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Appeals Court Revives Suit Against Katrina Insurers

Posted Feb 20, 2009 1:17 PM CDT
By Debra Cassens Weiss

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A federal appeals court based in New Orleans has revived a whistle-blower suit claiming several insurance companies tried to shift the burden of paying for Hurricane Katrina damages onto the federal government.

The 5th U.S. Circuit Court of Appeals ruled the Louisiana suit may continue against all but two insurers, according to the Associated Press and the New Orleans Times-Picayune. The two insurers were specifically named in a prior case filed in Mississippi in April 2006, four months before the Louisiana suit.

The dismissed insurers are Allstate Insurance Co. and State Farm Fire and Casualty Co., the stories say. Lawyer Allan Kanner represents the whistle-blowing insurance adjusters in the Louisiana qui tam suit, which seeks a portion of any proceedings recovered on behalf of the government.

“I think we will win this case, and it will shame the U.S. government to get off its you-know-what and go after Allstate and State Farm, who are probably the biggest abusers out there," he told the Times-Picayune.

The Louisiana suit was originally filed against eight insurers and six adjusting firms. It claims the defendants understated wind damage that was covered by insurance policies and overstated flood damage covered in a federal insurance program.

The lawyer who originally filed the prior Mississippi case is Richard "Dickie" Scruggs, who has pleaded guilty in two attempts to bribe judges. Other lawyers are now handling the litigation.

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