Accused firm could settle in Scruggs case

By ANITA LEE

GULFPORT -- Forensic notice of settlement

The Scruggs Katrina Group has settled its differences with an engineering firm accused of criminal activity in handling of Hurricane Katrina claims, according to a notice filed in U.S. District Court.

If the settlement is finalized, Forensic Analysis & Engineering Corp. will be dismissed as a defendant in a racketeering lawsuit the Scruggs group filed on behalf of 21 policyholders from Pascagoula to Waveland.

Terms of the settlement were not disclosed.

The lawsuit alleges State Farm insurance companies conspired with vendors to minimize or deny policyholder claims by blaming Katrina damage on tidal surge covered by federal flood insurance rather than the wind damage State Farm covers.


State Farm and the vendors, including Forensic and independent adjusting firm E.A. Renfroe & Co., have denied the allegations.

Forensic also is under federal scrutiny. In a policyholder lawsuit filed by the Scruggs group, Forensic was forced to turn over the personal computer hard drive of employee Nellie Williams, who exchanged e-mails with company engineers assigned to State Farm claims.

The U.S. Attorney's Office in Jackson subpoenaed the computer hard drive from the Scruggs group, asking that it be delivered to a grand jury in Gulfport. Forensic at first fought the subpoena, which the Scruggs group wanted to give federal prosecutors. The two sides settled their disagreement over the hard drive on Nov. 9, the same day Forensic entered a notice that a settlement was at hand in the racketeering case.

Forensic e-mails previously obtained by the Scruggs group for the racketeering case show State Farm manager Alexis "Lecky" King was unhappy when engineers concluded wind had damaged property, insisting water was the cause. King at first "fired" Forensic, the e-mails indicated, but decided to give the company another chance if two contested reports were reworked.

King has been identified as a "target" of the federal investigation, but her attorney says she has done nothing wrong. In cases where she has been forced to offer pretrial testimony, King has refused to answer many questions, invoking her Fifth Amendment right to avoid self-incrimination.

State Farm maintains it was simply seeking "dependable, accurate engineering reports."

Forensic attorney Larry Canada of New Orleans could not be reached to comment.

The racketeering lawsuit filed by the Scruggs group on behalf of policyholders has been assigned to Judge William H. Barbour Jr. in Jackson and has tentatively been set for trial Oct. 20, 2008.

• Federal subpoena for Forensic hard drive

• Forensic, Scruggs joint motion regarding subpoenaed records


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