With Katrina's Wind at Our Backs, We're Blowing Through Congress!!

by Ana Maria

With a force seemingly more powerful than that of Katrina herself, the House of Representatives Financial Services Committee passed the Flood Insurance Reform and Modernization Act of 2007 keeping in tact the Multiple Peril Insurance Act that had recently been attached to it. In every day language, this means that the Democratically-controlled Congress just took a major step forward in protecting the 55% of Americans who live within 50 miles of the nation’s beautiful coastline. Score one for American families and businesses!


This began nearly two years ago with the insurance companies apparently devising a scheme though which to rip off Mr. and Ms. Home or Business Owners who had just been through the nightmarish Hurricane Katrina with her 22 tornadoes and winds at landfall that were at least 135 miles per hour. Katrina's winds beat down residences and businesses for up to three to four hours. Insurance companies like State Farm, Nationwide, and Allstate directed their agents that if so much as a smidgen of water were on the property to blame all the sustained damage on water.

Those directives and the subsequent documentation on how they were carried out are the foundation for the racketeering (RICO) lawsuit that the Scruggs Katrina Group filed against State Farm and its two corporate partners. [See State Farm, Partners, and RICO: What a Racket! It's another piece I did. You'll love it.]

ABC News was able to obtain a copy from State Farm files of the original FAEC [Forensic Analysis & Engineering Corp.] damage report, which included the image of an attached "Post-it" note that read, "Put in wind file - do not pay bill - do not discuss"

Image at ABC's The Blotter.

The agents for the federal government’s flood insurance program were the very same agents for State Farm, Nationwide, and Allstate and the like. Insurance companies handed down their directives: Do the paper work shuffle, leave your conscience at the door that Katrina blew away, and deliver the bad news to Mr. and Ms Home or Business Owners.

Routinely, the news went something like this.

Mr. and Ms. Homeowner, your wind policy on your homeowner’s insurance won’t pay for any damage. We want to keep to ourselves the $108 billion in profits our industry will make in 2005 and 2006. We have faith that you’ll be ok in spite of our reckless, selfish, irresponsible behavior. We’re greedy bastards who show up religiously at church. We’ll be praying for ya! Do I hear an amen! God bless.

Well, we have been blessed. We have Gulf Coast Representative Gene Taylor (D-MS), a heroic congressman who lost everything in Katrina, whose insurance company screwed over him and his family with failing to pay a penny before resorting to a lawsuit, whose own constituents were experiencing the same level of anguish that he and his family were experiencing.

We are blessed because Congressman Gene Taylor pulled out from the depths of his soul an indefatigable strength to carry on personally and professionally to champion this cause to ensure that America’s families and businesses all over the country never again are exposed to the ravages of corporate greed that has become so apparent in our nation’s insurance industry. To that I say Amen!

President Bill Clinton said something along these lines, “There isn’t anything wrong with America that can’t be made better by what’s right with America.” What is happening with this insurance reform bill is a fantastic example of Clinton’s wise words.

We are blessed because down here in Katrina Land, we reflect the rich tapestry that makes our nation envied the world over. We are of African, European, and Asian descent. We come from Central and South America. Our music is lively and soulful. Our food is hot, strong, and spicy. Our determination to persevere is strong.

To achieve the justice that every home and business owner in America requires in the aftermath of a natural disaster will require that all of us remain determined to persevere through the laborious and slow legislative process that is our form our government.

We can achieve this. The first step is to believe we deserve it. We do deserve it, and now we must embrace that very idea. The second is to believe that it is possible. We have proof that it is. The vote in subcommittee last week—along party lines, I might add, and the vote yesterday—again along party lines with a few conscientious Republicans joining the leadership of every Democrat on the committee. We have achieved step two.

The next step is to take concerted steps in the direction of this legislative dream. You know what that means! It’s political hell raising time. Woohoo! The very next vote will be in the entire chamber of the House of Representatives. It could be as soon as next week before the congress breaks for its August recess. We can say that to achieve our political dreams, we must engage in a bit of political hell raising. What fun!

In the aftermath of Katrina, with the malice of forethought the insurance industry engaged in deceptive practices intent to steal from American home and business owners the benefits that they had paid to have. Through our own political hell raising, we can end the deceptive financial charade of the insurance industry.

We must contact our own congressional representatives and let him or her know that we support the Flood Insurance Reform and Modernization Act of 2007 ESPECIALLY because it includes the Multiple Peril Insurance Act which protects America’s families and businesses.

Sharing our perspective on this critical matter is how we protect our families through expanding the flood insurance program to include wind coverage. Sharing our perspective is how we put a gust of powerful wind under our political sails—and sail into the next round of legislative victories for ourselves, our families, and our businesses.

[Here are political hell raising email and phone activities.]

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U.S. attorney declines to prosecute Scruggs

The Associated Press
July 25, 2007

BIRMINGHAM — The U.S. attorney in Birmingham declined today a federal judge’s request to prosecute prominent Mississippi attorney Richard F. Scruggs and his law firm for criminal contempt in a Hurricane Katrina insurance dispute.

U.S. Attorney Alice Martin said in the letter to U.S. District Judge William M. Acker Jr. that “following a serious and thorough review of the facts surrounding this indirect criminal contempt,” she had decided not to prosecute Scruggs or his law firm.

In his June 15 request Acker said he would appoint another attorney to handle the prosecution if Martin declined the court’s request.

Acker’s office did not immediately return a phone call seeking comment this afternoon.

A spokeswoman for Martin’s office, Jill Ellis, said the U.S. attorney had no further comment beyond the letter.

Acker ruled in June that Scruggs “willfully violated” a Dec. 8 preliminary injunction that required him to deliver “all documents” about State Farm Insurance Co. that whistleblowers Cori and Kerri Rigsby secretly copied after Katrina.

Acker’s ruling came in a suit by E.A. Renfroe and Co. Inc., a claims adjusting firm that fired the Rigsbys after finding out they had taken internal documents.

Renfroe and Co. worked for State Farm, and the sisters were heavily involved in processing claims for the insurance giant.

Original article published here.

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Scruggs' Statement Responding to State Farm’s Latest Salvo

From the Scruggs Katrina Group's website.

State Farm, desperate to shake the dark cloud permanently affixed to their reputation has taken another pass at us. This time they’ve re-released a two-week-old statement penned by the Washington Legal Fund, in an attempt to undermine our efforts on behalf of the families of Mississippi.

While it is tempting to re-release our two-week-old announcement that we filed over 20 counts of RICO charges against State Farm and over 200 additional lawsuits against them on behalf of Mississippi families, brimming with evidence of how “the good neighbor” has systematically defrauded policy holders, we won’t.

Instead we will simply say, we welcome any investigation into the matter of Katrina-related insurance litigation. Bring it on. We know who is hiding the truth. We know who hopes to bury that truth in litigation. Every member of the Scruggs Katrina Group and our clients call on the courts and the US Department of Justice to fully investigate all charges related to insurance industry corruption post Katrina. Unlike State Farm we won’t be taking the Fifth.

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For more information on the Scruggs Katrina Group's RICO lawsuit, see State Farm, Partners, and RICO: What a Racket! Former Mississippi Attorney General explains well the RICO lawsuit that the Scruggs Katrina Group has filed against State Farm.

Watch the video: Hi-Res Lo-Res
Former Attorney General Mike Moore Explains the RICO Case on WLOX's This Week.

Court Documents: Shows vs. State Farm
Original Complaint (PDF) Exhibits (PDF)
Note: These are large files and may take over a minute to load.

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State Farm, Partners, and RICO: What a Racket!

[At end of this piece are additional resources on the RICO case including a video of the press conference annoucing this historical lawsuit.]

I’m not talking tennis either. The whirlwind of news swirling about is almost dizzying. Shortly after Katrina hit the Mississippi Gulf Coast and breached the New Orleans’ levees, rumors floated around implying that the insurance companies would rig their claims process to wiggle out of paying what was owed to Paula and Peter Policyholders.

I thought to myself how criminal and cruel, heartless and calculating the people running a corporation would have to be to actually pull off something like this.

I envisioned a set of companies passing back and forth among themselves responsibility for the Katrina claims. I had thought this would be a way to shift its costs to other companies depending on which of them had the flood insurance policies. I was unaware that the private insurance corporations had bailed out of the flood insurance business some forty years ago.

I didn’t realize that our U.S. Government was taking care of what the private market neglected. When corporations failed to fill the market needs of American families and business owners, the federal government stepped in. Indeed, a lesson in the absurdity of arguing in favor of straight up laissez faire economics.

What I had envisioned was in the right direction of what occurred. I just didn’t realize that the US taxpayers would get stuck with the private corporations’ bill.

Courageous Whistleblowers Step Forward
Thankfully, two courageous women—Cori and Kerri Rigsby—blew the whistle on what has turned out to be a scenario worse than imagined. These very brave Rigsby sisters came forward with evidence that allegedly proves that State Farm defrauded policyholders by manipulating engineers' reports so that claims could be denied.

Photo of Cori and Kerri Rigsby

ABC News was able to obtain a copy from State Farm files of the original FAEC damage report, which included the image of an attached "Post-it" note that read, "Put in wind file - do not pay bill - do not discuss"

Below is a post it note on a file that appears to embody the essence of the allegations.

Cori and Kerri Rigsby turned to attorney Richard Scruggs to represent them. A few years back, Scruggs had won his fight against Big Tobacco costing the cigarette industry a “$246 billion settlement to help states defray Medicaid costs for smoking-related illnesses.”

The sisters say they ultimately printed out and copied roughly 15,000 pages of claims records. In addition to providing the material to Scruggs, they say they gave copies to Mississippi Attorney General Jim Hood and U.S. Attorney Dunn Lampton's offices on June 5, the same day they told a supervisor they were cooperating with Scruggs. For eight years, Cori and Kerri Rigby had managed State Farm claims adjuster teams.

Of course, State Farm is doing everything it can to suppress the use of this information in any legal proceeding. Doesn’t this sound just like they took a page straight out of the playbook for their Republican buddies in the White House?

Remember how the Administration went ballistic when we learned that someone in Bush’s employ had leaked the identity of CIA undercover operative? The White House wasn’t upset that someone had betrayed the country and put at risk Valerie Plame’s life and all those with whom she was associated as well as compromised her work on weapons of mass destruction. No ma’am. Bush and his team were upset that they had been caught. Well, this is the same game State Farm seems to be playing.

Racketeering
On Wednesday, June 20,2007, the Scruggs Katrina Group filed a federal lawsuit against State Farm and its corporate partners alleging the corporations were violating the Racketeer Influenced Corrupt Organization Act, which most of us have heard of as RICO. State Farm worked with “Forensic Analysis & Engineering Corp. of Raleigh, N.C., and E.A. Renfroe Co. Inc. of Hoover, Ala. Forensic's engineers inspected homes for State Farm, while Renfroe helped the company adjust claims.”

The Scruggs Katrina Group characterized the complaint as "a story of how State Farm and its web of surrogate companies conspired to deny claims that should be paid by State Farm and to shift liability to the federal-funded flood insurance program. Actions taken by State Farm and conspirators included:

• threatening experts who disagreed with their desired result
• concealing information that would work in the policyholder's favor destroying or falsifying reports
• placing pressure on engineers to use scientifically inaccurate and deceptive language
• firing engineers who refused to be corrupted inventing a new policy to exclude all hurricane damage
• using their strength and size to intimidate policyholders in the mediation process

My God alive! Racketeering charges against an insurance company that is known for its jingle claiming “just like a good neighbor, State Farm is there.”

“I've never seen a smoking gun this good, even in the tobacco litigation when I'd thought I'd seen it all,” Scruggs said in an interview. “They collaborated to defeat valid homeowner claims through rigged engineering reports and biased adjusting.”

Boy oh boy. This is sounding more and more like the Bush Administration’s kind of friends. For an analysis of the obscene amount of money the insurance industry invests in Republican candidates, see Soaking U.S. Taxpayers.

Where’s the Federal Probe?
The Rigsby sisters had turned over their documentation to both the state attorney general and the U.S. Attorney. Just over a week ago, Mississippi’s Attorney General Jim Hood, a good Democrat, filed a lawsuit against State Farm for breach of contract. [See State Farm Paying Attorney Fee for Miss. Insurance Commissioner]. As part of that contract, Hood had agreed to drop the state’s criminal probe into State Farm. With State Farm’s alleged breach, Hood has not ruled out reopening the criminal probe.

The Sun Herald reported that the U.S. Attorney’s Office has subpoenaed records from Nationwide Insurance, State Farm, and Allstate. The paper also reported “records indicate a grand jury is hearing evidence. Grand jury proceedings are secret and don't necessarily result in criminal charges.”

I feel the public is in good hands with Attorney General Jim Hood and attorney groups like the Scruggs Katrina Group. But I have reservations when it comes to the federal probe.

In September 2001, George W. Bush appointed Dunn Lampton, a Republican, as U.S. Attorney for the Southern District of Mississippi. The Clarion-Ledger reported that Lampton was allegedly on a White House 2005 hit list for canning U.S. Attorneys. When asked why he would be on the list, Lampton said, “I don’t have a clue.”

How’s about this for a clue, Mr. Lampton? Your office has subpoenaed documents from three of the big insurance companies: State Farm, Allstate, and Nationwide. Your office has convened a grand jury in the federal probe of these companies … and if that isn’t plenty enough, you just successfully concluded the criminal conviction of “reputed Klansman James Ford Seale [for] kidnapping and conspiracy in the 1964 deaths of two black teenagers in southwest Mississippi.”

I applaud you for bringing justice to the families who have endured immense and unthinkable pain for the last 33 years. Bush’s lapdog Gonzales and his minions found out that you were not one of them. I’m quite sure that the compassionless folks in the White House do not share your sense of justice, your values. I think it’s probably quite safe to say that you are a bit out of sync with the Republican leadership, and once again, for this, I applaud you. You have brought justice to these families and a sense of closure for their wounds.

I hope that you will pursue with equal vigor your probe into the alleged criminal behavior of the corporations that have brought a different kind of unthinkable pain and suffering to the families of all racial and ethnic backgrounds here along the Mississippi Gulf Coast.

To top it all off, Mr. Lampton, you’ve stirred up a hornets nest with pursuing a public campaign for gun control. Bravely, you yourself were featured in this public service television spot. As I’ve already stated twice and now shall do so for a third time, I applaud you, Mr. Lampton. This was the right thing to do. However, the Bushies do not share your values, sir. Even though you are a Republican, this may be yet another reason that your name was on Gonzales’ hit list for the political purging of the Justice department.

Be strong, Mr. Lampton. The people of South Mississippi, and for that matter throughout this country, need an honest to God federal investigation into the insurance racket.

Whether it’s the White House once again squirming out of taking responsibility for its own wrongdoing in the political firings of U.S. Attorneys or one of the Bush Administration’s partner industries spinning its PR to cover up their corporate corruption, we need strong public leadership.

What the insurance companies have done to the people of Mississippi and New Orleans will continue to happen to anyone of us anywhere in the country until we bring together every resource to end what is essentially a legal mob ring.

While the legal eagles are taking care of their responsibilities in our grand democratic scheme of government, we can also do our part to put all of our families on safer ground after natural disasters.

Since the insurance companies are obviously bowing out of taking care of the customers, the ultimate remedy is to expand the federal government’s flood insurance program to include all natural perils. Gulf Coast Congressman Gene Taylor (D-MS) introduced the Multiple Peril Insurance Act of 2007. (The bill is H.R. 920.)We can partner with Congressman Taylor to take the wind out of the insurance industry. You know what that means! It's political hell raising time again. We can call and email our own congressional representatives to request that they co-sponsor the Multiple Peril Insurance Act of 2007.

Taking these steps is how we begin to break up this insurance racket so that each of us and our families will truly be in good hands.

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Watch the press conference (Quicktime) high-res low-res
Download and install Quicktime to view videos .

Press Release Statement of Atty. Don Barrett
Summary of the case (PDF) Concise Statement (PDF)
Court Documents: Shows vs. State Farm
Original Complaint (PDF) Exhibits (PDF) Note: These are large files and may take over a minute to load.

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