A.M. in the Morning!

Wednesday, February 06, 2008

6 Coast Democrats oppose Barbour road plan

JACKSON -- A roundup of Tuesday's action at the Capitol:

• Citing Hurricane Katrina concerns, six South Mississippi Democrats said in a statement they oppose Gov. Haley Barbour's plan to spend $25 million in Katrina savings for road improvements in north Mississippi.

Since a rules change allowed the state to avoid paying millions to match federal spending on Katrina rebuilding projects, Barbour wants to use about $108 million of $268 million that had been socked away to replenish the "rainy day" fund and to make $25 million in improvements that would benefit a Toyota plant in Lee County.

Sens. David Baria, D-Bay St. Louis, Debbie Dawkins, D-Pass Christian, Ezell Lee, D-Picayune and Reps. Dirk Dedeaux, D-Sellers, Randall Patterson, D-Biloxi, and Diane Peranich, D-Pass Christian, were listed on the statement.

"Many residents of the areas directly impacted by Katrina still reside in FEMA trailers, insurance remains unaffordable, small businesses are struggling and Hancock County doesn't have a jail," the statement said. "To us, this is simply a matter of priorities and our priority is rebuilding the Mississippi Gulf Coast. We hope that this 'found money' will be used to further our recovery from Katrina."

• Superintendent of Education Hank Bounds would be allowed to hire and fire Department of Education personnel without taking matters to the personnel board under a bill the Senate Education Committee agreed on. The provision, designed to give the department more flexibility to reorganize, would be for a year.

• The Senate Education Committee voted to authorize a mentoring program for young teachers. The program, which would utilize retired or long-serving teachers and pay them up to $1,000 a year, is designed to combat the loss of many of the state's recently hired teachers.

• The committee also approved longevity pay increases of up to $794 a year for teachers who have taught at least 25 years.

• The House of Representatives Judiciary Committee approved a bill that would restrict eminent domain from being declared on a parcel for a commercial venture, but the law would still allow governments and utility companies to use eminent domain for roads, utility work and levees and other projects for the public.

• The House Military Affairs Committee approved a tuition waiver for spouses of those serving with the National Guard. Spouses could forgo paying up to 50 percent of their tuition at both four-year and two-year schools.

The bill would also give "tuition stabilization" for up to $4,500 for active duty members of the National Guard. The bill has been referred to the appropriations committee.

• Members of the Legislature will meet this morning at the Capitol to ride to memorial services in Bay St. Louis for Joseph P. "Jody" Compretta Jr., son of House Speaker Pro Tem J.P. Compretta, who represents Hancock County. Compretta, 39, died in an accident at the Endymion parade in New Orleans on Saturday.

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Monday, February 04, 2008

Secrets, Lies And Documents - The Sequel

The Tampa Tribune
Published: February 4, 2008

Even after we agreed to accept more risk in our policies, big insurance not only reneged on their promise to lower rates for Floridians, they continued to increase them.

And while the Office of Insurance Regulation should be applauded for its decision to hold hearings to find why we were lied to, they are also getting a real sample of what lengths insurance companies will endure to fatten their bottom lines at the expense of consumers.

Having battled these entities for over 20 years, I have seen firsthand how they will do anything to avoid exposing upper management tactics that would confirm our fears about an industry that has done everything possible to avoid accountability.

Furthermore, having chaired the American Association for Justice's Bad Faith Group, I also have been witness to the much-sought-after Allstate-McKinsey documents along with similar unfair claims tactics used by carriers as far back as the early 1990s.

In Missouri, Allstate chose to pay a $25,000 a day fine rather than turn over key management documents regarding the tactics and goals of its claims practices.

In Michigan, State Farm was sanctioned for failure to produce over 2,000 McKinsey-related documents when ordered to do so. The landmark case of Campbell vs. State Farm, which began in Utah and made its way to the U.S. Supreme Court over a course of 23 years, uncovered documents detailing a systematic program to underpay legitimate claims.

Yet another regulatory action in South Dakota cost Farmers Insurance Company and its shareholders a $750,000 fine for having a program where cash incentives were used to encourage adjusters to underpay claims.

These tactics of secrecy represent an underlying business strategy to prevent public scrutiny of a highly regulated business that involves the public's trust. They delay and deny with the hope that the other side will simply give up as we become numb to high rates and the broken promise of fast and full payment on legitimate claims. Policyholders, governments and even shareholders suffer as insurance industry's management thumbs its nose at us.

While hearings and commissions will reveal more bad news, special-interest promises remain the biggest blockade to establishing true reform. Until the army insurance lobbyist roaming our capital is removed, along with their influence on the political system, it will remain broken.

It is time for us to enforce honesty and fair play upon an industry, which agreed to be regulated in order to do business in our state, with nothing less than an iron fist.

William F. "Chip" Merlin is managing partner of Merlin Law Group in Tampa.

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AG says State Farm lawsuit based on 'lies, speculation and innuendo'

By HOLBROOK MOHR
Associated Press Writer

JACKSON, Miss. -- A lawsuit filed by State Farm Fire and Casualty Co. that accuses Attorney General Jim Hood of using the threat of criminal charges to force settlements in civil lawsuits is based on "lies, speculation, and innuendo," Hood said in court papers.
State Farm sued Hood in September, claiming he violated his part of a January 2007 settlement in which the attorney general's office agreed to end its criminal investigation over the company's handling of Hurricane Katrina claims. A judge ordered Hood to temporarily shut down the probe.

The accusations in court documents have intensified over the past week as both sides prepare for a hearing on Wednesday.

"Before allowing State Farm to use this court as a three ring circus to parade its inflammatory evidentiary rhetoric of innuendo, guilt by association, and smears, there should be some factual basis alleged to support a conclusion of retaliation and/or harassment," Hood said in papers filed Friday in U.S. District Court in Jackson.

Jonathan Freed, a State Farm spokesman told The Associated Press on Friday, that the insurer is ready to "proceed with our case and we're looking forward to airing these issues in court."

Hood asked the court to dissolve the restraining order and allow him to resume his investigation. Hood's 19-page filing came just days after State Farm used some of the strongest language yet in accusing the second-term attorney general of wrongdoing.

The company claimed Hood and wealthy plaintiffs attorney Richard "Dickie" Scruggs, who is facing corruption and contempt charges in other cases, participated in an "extortion conspiracy" by trying to force the company to settle civil litigation with private attorneys.

The court battle heated up when State Farm began urging a judge to allow the company to question Scruggs under oath. Hood has called Scruggs his "confidential informant" and has said Scruggs provided allegedly incriminating information about State Farm.

"General Hood is clearly concerned that his co-conspirator will either tell the truth or invoke the Fifth Amendment on specific questions related to their extortion conspiracy," State Farm said in a motion filed Wednesday.

U.S. District Judge Michael P. Mills on Friday ordered Scruggs to submit to the questioning by 5 p.m. Monday. Scruggs will likely invoke his Fifth Amendment protection against self-incrimination when questioned because of the pending charges against him.

Scruggs, one of the most influential plaintiffs lawyers in the country, is facing federal charges that he conspired with several associates to bribe a judge in an unrelated dispute over $26.5 million in fees from a mass settlement of Katrina claims. He's facing contempt charges in Alabama for allegedly violating a federal judge's order by giving leaked Katrina assessment documents to Hood rather than returning them to the company from which they were taken.

Scruggs has denied wrongdoing in either case. Scruggs is not a party to the lawsuit State Farm filed against Hood, but the company claims he worked in collusion with Hood.

The January 2007 agreement that State Farm claims Hood violated by resuming a criminal investigation was part of a broader settlement that called for State Farm to reopen and possibly pay thousands of policyholder claims. However, a federal judge refused to sign off the terms of deal and State Farm later entered into another agreement with George Dale, who was then Mississippi's Insurance Commissioner.

In August 2007, State Farm received a new subpoena for records from a grand jury. Less than a month later, the company sued Hood in an effort to stop the grand jury's investigation.

Hood claims he wasn't reopening the same investigation, rather he was probing new claims.

Hood has argued that he never provided "blanket immunity" from future investigations.

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Thursday, January 31, 2008

GAO National Flood Insurance Program Report: A View from Outside the Industry

by Sop811

Insurance Issues Forum

Yesterday we pointed out several glaring omissions and factual inaccuracies in the Reuters drive by reporting on the General Accounting Office NFIP report. Today we see better coverage courtesy of Anita Lee at the Sun Herald. In addition to our analysis, Ms Lee points out some of the other conclusions reached by the GAO on the flaws inherent to the current program design:

The first flaw involves the three wise monkeys and the concept of see no evil, hear no evil and speak no evil. While that old proverb works well in our personal conduct it is an invitation to disaster when used to manage a federal program:

Read more . . .

Wake Up and Smell the Formaldehyde

by James Polk
the New American Village

FEMA trailers are in the news again. Turns out they're not fit for human habitation. Problem is we've known it all along.

A scathing article on Salon.com sheds light on the toxic conditions and details the efforts of the United States government to cover it up.

http://www.salon.com/news/feature/2008/01/29/fema_coverup/

Meanwhile, better than two years on, over 30,000 hurricane victims still call FEMA trailers home. Read more . . .

GAO: Flood insurers have 'inherent conflict of interest'

McClatchy Newspapers
1/30/2008 -

WASHINGTON — The Government Accountability Office issued a report Wednesday on the National Flood Insurance Program that concluded insurers have "an inherent conflict of interest" in determining flood damage that the federal program must pay and the wind damage covered by private companies.

"I applaud the GAO for confirming that insurance companies have an inherent conflict of interest when they are allowed to determine whether to assign damages to their own wind insurance policies or to the federal flood insurance policy claims," said Rep. Gene Taylor, D-Miss.

The GAO concluded that the program needs greater transparency and oversight of wind and flood damage decisions.

"The report reinforces my proposal to give homeowners the option to buy wind and flood coverage in the same policy." The House passed Taylor's provision last September but the bill is stalled in the Senate.

"I urge the Senate to pass this legislation in order to stabilize the insurance market in coastal states," Taylor said. "I strongly support GAO's recommendations that insurance companies be required to turn over their wind claims files so that FEMA can verify that the companies applied the same standards to the flood insurance claims as to their own wind claims."

©2008, The Santa Fe New Mexican and MediaSpan

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Wednesday, January 30, 2008

REP. TAYLOR COMMENTS ON GAO WIND AND FLOOD REPORT

Findings reinforce importance of multiple peril insurance provision

WASHINGTON, D.C. – Rep. Gene Taylor commented today on the U.S. Government Accountability Office’s report that greater transparency and oversight is needed for determining the extent of wind and flood damage after a storm.

“I applaud the GAO for confirming that insurance companies have an inherent conflict of interest when they are allowed to determine whether to assign damages to their own wind insurance policies or to the federal flood insurance policy claims,” Rep. Taylor said. “The report reinforces my proposal to give homeowners the option to buy wind and flood coverage in the same policy.”

The multiple peril insurance provision in H.R. 3121, passed by the House of Representatives in September, would allow coastal residents to buy insurance and know that hurricane damage would be covered. It would protect taxpayers by ensuring that more hurricane damage is covered by premiums rather than by disaster assistance programs.

The volatility and uncertainty of the coastal insurance market are the biggest obstacles to recovery on the Gulf Coast. Insurance companies are withdrawing from almost every coastal market, forcing many homeowners into state insurance pools.

“I urge the Senate to pass this legislation in order to stabilize the insurance market in coastal states,” Rep. Taylor said. “I strongly support GAO’s recommendations that insurance companies be required to turn over their wind claims files so that FEMA can verify that the companies applied the same standards to the flood insurance claims as to their own wind claims. I am disappointed, but not surprised, that FEMA opposes that recommendation. FEMA needs to recognize that its oversight responsibility is to protect federal taxpayers, not insurance companies.”

The GAO’s findings include these major points:

· A conflict of interest exists when insurance companies are responsible for determining both the extent of the flood damage that NFIP must pay and the extent of the wind damage that the insurance company itself must pay;

· NFIP cannot determine the accuracy of flood claims payments on properties that were subject to both high winds and flooding, because FEMA does not collect any information on wind claims and does not require companies to explain their procedures for distinguishing between wind and flood losses;

· Property owners with separate homeowners, wind and flood insurance policies cannot know in advance whether all their damage from a hurricane will be covered because of differences in the policy limits; the uncertainty is increased because NFIP cedes control of the damage determination to the insurance company despite a vested economic interest in maximizing the flood claim and minimizing the wind claim;

· Legal disputes between wind and flood coverage have increased because of insurance companies’ anti-concurrent causation clauses that attempt to exclude coverage of wind damage if flooding contributed to the loss.

The Flood Insurance Reform and Modernization Act, H.R. 3121, which passed the House in September, already addresses some of the concerns raised by the GAO report:

The House approved a Taylor amendment that prohibits insurance companies from using anti-concurrent causation language to exclude coverage of wind damage solely because flooding also contributed to the damage.

The House also approved an amendment offered by Rep. Mel Watt that would require insurance companies to report their actual expenses operating the flood program and to undergo an independent audit of their administration of NFIP policies every two years.

The complete GAO report can be found at http://www.gao.gov/new.items/d0828.pdf.

# # #

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Houston lawmakers blast pace of Katrina, Rita housing

By RICHARD S. DUNHAM
Copyright 2008 Houston Chronicle Washington Bureau

WASHINGTON — Two Houston lawmakers upbraided federal and Texas officials for their slow response to finding replacement housing for victims of hurricanes Rita and Katrina.

Rep. Sheila Jackson Lee, D-Houston, called the efforts "a complete failure." Rep. Al Green, D-Houston, went further. "Some heads really should roll for letting this go on and on and on," he said at an investigative hearing held by the House Homeland Security Committee.

Jackson Lee and Green noted that thousands of Texans have been housed for more than three years in trailers laced with the cancer-causing chemical formaldehyde.

"HUD and FEMA are wrapped around this failure," Jackson Lee told state and federal emergency response officials. "The state of Texas has failed, plain and simple."

"The simple question I ask you: Why are people still in trailers in 2008?" Jackson Lee demanded.

"Madam, you are correct," said Nelson Bregón, of the Department of Housing and Urban Development. "There are people still residing in trailers who should not be living in trailers."

During the afternoon-long hearing, there were several examples of federal agencies and Texas officials pointing the finger of blame at somebody else.

HUD's Bregón testified that the housing situation "is FEMA's responsibility." He said HUD is "very concerned" and is "working with the states." He called the situation "a travesty."

A Texas official defended the performance of Gov. Rick Perry, a target of Jackson Lee's ire.

Michael G. Gerber, executive director of the Texas Department of Housing and Community Affairs, said federal aid was only a fraction of state costs.

Jackson Lee was not convinced: "People are living in a disaster because of your inaction," she said.

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FEMA slowing Coast building

Chris Joyner • chris.joyner@jackson.gannett.com • January 30, 2008

BILOXI — Two-and-a-half years after Hurricane Katrina devastated the Mississippi Gulf Coast, less than a fourth of the 10,833 public rebuilding projects are completed.

Many haven't even broken ground.

And local officials are finding it harder to work with the Federal Emergency Management Agency.

Long Beach Mayor Billy Skellie spent much of Tuesday in a meeting with FEMA accountants arguing over whether the federal government will help pay overtime costs incurred by his fire and police departments in the days and weeks after the storm.

"They are wanting to deobligate about half of that," he said.

In regular language, Skellie explained FEMA is hedging on paying the city's costs of more than $350,000 because the agency's contract accountants are not satisfied with the time sheets kept by first responders immediately after Katrina hit.

"We were just trying to survive. I mean, my God," Skellie said. "It's these people who worked around the clock pulling bodies out. ... They don't want to pay for any of that because a person's name doesn't appear on a time sheet."

It is a familiar complaint along the Coast, especially among the smaller cities. Recovery is slow because FEMA and its state-level partner, the Mississippi Emergency Management Agency, spent months arguing with local government officials over what is and is not covered under grants set aside to pay for rebuilding government buildings, roads and infrastructure and paying other public costs.

After more than two years of hearing the complaints, FEMA and MEMA officials Tuesday held a news briefing at their Biloxi headquarters to plead their case.

"There's a lot of misconceptions about this program and a lot of misconceptions about what FEMA and MEMA can and can't do," MEMA Director Mike Womack said.

Recovery is "one team, one fight," Womack said, but there are legal limits to the public assistance grants.

For instance, under the federal rules, a fire station destroyed by Katrina can be rebuilt completely using federal money, as long as it is rebuilt the way it was before the storm using the former building's "footprint." But if a city wants to expand the fire station, relocate it or use the money to improve a fire station across town, then the project has to go through another vetting process and the city may be required to provide some matching funds.

"It's an area that confuses the applicants quite a bit," Womack said.

The process is tougher on smaller communities. When FEMA negotiates payments with the largest cities of Gulfport and Biloxi, those cities bring in-house experts who are dedicated to shepherding projects through the labyrinthine federal process, but smaller cities do not have the money to hire their own advocates.

"Myself, the city clerk and my fire chief," Skellie said. "That's just about it."

Since the storm, about $1.3 billion has been paid out to cover the costs of rebuilding to local governments, school systems and eligible nonprofits.

But as Mississippi approaches its third hurricane season since Katrina, many of the projects have not made it out of the planning stages. In all, 22 percent of Mississippi's 10,833 public projects have been completed.

FEMA Transitional Recovery Office Director Sid Melton said the agency is working to improve the process. Development of an electronic database of ongoing projects is nearly completed, he said. Since the storm, tracking of progress of public assistance projects has been a manual process.

Melton said FEMA is a willing partner with local governments to get them the funds they need and get their projects done.

"Our job is to move the state of Mississippi forward, and if we are not doing that, then we need to get out of the way," he said.

That's just what Skellie would like to see happen. Once he receives bids on a project, Skellie said it takes several months for FEMA to review and approve them before work can begin.

He said he believes it is getting harder to get FEMA to approve projects as the agency pores over worksheets in what he sees as an attempt to reduce how much money his city receives.

"They are watching for thieves, and I understand that," he said. "We haven't asked for anything more than we need, and we still get punched in the nose."

Womack agreed one of the problems with the system is it is adversarial. He said he hopes the Katrina experience will spur Washington to find a new way, but in the meantime, there are rules that have to be followed.

But it's not all the fault of FEMA or MEMA, he said. Internal squabbling among local government officials has slowed the rebuilding, too, he said.

"There are disagreements in local governments on how to rebuild," he said. "These are very difficult decisions for local communities."

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Monday, January 28, 2008

Study Claims FEMA Ignored Toxic Findings

By EILEEN SULLIVAN
January 28, 2008

WASHINGTON (AP) — The Federal Emergency Management Agency manipulated scientific research in order to play down the danger posed by formaldehyde in trailers issued to hurricane victims, according to an investigation by congressional Democrats released Monday.

FEMA "ignored, hid and manipulated government research on the potential impact of long-term exposure to formaldehyde" on Katrina and Rita victims now living in FEMA trailers, Democrats on a House Science and Technology subcommittee wrote in a letter to Homeland Security Secretary Michael Chertoff. FEMA is part of the Homeland Security Department.

In a separate letter, lawmakers said the federal health agency that provided guidance to FEMA was "complicit in giving FEMA precisely what they wanted."

Victims living in FEMA trailers have complained of health problems related to formaldehyde, but initial FEMA tests revealed the air quality in the trailers was safe if those trailers were properly ventilated. Formaldehyde is a common preservative found in building materials used in manufactured homes. It can cause respiratory problems and has been classified as a carcinogen by the International Agency for Research on Cancer and as a probable carcinogen by the U.S. Environmental Protection Agency.

FEMA said the health agency's Feb. 1, 2007 advice didn't address long-term health effects, but rather concerned ways to avoid toxic exposure to formaldehyde. "FEMA did not suppress or inappropriately influence any report," said agency spokesman James McIntyre.

The lawmakers are questioning the integrity of research done by the Agency for Toxic Substances and Disease Registry, and said they don't trust FEMA to conduct an independent investigation into the toxicity of the formaldehyde in trailers.

The investigation, led by Rep. Brad Miller, D-N.C., found the health agency ignored research from one of its own experts, Christopher De Rosa.

Because the health opinion was completed without appropriate oversight, the results could be misleading, De Rosa wrote in a February 27, 2007 letter to a FEMA attorney that was obtained by the subcommittee.

"Any level of exposure to formaldehyde may pose a cancer risk, regardless of duration," De Rosa wrote. "Failure to communicate this issue is possibly misleading and a threat to public health."

In its initial round of testing, FEMA took samples from unoccupied trailers that had been aired out for days and compared them with federal standards for short-term exposure, according to the lawmakers. FEMA officials instructed scientists at the health agency to leave out details about long-term exposure in its consultation.

"Honest scientific studies don't start with the conclusion, and then work backwards from there," Miller said in statement.

FEMA is currently testing 500 of the 40,000 trailers, but the lawmakers said they have no confidence in the new testing and sampling procedures.

The test results are due to come out in February and FEMA plans to issue a final report in May.

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