost their Biloxi, Mississippi, home to the storm. The sisters allege State Farm defrauded the McIntoshes by manipulating engineers’ reports so claims could be denied, according to the AP. The Rigsbys also alleged that State Farm’s fraud against the National Flood Insurance Program was widespread along the Mississippi coast.

State Farm says it correctly assessed the McIntoshes’ damage and never instructed its adjusters to wrongly process claims as flood damage, nor did it withhold a report that showed the home had been destroyed by wind as the Rigbys alleged.

At State Farm’s direction, the flood insurance program paid the Macintoshes the policy limits of $250,000, the AP reports. State Farm initially paid the couple $36,000 for wind damage on a policy that provided more than $500,000 in coverage, according to court documents.

U.S. District Judge Halil S. Ozerden ordered State Farm to pay $750,000 in damages to the government. Under the federal False Claims Act, a whistleblower law dating back to the Civil War, individuals may sue on behalf of the government and receive a portion of funds recovered if the case is successful. If damages are upheld on appeal, the Rigsbys will each receive 15 percent of the $750,000 judgment, according to the AP.