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US Supreme Court Agrees: State Farm Defrauded Federal Government

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. 

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