Posted Aug 24, 2007 09:38 pm CDT
In a blunt opinion filed today, a federal appeals court says two sisters portrayed as whistle-blowers in ongoing litigation over Hurricane Katrina insurance claims must return some 15,000 internal documents concerning State Farm Insurance Co.
The unpublished ruling by the 11th U.S. Circuit Court of Appeals is potentially important not only to the sisters, who are represented along with hundreds of policyholders by Mississippi plaintiffs attorney Richard Scruggs, but to Scruggs himself: As discussed in an earlier ABAJournal.com post, he and his law firm are now defendants in a criminal contempt case because he reportedly returned the documents not to the sisters’ employer, as a federal district court ordered, but to the Mississippi attorney general.
The sisters, Cori Rigsby Moran and Kerri Rigsby, obtained the documents while working for a third-party insurance claims processor, E.A. Renfroe & Co., that was handling Katrina claims for State Farm. The documents allegedly show that the insurer improperly denied coverage for damage from the August 2005 windstorm.
Because the sisters clearly violated contractual confidentiality provisions that applied to their employment with Renfroe, among other reasons, they must return the documents, the 11th Circuit wrote. Its opinion (PDF) was provided by the Insurance Coverage Law Blog.
The opinion upheld an injunction by a federal district court in Alabama. It was issued in a lawsuit Renfroe filed against the sisters after they disclosed information about the documents in an Aug. 25, 2006 broadcast of the ABC News television show 20/20.