As if Hurricane Katrina was not already devastating enough, the insurance industry tried to make it worse. Earlier this week, the US Supreme Court unanimoulsy upheld a jury verdict finding that State Farm defrauded the federal government after Hurricane Katrina hit the Gulf Coast in 2005. Prior to the hurricane, State Farm sold federally-backed flood insurance policies to individuals and businesses throughout the area. However, after the hurricane, State Farm ordered its claims adjusters to classify what was actually wind damage as flood damage. In other words, State Farm’s goal was to shift the cost to the federal government rather than pay out of its own reserves. 

This fraudulent scheme was exposed when two of State Farm’s claims adjusters came forward and told the truth. These whistleblowers, Cori and Kerri Rigsby, filed a law suit under the False Claims Act on behalf of the federal government. Eight years after the hurricane in 2013, State Farm was ordered to pay $750,000 in damages to the federal government.

There are other lawsuits similar to this one still active against State Farm, including one involving the state of Mississippi. Mississippi claims it had paid more than $522 million to State Farm policyholders after adjusters and engineers from the company manipulated reports to escape potential liability.

The lawyers at Leeseberg & Valentine are not surprised to learn about State Farm’s recent attempt to shirk its responsibility to pay on a claim. We deal with these underhanded practices every day. If you or someone you know has been the victim of another’s negligence and are getting nowhere with the insurance company, contact our office today and ask to speak with one of our attorneys to see if we may be of assistance to you.

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