Court refuses to bar high-profile lawyer from State Farm case

Posted on Mon, Nov. 19, 2007
By MICHAEL KUNZELMAN
Associated Press Writer

NEW ORLEANS -- A federal appeals court refused Monday to bar a prominent attorney from representing a Mississippi resident in a lawsuit against State Farm Fire & Casualty Co. over Hurricane Katrina damage.

State Farm failed to show the "extraordinary circumstances" that would call for disqualifying Richard "Dickie" Scruggs from the case, a three-judge panel from the 5th U.S. Circuit Court of Appeal ruled. The case is one of hundreds Scruggs' firm has filed against the Bloomington, Ill.-based insurer for denying policyholders' claims after Katrina.

State Farm accuses Scruggs of violating ethical rules for attorneys through his work with two sisters who helped the company adjust claims on Mississippi's Gulf Coast after the Aug. 29, 2005, hurricane.

The company claims Scruggs improperly used internal State Farm records he obtained from the sisters, Cori and Kerri Rigsby. Scruggs has said those records support accusations that State Farm fraudulently denied policyholders' claims after Katrina.

In a September ruling, U.S. District Judge L.T. Senter, Jr., in Gulfport, Miss., questioned why State Farm waited more than a year to seek Scruggs' removal from the case on those ethical grounds. Senter didn't take a position on the ethical violations, but refused to prohibit Scruggs from representing any policyholders with suits against State Farm.

State Farm challenged Senter's ruling, but the 5th Circuit upheld the judge's decision.

"Without deciding the contested issue of ethics, we are satisfied that Judge Senter has carefully weighed the balance between the need to ensure ethical conduct on the part of lawyers and other social interests, including litigants' right to choose their counsel," the panel said in a three-page ruling.

Scruggs, whose firm is based in Oxford, Miss., said he is grateful that the court rejected State Farm's "New York-style" legal tactics.

"This is what New York law firms do to each other routinely: try to disqualify each other," he said. "It doesn't work in New York. It shouldn't work here."

Scruggs' work with the Rigsby sisters also is the subject of a criminal contempt case in Alabama.

U.S. District Judge William Acker accused Scruggs of disobeying a court order to turn over all the documents he obtained from the sisters, who worked for a company that contracted with State Farm. After U.S. Attorney Alice Martin in Birmingham, Ala., declined to prosecute Scruggs, Acker appointed special prosecutors to handle the contempt case.

Scruggs was scheduled to be arraigned Tuesday in federal court in north Alabama, but all judges in that district have agreed to disqualify themselves from hearing the case. Scruggs had questioned whether they could be impartial because they work alongside Acker.

A federal appeals court in Atlanta is expected to appoint another judge in a different district to preside over the case.


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Florida: Hurricane Damage & Denial of Coverage - Citizens Property Insurance Corporation

The following is a story written by a Citizens Property Insurance Corporation customer living on the east coast of Florida. It alleges that the company canceled the family's wind-only insurance policy without giving proper notice. Four major hurricanes ravaged Florida between August and September 2004.

After Hurricane Frances we called Citizens Property Insurance Corporation to file our claim. After hours on the phone, I was advised by a customer services representative at Citizens Property Insurance Corporation that our Wind-Only policy was cancelled almost exactly one year ago due to non-payment. We received no notice, written or otherwise, of the impending cancellation of the policy and we received no notice when our policy was indeed cancelled. We were shocked because for the previous 12 months, we had taken comfort in the fact that our home and its contents were properly insured.

Like most people, our property taxes and insurance are paid from our escrow account with our mortgage company. Our mortgage company claims that it never received a bill from Citizens Property Insurance Corporation for the insurance premium so it went unpaid. Our insurance agent claims not to have received notice from Citizens Property Insurance Corporation of the impending cancellation of the policy and claims further that he did not receive notice from Citizens Property Insurance Corporation when the policy was indeed cancelled. And, as I indicated above, we, the homeowners, received nothing from Citizens Property Insurance Corporation concerning a lapse or cancellation of our policy.

The only document we received from Citizens Property Insurance Corporation was a renewal notice from approximately one year ago which was clearly marked "THIS IS NOT A BILL. THE PAYOR OF YOUR POLICY HAS BEEN INVOICED" and "DO NOT PAY." It appears that Citizens Property Insurance Corporation did not notify the homeowner, the lending institution or the insurance agent of record of the potential for cancellation due to nonpayment despite the fact that the insurance premium was sitting in our escrow account waiting to be paid.

As it stands now, we do not have a hurricane or wind insurance policy for our home but we feel in our hearts that the responsibility for our lack of insurance rests with someone other than us, the homeowners. We feel confident that there are others in a similar predicament. We would like to band together with those individuals to see if there is something that we can do to have our insurance reinstated at its last premium rate and recoup the losses we have incurred due to Hurricanes Charley, Frances and Ivan.

If your policy was canceled by Citizens Property Insurance without your knowledge, it may be important to contact an attorney who can help protect your legal rights. Please keep in mind that there may be time limits within which you must commence suit.

Attorneys associated with InjuryBoard.com will evaluate your case free of charge. In addition, you will not pay any fees unless your attorney recovers money for you. Please click Ask An Attorney to take advantage of this valuable service.

Story from InjuryBoard.com.

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Hurricane Recovery Legislation Would Give Katrina Survivors Permanent Shelter, Peace of Mind

By Marc H. Morial, President and CEO, National Urban League
November 19, 2007

FEMA trailer parks seem to be providing the backdrop for growing mental health problems among Gulf Coast residents ravaged by Hurricanes Katrina and Rita. That is where suicide attempts are 79 times the national average. More than two years after the storm devastated the region, survivors continue to reel from the pain, thanks in part to the anxiety created by a sluggish recovery process.

"The mental toll of a lack of permanent housing is indescribably great," writes Joshua Norman of McClatchy Newspapers in a story from early October. "FEMA trailer parks are therefore the epicenter of any post-Katrina mental-health crisis."

The mental wear and tear is enough to drive the sanest person mad - let alone victims traumatized by the nation's worst natural disaster in 70 years and most expensive.

So, it should come as no surprise that the incidence of mental illness among these survivors has actually increased since 2005.


Usually, most cases of mental illness caused by a traumatic event are resolved within two years of a traumatic event. Thanks to the slow state of recovery, the Katrina nightmare continues to haunt survivors years later.

Last month, Dr. Ron Kessler of Harvard Medical School testified before a key congressional panel that one year after the disaster, he observed extraordinary resilience and optimism among the nearly 1,100 Katrina survivors he surveyed. Since then, that sense of hope has turned into resignation and despondency.

According to Kessler's study, the estimated incidence of serious mental illness rose to 14 percent among residents of storm-town regions of the Gulf Coast, up from nearly 11 percent since the disaster struck. That of mood and anxiety disorders increased by a comparable rate to 33 percent and that of post-traumatic stress rose 50 percent. In New Orleans proper, rates of all types of mental disorders stayed steady.

"The numbers tell the story of the federal government's continuing failures of Hurricane Katrina survivors," states a recent Seattle Post-Intelligencer op-ed. "Could there be any clearer sign that we are failing a whole region of this country in a time of need?"

To add to Katrina victims' anxiety levels, efforts in the U.S. Senate to push through legislation designed to bring relief to Gulf Coast residents affected by Katrina appear to be facing opposition from a member of the Louisiana congressional delegation splitting hairs over public housing provisions.

Immediately after Katrina hit, the National Urban League issued a plan of action for the Gulf Coast known as "The Katrina Bill of Rights." Of these rights, the "Right to Return" stands as a cornerstone where we call upon Congress to "... guarantee to every evacuee and every resident the right to return to their home." That, "every family should have the chance to come back to their hometown or neighborhood if they so choose."

Introduced last June by Sens. Chris Dodd (D-Conn.) and Mary Landrieu (D-La.), the legislation, known as the Gulf Coast Housing Recovery Act, proposes important and needed steps forward as well resources to make the "Right of Return" happen for thousands of lower-income families who need safe and affordable housing - whether as renters or homeowners - to reclaim their lives. It is currently awaiting Senate Banking Committee action. A comparable bill passed the House in March by a commanding margin.

In the words of the Post-Intelligencer editorial, "it would be easy to lay all of this on the Bush administration, especially since it has been trying to rewrite the Katrina history to escape most blame." But Congress is equally responsible for ensuring that Gulf Coast residents devastated by Hurricanes Katrina and Rita are not forgotten, given the outpouring of popular support for the victims following the disaster.

The U.S. Senate must resist in-fighting and quibbling over the details of efforts to enable Gulf Coast residents to reclaim their previous lives and put the tragedy behind them. I urge our nation's senators to act swiftly on this important issue.


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NPR Missed the Political Boat on Bush's Buyout Program

by Ana Maria

Last week, I became aghast at NPR’s story “Feds Propose Massive Buyout for Mississippi Coast.” What a remarkable contrast between NPR failure to provide a full picture of life on the ground here in Bay St. Louis—the target of Bush’s buyout and the home town of Congressman Gene Taylor (D-MS), and Bill Moyer's reporting on PBS titled Recovery Gone Wrong? regarding the horrendous obstacles severely hindering our vibrant recovery.

NPR’s story didn’t air any response from Congressman Gene Taylor (D-MS), who has been a tireless and outspoken advocate for South Mississippi’s recovery efforts AND who lives in the very town that is the target of Bush’s proposed $40 billion buyout boondoggle. I'm sure that Taylor would have been more than willing to interview about such a critical matter in his district, his hometown at that. Besides, he interviews well and makes for great quotes. Taylor’s public response to Bush’s proposal is more than telling and proves my point.

"Five words: 'It ain't going to happen,' " says Rep. Gene Taylor (D) of Mississippi, who's in the midst of rebuilding his Bay St. Louis home. "There's no money for it, there's no will for it, and there's no public support for it. That's 0 for 3."

NPR missed the simple fact that Bush’s proposed $40 billion federal buyout program has no Congressional support. However, NPR provided plenty of time for Bush's agency to spout the White House talking points on the matter. Yet, not a smidgen to Congressman Taylor. [Note to NPR: How about a follow up interview with Taylor to provide the balance that this story failed to achieve?]

NPR’s story also missed the bigger picture, which yours truly wrote last month in the Bay St. Louis political blog A.M. in the Morning!

Can it be merely coincidental that Bush’s buyout plan is targeting the hometown of the man spearheading the effort to ensure that whenever an American family or business owner purchases insurance for both wind and flood, that they actually get paid on their wind policy for the damages wind causes? In a word, no.

With so much airtime dedicated to the Corps’ mouthpieces, NPR didn’t apparently found not time to view the excerpts of Taylor's Insurance Reform Town Hall meeting uploaded on YouTube.


Not a single member of that panel talking before a standing-room only capacity venue spoke about a need for the federal government to wall off the beach and pay to haul us off of our land and out of our homes. Not ONE. Telling, isn't it?

Rather, everyone of the panelists—which included the local chamber, regional bank chair, and vice-president of the state wind pool—spoke about the fact that we need the ability to purchase a single wind-water insurance policy so that we can rebuild our homes, our lives, and our communities. They spoke of the immense hardship that the insurance industry has placed on the families and small business owners.

Had Bush ensured that the insurance industry live up to the financial obligations to its customers and actually paid off on the wind coverage of the homeowner insurance policies, the only kind of press that Bush’s Corps would be receiving would be the kind that mock its utter stupidity.

Rather the story could center upon this question.

Why on earth would Bush’s federal agency propose buying up homes and businesses that had already been rebuilt—to better standards, of course—and do so long after everything had been returned to normalcy, long after the party decorations celebrating the remarkably vibrant recovery been put away?!

So what is preventing our remarkably vibrant recovery? PBS reported on certain quintessential elements.

“ . . .critical to short-term recovery: construction-sector capacity; availability of funds to finance recovery; and an adequate supply of housing, especially affordable housing, for those whom the storm displaced from their residences.”

No one is suggesting much less saying that we need a $40 billion government home buy out program. No one.

However, what has actually occurred is an unanticipated, unstated insurance industry bailout. Yes, an unstated insurance industry bailout. The recovery hasn’t occurred because the financing that home and business owners had expected to receive from their insurance companies didn’t come through because the insurance companies essentially swindled those policy funds from us.

Last week, NBC reported on the Bush White House spending upwards of over $200,000 for many of FEMA’s formaldehyde-filled, Barbie doll-sized trailers—housing money that the insurance industry should have paid out of the cost of living end of the homeowner insurance coverage. The Government Accountability Office (GAO) released a report in which it had analyzed FEMA costs for trailers in Mississippi only. It found $30 million in wasted funding here in Republican Governor Haley Barbour’s state.

PBS reported that Barbour, the once powerful corporate lobbyist and former RNC chair, had successfully gotten his strong connections in DC to waive many of the requirements on the federal money Congress had allocated for Mississippi’s recovery. Other states, such as our neighboring Louisiana, were not afforded this luxury.

Of course, here along the Mississippi Gulf Coast, we have no sense of luxury. Heck, from homes to gas stations, essentials remain absent. Plenty of families remain unable to go home for their home remains uninhabitable or non-existent. There still remains not a single gas station along the 30 plus beach front miles on Highway 90 from Pass Christian to Biloxi, Miss.

What Barbour has done of late is propose scurrying away $600 million of the lower income housing funds to pay for the rebuilding and expansion of the state’s port in Gulfport, Miss.

Look, everyone wants that port rebuilt, and expansion sounds pretty good, as well. Just not on the backs of the lower income families in South Mississippi.

As PBS pointed out, as the once powerful corporate lobbyist and former powerful chair of the Republican National Committee, Barbour has access to plenty of capitol without touching the money Congress had intended for the housing needs for South Mississippi lower income families. Barbour can surely to goodness find the money for the expansion from elsewhere and not steal away the dreams of Mississippi families rebuilding their homes and coming back to their lives built up over years here in South Mississippi.

NPR also mentioned that the Corps talked to 20 people at its Gulfport meeting. Again NPR failed to mention that the Corps’ meeting here in Bay St. Louis drew a crowd of many hundreds furious at the idea of walling off our town and hauling off its residents—and the Corps had very poorly advertised the meeting. Imagine the turnout if it had actually wanted us to know of its secret program?

The real story is that the Corps of Engineers would not have a political leg to stand on had Bush merely used the bully pulpit to bully his corporate buddies in the insurance industry to pay up on their financial obligations regarding the wind coverage of home and commercial business owners’ insurance policies.

Bush should have leveraged the power of the bully pulpit to call press conferences which would have been viewed on every television news program, read in every newspaper, and heard on every radio program. Bush should have banged the drum that the American people expect the ‘good hands’ and ‘good neighbor’ companies to do right by the American families and businesses, families and businesses that continue to be responsible for the profits those companies fully enjoy . . . THEN we wouldn’t be having any discussion of how NPR missed the proverbial boat on the story’s real context regarding Bush’s politically-motivated, revenge-filled buyout plan.

What's the revenge part?

In September of this year, Taylor has already successfully led the effort to successfully pass overwhelmingly in the House of Representatives and with bi-partisan support (263 - 146), his landmark legislation to provide wind coverage as an option to the nation's flood insurance program. It is only a matter of time before it passes the Senate and is signed into law by the President--even if it means we wait until 2009 with a Democratic President of the United States in the White House.

Taylor's landmark Multiple Peril Legislation protects home and business owners from the ravages of Big Insurance greed. Corporate greed is like oxygen to the Bush Administration's Big campaign contributors. Taylor's legislation potentially removes billions of dollars of profit, which the greedy gutted goons in insurance corporations have been able to swindle from us carte blanch.

Targeting Taylor's hometown with a bogus $40 billion buyout program is political revenge straight out of Karl Rove's political playbook.

© 2007 Ana Maria Rosato. All rights reserved.
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GAO blasts FEMA costs for trailers

November 17, 2007
THE ASSOCIATED PRESS

JACKSON --What will $229,000 cover in the Mississippi real estate market?

Try a five-bedroom, 2,000-square-foot home in the capital city of Jackson. Or a 280-square-foot temporary FEMA trailer on the Katrina-ravaged Coast.

A government report issued Friday says "ineffective oversight" by FEMA caused about $30 million in "wasteful and improper or potentially fraudulent payments" to contractors between June 2006 and January 2007, including expenses for some temporary trailer sites.

Some FEMA trailers are on private property, such as the front yards of people's homes. Others are in group sites, or temporary trailer parks, that were set up after the storm to provide shelter to people who lost apartments or rental homes.

Katrina damaged or destroyed 134,000 homes and 10,000 rental units in Mississippi, according to the report by the U.S. Government Accountability Office. The report does not include spending or provide statistics for Louisiana.

The GAO report says FEMA will spend an average of $30,000 on each Katrina trailer on a private site through March 2009, when the government plans to close the temporary housing.

But at a temporary trailer park set up after Katrina at Port Bienville Park in Hancock County, the report says expenses for one trailer could hit $229,000. That covers costs for FEMA to buy, haul and install each trailer and to lay out, construct and maintain the group site.

"Part of the reason for this expense is that FEMA placed only eight trailers at the Bienville site," the GAO said. "FEMA wastes money when it operates sites with such a small number of trailers because GSM (group-site maintenance) costs are fixed whether a site contains 1 or 50 trailer pads."

The GAO compared the cost of a Port Bienville trailer to a five-bedroom home in Jackson.

FEMA responded it agrees with all of the GAO's recommendations in the report, including one to evaluate whether money can be saved in the placement and maintenance of trailers.

Steven J. Pecinovsky, director of the Departmental Audit Liaison Office for FEMA, wrote that most people who receive temporary housing after a disaster want to stay close to where they had lived.

"As some of the disaster victims are renters, the agency does set up group sites and utilizes existing commercial sites in order to house them in their pre-disaster community," Pecinovsky wrote in the FEMA response, which was included in the GAO report.

The GAO says FEMA gave contracts for group-site maintenance to two companies that did not appear to have met a requirement to submit independent bids. The companies had the same president and accountant, and the companies shared price information before submitting proposals to FEMA, the GAO says.

Pecinovsky said FEMA will evaluate whether contractors were overpaid.


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Bush’s FEMA Smells Kinda Fishy

by Ana Maria

Since moving into the White House in January 2001, the Bush Administration has been spending our tax dollars like drunken sailors on leave for a weekend in the French Quarter. Drunk with stupidity or the arrogance of power or both, Bush’s FEMA wants to be let off the hook when it comes to the costs for restocking the New Orleans Aquarium. Their refusal just didn’t pass the smell test, and now we find out just how fishy Bush’s FEMA is.

Bush’s White House is used to overpaying its high roller campaign contributors. Katrina’s aftermath provided another pond into which Bush, Cheney and their high-roller supporters could fish for the most inflatable opportunities. FEMA’s formaldehyde-filled trailers are one such example.

In south Mississippi at one point we had 40,000 people living in FEMA trailers, we're grateful for every one of them. But those trailers were delivered by a friend of the president by the name of Riley Bechtel, a major contributor to Bush administration. He got $16,000 to haul a trailer the last 70 miles from Purvis, Miss., down to the Gulf Coast, hook it up to a garden hose, hook it up to a sewer tap, and plug it in, $16,000.

Congressman Gene Taylor (D-MS)
House of Representatives debate, March 22, 2007

[Watch the video in which Taylor expertly filets Republican Congressman Tom Price on yet another pathetically uncompassionate proposal from that side of the aisle.]

OVERbilling is the kind of innovative and creative skills Bush and Cheney’s Administration reward. In the case of the New Orleans Aquarium, the Aquarium’s innovative and creative skills led them to go out to sea and catch the fish "the old fashioned way, hooks and nets." The cost? $90,000.

What keeps rolling around in my head is this line.

FEMA would have been willing to pay more than $600,000 for the fish if they had been bought from commercial suppliers.

What?! This is so nuts. Yes, I know that this is THE most corrupt and incompetent administrations in my lifetime. Thankfully, their corruption and incompetence hasn’t tarnished my internal compass of what I expect and desire—and am willing to work on behalf of—in public officials be they elected or appointed.

What gets me is that I know full well that the reason stupid decisions or foot-dragging at the lower levels of any government agency happens for one primary reason: management at the top tolerates, excepts, and/or promotes it. This administration is the poster child for this lesson in organizational behavior being set at the top and rolling down hill.

The New Orleans Aquarium is a major tourist attraction to this much beloved city. New Orleanians take great pride in it. Residents like my precious niece and her father—my brother—spend their precious free time volunteering for hours on end to help the city’s tourists enjoy this beautiful place.

Clearly, FEMA’s rationale for questioning these Aquarium costs is more than a bit fishy. Quite simply, FEMA’s foot dragging, nay-saying, red-tape creating, and obstacle course to reimbursing legitimate costs for the Aquarium as well as cities, states, and families smells to high heaven.

Requiring any of us to OVERSPEND tax dollars as if we are Bush’s best campaign buddies sucking at the government teat—to put it bluntly—stinks like dead fish.

© 2007 Ana Maria Rosato. All rights reserved.
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Aquarium tanks are full, but bill remains unpaid

Christina Nguyen takes a snapshot of a shark as friends Huy Nguyen and Tony Nguyen, all of New Orleans, visit the restocked Gulf of Mexico exhibit at the Aquarium last month.
STAFF PHOTO BY ELIOT KAMENITZ

By Mark Schleifstein
Staff writer
November 12, 2007

When black smoke stopped streaming from an emergency generator atop the Audubon Nature Institute's Aquarium of the Americas three days after Hurricane Katrina, it marked the death of more than 8,000 of the aquarium's occupants, from huge sharks to tiny jellyfish.

Without electricity, pumps used to supply oxygen to watery exhibits throughout the aquarium went quiet, and suffocated fish quickly bobbed upside down on the surface of tanks throughout the building.

More than two years later, after an outpouring of donations from the public and from sister aquariums across the United States, the fish are swimming again in the wide variety of exhibits within the restored jewel on New Orleans' riverfront.

But aquarium officials say they're now drowning in federal bureaucracy, still wading through a series of nonsensical Federal Emergency Management Agency decisions that have held up requests for reimbursement of $90,000 in costs associated with restocking the exhibits with marine life.


Off Big Pine Key in Florida, Elizabeth Hayes captures a juvenile grunt for the Aquarium of the Americas in April 2006. Aquarium officials say FEMA decisions have held up reimbursement of $90,000 in costs associated with restocking the exhibits.

STAFF FILE PHOTO BY MICHAEL DeMOCKER

One of the city's top tourist attractions should be treated like other businesses devastated by Katrina, and allowed to recoup at least part of the cost of collecting the replacement specimens, said Audubon chief operating officer Dale Stastny.

At first, FEMA officials likened dead fish to irreplaceable works of art, like paintings lost in the flood, and declared them thus ineligible for reimbursement. Audubon officials quickly lobbied the agency to explain that, yes, fish die all the time at aquariums across the country, and are just as routinely replaced.

"We told them that, though emotionally it's true each fish is a unique living animal, none of them lives forever. And when they die, we replace them," he said.

The aquarium also showed FEMA officials where the federal agency reimbursed a Texas university for the cost of replacing a laboratory's stable of test rats killed in a similar flood -- at a much greater cost than the aquarium's fish expenses, Stastny said.

FEMA reluctantly relented, and aquarium officials then submitted a bill for expenses that had not already been reimbursed by insurance or through donations of fish by other aquariums.

That included the New Orleans aquarium's cost of transporting jellyfish from the New England Aquarium in Boston, and aquariums in Monterey, Calif., and Baltimore; five large sand tiger sharks from the Ripley's Aquarium in Myrtle Beach, S.C.; and a school of more than 100 blue runner fish donated by the Tennessee Aquarium in Chattanooga.

But the second sticking point for FEMA officials, apparently, came over excursions to the Florida Keys, the Bahamas and Chesapeake Bay, where Audubon staffers donned swimsuits, snorkels and scuba equipment -- and suntan oil -- to collect a wide variety of exotic fish ranging from gaudy tropical reef species and nurse sharks.

Stastny said buying the same fish on the open market, if they were available, would have cost close to $500,000 -- compared with the $90,000 in expenses they're trying to collect.

"Obviously, they're not going to pay us for what other aquariums gave us," Stastny said. "But what we're requesting is reimbursement of our staff time and the use of our equipment to go collect the fish."

FEMA spokesman Bob Josephson said the agency has not yet dismissed the aquarium's request.

"I do know that there are some expenses that are being looked at, and that could be deemed eligible to being reimbursed," Josephson said. "It was denied the first time, but they have the appeals process to go through, and it's being looked at.

"We're optimistic that that will result in a conclusion that both we and the aquarium can be happy with," he said.

Stastny remains guardedly optimistic.

"They did reimburse us for some of our other cleanup expenses," he said. "Now the task is helping them understand that -- if they can get past the idea of fish as a living collection of art, irreplaceable or not -- it's no different than debris removal."

Mark Schleifstein can be reached at mschleifstein@timespicayune.com or at (504) 826-3327.


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FEMA wants to be let off the hook for reimbursement

Tuesday, November 13, 2007

By Mark Schleifstein

Staff writer

When black smoke stopped streaming from an emergency generator atop the Audubon Nature Institute's Aquarium of the Americas three days after Hurricane Katrina, it marked the death of more than 8,000 of the aquarium's occupants, from huge sharks to tiny jellyfish.

But aquarium officials say they're now drowning in federal bureaucracy, still wading through a series of nonsensical Federal Emergency Management Agency decisions that have held up requests for reimbursement of $90,000 in costs associated with restocking the exhibits with marine life.

One of the city's top tourist attractions should be treated like other businesses devastated by Katrina, and allowed to recoup at least part of the cost of collecting the replacement specimens, said Audubon chief operating officer Dale Stastny.

At first, FEMA officials likened dead fish to irreplaceable works of art, like paintings lost in the flood, and declared them thus ineligible for reimbursement. Audubon officials quickly lobbied the agency to explain that, yes, fish die all the time at aquariums across the country, and are just as routinely replaced.

"We told them that, though emotionally it's true each fish is a unique living animal, none of them lives forever. And when they die, we replace them," he said.

The aquarium also showed FEMA officials where the federal agency reimbursed a Texas university for the cost of replacing a laboratory's stable of test rats killed in a similar flood -- at a much greater cost than the aquarium's fish expenses, Stastny said.

FEMA reluctantly relented, and aquarium officials then submitted a bill for expenses that had not already been reimbursed by insurance or through donations of fish by other aquariums.

That included the New Orleans aquarium's cost of transporting jellyfish from the New England Aquarium in Boston, and aquariums in Monterey, Calif., and Baltimore; five large sand tiger sharks from the Ripley's Aquarium in Myrtle Beach, S.C.; and a school of more than 100 blue runner fish donated by the Tennessee Aquarium in Chattanooga.

But the second sticking point for FEMA officials, apparently, came over excursions to the Florida Keys, the Bahamas and Chesapeake Bay, where Audubon staffers donned swimsuits, snorkels and scuba equipment -- and suntan oil -- to collect a wide variety of exotic fish ranging from gaudy tropical reef species and nurse sharks.

Stastny said buying the same fish on the open market, if they were available, would have cost close to $500,000 -- compared with the $90,000 in expenses they're trying to collect.

"Obviously, they're not going to pay us for what other aquariums gave us," Stastny said. "But what we're requesting is reimbursement of our staff time and the use of our equipment to go collect the fish."

FEMA spokesman Bob Josephson said the agency has not yet dismissed the aquarium's request.

"I do know that there are some expenses that are being looked at, and that could be deemed eligible to being reimbursed," Josephson said. "It was denied the first time, but they have the appeals process to go through, and it's being looked at.

"We're optimistic that that will result in a conclusion that both we and the aquarium can be happy with," he said.

Stastny remains guardedly optimistic.

"They did reimburse us for some of our other cleanup expenses," he said. "Now the task is helping them understand that -- if they can get past the idea of fish as a living collection of art, irreplaceable or not -- it's no different than debris removal."

. . . . . . .

Mark Schleifstein can be reached at mschleifstein@timespicayune.com or at (504) 826-3327.

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N.O aquarium denied $$: FEMA doesn't like fish freshly caught

11/13/2007, 4:19 p.m. CST
By JOHN MORENO GONZALES
The Associated Press

NEW ORLEANS (AP) — In what some see as another bureaucratic absurdity after Hurricane Katrina, FEMA is refusing to pick up the cost of restocking New Orleans' aquarium because of how the new fish were obtained: straight from the sea.

FEMA would have been willing to pay more than $600,000 for the fish if they had been bought from commercial suppliers. But the agency is balking because the Audubon Aquarium of the Americas went out and replaced the dead fish the old fashioned way, with hooks and nets. That expedition saved the taxpayers a half-million dollars but did not comply with FEMA regulations.

"You get to the point where the red tape has so overwhelmed the process that there's not a lot you can do to actually be effective," Warren Eller, associate director of the Stephenson Disaster Management Institute at Louisiana State University, said of FEMA's actions.

Katrina knocked out power to the tourist attraction at the edge of the French Quarter in August 2005, and the staff returned days four days later to find sharks, tropical fish, jellyfish and thousands of other creatures dead in their tanks.

Aquarium officials wanted to reopen the place quickly. So even before the $616,000 commitment from the Federal Emergency Management Agency came through, they sent a team on an expedition to the Gulf of Mexico, the Florida Keys and Bahamas, where they caught 1,681 fish for $99,766.

Despite the clear savings, the dispute has dragged on for 17 months.

"FEMA does not consider it reasonable when an applicant takes excursions to collect specimens," FEMA quality control manager Barb Schweda wrote in a 2006 e-mail. "They must be obtained through a reputable sources where, again, the item is commercially available."

FEMA's refusal to reimburse the aquarium is grounded in the Stafford Act, the federal law governing disaster aid that has been criticized as inadequate for Katrina recovery. The Stafford Act says facilities can only be returned to their pre-disaster condition, not improved. Under those rules, the aquarium would have to buy fish of the approximate age and size of the lost specimens.

State experts and others counter that acquiring thousands of duplicates in the marketplace is nearly impossible, and a waste of public money.

"You can go out in the commercial market and buy a clownfish. You can also go out and capture it. And if you're capturing fish to fill an aquarium, it is much more cost-effective. Talk about being good stewards of the taxpayer dollar," said Rick Patterson, a specialist with James Lee Witt Associates, a firm that mediates Louisiana's disputes with FEMA. The firm is led by Witt, FEMA director during the Clinton administration.

Mark Smith, a spokesman with the Gov.'s Office of Homeland Security and Emergency Preparedness, complained that all too often, FEMA does not reward innovation or cost-saving ways to rebuild.

"It's relatively typical that when Louisiana, or an applicant, finds a unique way to solve a problem that FEMA comes in and throws a flag and says, `No, you can't do that,'" Smith said.

Local officials have complained that FEMA has applied the rules with maddening literal-mindedness, insisting on itemizing smashed buildings down to every last light fixture, doorknob and hinge when awarding rebuilding aid.

Bob Josephson, FEMA's director of external affairs in Louisiana, was alerted to the case by The Associated Press and reviewed it recently. He suggested FEMA may have made a mistake, but did not promise quick resolution.

"There are approximately 35,000 projects in the system and although we work very hard to ensure we get them right the first time around, undoubtedly, some will be misjudged," he said.

About a dozen aquarium staffers went fishing, snorkeling and scuba diving between January and May 2006, catching tiny highhat fish, yellowtail snapper, jackfish and others. The staffers worked 12-hour days but put in for only eight hours a day, according to invoices.

The catch was placed in a 1,000-gallon tank fitted to a flatbed trailer for the trip to New Orleans. TV crews and a local newspaper reporter tagged along on some trips but paid their own bills.

Most of the fish were caught in Florida waters for one-fifth the price charged by online vendors and specialty stores — suppliers FEMA recommended using.

"That is exactly the most prudent way to do it," Steve Feldman, spokesman for the Association of Zoos and Aquariums, said of the fishing trip.

The aquarium also received donations from other institutions, including stingrays from Sea World in Orlando, Fla.

With the aquarium's 900,000 annual visitors a linchpin of the city's tourism-dependent economy, the state asked FEMA in May 2006 for rebuilding help for the private institution even though the fish had already been caught. It is not unusual for the state to ask for assistance after a project has been completed.

The fish were put on display in mid-2006 and have proved to be healthy. But the aquarium had to lay off 80 percent of its workers after Katrina and attendance is only 70 percent of what it was before the storm, spokeswoman Melissa Lee said.

"When those numbers drop, the revenue drops," she said. "That's money that could go to feeding animals and increasing staff. That's money we need back from FEMA."

The firm mediating the dispute has pressed on with its effort to secure FEMA help, arguing that salmon hatcheries in Oregon and lab rats in Texas were replaced with FEMA money after disasters hit there in 1994 and 2001.

The New Orleans case has been appealed to FEMA offices in Texas and Washington. The dispute could wind up in federal court.


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Engineers cut from storm suits

• Firm that helped State Farm with claims reaches settlement

By Michael Kunzelman
The Associated Press
November 14, 2007

NEW ORLEANS — An engineering firm has reached a settlement with attorneys who have filed hundreds of lawsuits against State Farm Insurance Cos. on behalf of policyholders whose claims were denied by the insurer after Hurricane Katrina.

Under terms of the settlement, Forensic Analysis and Engineering Corp., which helped State Farm adjust policyholder claims in Mississippi, would be dropped from a federal lawsuit that accuses the insurer of engaging in a "pattern of racketeering" after the storm.

Forensic would be dismissed from several of those suits, including one filed in June that accuses Bloomington, Ill.-based State Farm of violating the civil Racketeer Influenced Corrupt Organization Act, or RICO, in its handling of claims after the Aug. 29, 2005, hurricane.

Zach Scruggs, one of the attorneys who filed the RICO case against Forensic, State Farm and engineering firm E.A. Renfroe & Company Inc., said the settlement will "better enable us to prosecute our cases against State Farm." Scruggs said he couldn't elaborate, however, because the terms of the deal are confidential.


In a related development this past week, a federal magistrate in Gulfport agreed to lift a court order that had barred Scruggs from providing a federal grand jury with a Forensic employee's computer hard drive.

U.S. Attorney Dunn Lampton, whose jurisdiction includes Mississippi's Gulf Coast, served Scruggs with a subpoena for the hard drive. Lampton has convened a grand jury that is believed to be investigating the insurance industry's handling of claims after Katrina.

Forensic had persuaded U.S. Magistrate Judge Robert Walker to block Scruggs from complying with the subpoena. Now that Walker has lifted the order, Scruggs said his firm is "making arrangements" to turn over the hard drive it obtained from Forensic employee Nellie Williams in July.

An attorney for Raleigh, N.C.-based Forensic and a State Farm spokesman said they couldn't immediately comment on Forensic's settlement.

Scruggs and other policyholders' attorneys have accused State Farm of pressuring its engineers into altering their conclusions in reports on storm-damaged homes so claims could be denied. To support that claim, Scruggs' firm cited a series of e-mails exchanged by Forensic officials in October 2005.

In one e-mail, Forensic President and CEO Robert Kochan describes complaints about the firm's work made by Alexis King, a State Farm manager in Mississippi. Randy Down, who was the firm's vice president of engineering services, responded, "I really question the ethics of someone who wants to fire us simply because our conclusions don't match hers."

Forensic also is named as a defendant in a separate lawsuit the Scruggs Katrina Group's attorneys filed against several insurance companies, accusing them of overbilling the federal government for flood damage from Katrina.

The U.S. Department of Justice has until Jan. 31 to decide whether to intervene in that suit. In the meantime, Scruggs said his firm doesn't have the authority to dismiss Forensic from the case.

"That's kind of in a holding pattern now," he said.




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