Attorney General Jim Hood said Tuesay that his office has reached a class-action settlement with State Farm in the Katrina lawsuit. Policy holders and Hood claim the insurance company wrongfully denied coverage for storm surge damage.
Under the settlement, made before U.S. District Court Judge L.T. Senter, State Farm will re-evaluate policy holders' claim and make them a new offer. Under the terms of the class action, the insurance company can no longer use water damage as a reason to deny the claim and must show through a preponderance of the evidence that any damage denied was caused by a hazard outside policy coverage.
State Farm will even re-evaluate claims where only a slab remains and make a minimum offer equivalent to 50 percent of the structural policy limits.
"This could mean up to $500 million injected quickly into our Coast economy," Hood told reporters at a Tuesday press conference. "Others can (opt out) and go seek punitive damage, but this will expedite the process. We don't know how long the appeals process will take and this is an option. We believe that the overall value of this is that it will be a quick flow of capital at a crucial time. Grant money that is now getting down to the Coast can be added to this quick injection of insurance money and our people on our coast can go back and rebuild their lives."
Hood said policyholders would start getting their money in three months and explained that the settlement was tailored for about 8,000 storm-surge victims who have not hired a lawyer and have made no attempt to sue. He said he hoped the settlement would serve as a "template" for other insurance companies "to come forward and participate in this program so that we can help the thousands and thousands of coastal residents who have nothing but slabs."
He added that State Farm may have been pressured to agree to the settlement thanks to an unsympathetic Democratic Congress and some Republican legislators--like storm victim Sen. Trent Lott--who will likely push for insurance reform in the new congressional year.
Over on StateDesk, we have posted the verbatim statement by the attorney general explaining the State Farm lawsuit settlement. You can discuss there (without registering), as well as get a link to the audio and settlement on the AG's Web site.
It turned out the celebration was premature. Hopefully, all will work out soon.
- Ray Carter
told you he was a grandstander.
Having said that, TP today has story comparing their own AG's lack of action compared to Hood.
Here is story in WSJ about Judge Senter:
Put U.S. Judge
In Eye of Storm
Places Onus on Insurers
To Prove Water Damage
By LIAM PLEVEN and PAULO PRADA
February 10, 2007; Page B1
In New York and Aberdeen, Miss.
Lyonel Thomas Senter Jr.'s roots run deep in northern Mississippi, amid magnolia-lined streets and antebellum mansions. He learned to play trumpet there and high-school football and became a federal judge.
Now, at 73 years old, Judge Senter has become a defining figure in the coastal south of the state, presiding over a deluge of legal cases that grew out of Hurricane Katrina. The storm triggered more than 1.2 million claims from homeowners for $17.6 billion in damage, says the Insurance Information Institute, a trade group. Most claims have been resolved, but thousands of homeowners in the Gulf region are still suing their insurers, and billions are still at stake.
At issue in many of these cases is a messy question. Were homes destroyed by the ferocious winds of the storm or the surging Gulf waters that came with them? Insurers typically cover wind damage but exclude water damage, because it's covered under the federal government's flood insurance program. Yet who knows what's behind the damage when a house has been wiped off the map?
Judge Lyonel Thomas Senter Jr. (pictured) is delivering some key decisions in Mississippi Katrina cases.
Judge Senter has been at the core of several recent critical turns in cases in Mississippi -- which have generally moved faster than in Louisiana -- in part because he's one of the few federal judges there whose own home wasn't damaged by the storm. At least two other judges have sued their insurers. He owns a condo in nearby New Orleans that was unharmed and stays in a hotel when in Mississippi.
Judge Senter, who has declined interviews, has ruled against the insurance industry in some important ways. In late January, he ruled against State Farm Insurance Cos., the nation's largest home insurer, in one case involving one Mississippi couple, setting the stage for a $1 million punitive damage award against the company.
A few days later, he tossed aside a proposed settlement that would have had State Farm pay at least $50 million to thousands of Mississippi homeowners, helping it clean the slate of Katrina-related conflicts in the area. He said he needed more information.
He'll be holding a hearing on the settlement -- important to residents desperate for rebuilding funds -- on Feb. 28.
"I would like nothing more than to approve a settlement procedure that is fair, balanced and reasonable," he wrote in an order Thursday that set that coming hearing.
He's handed the insurance industry some important victories. Last March, he upheld a standard provision in many policies that frees them from the responsibility of covering damage caused by floods. The industry considers the "flood exclusion" sacred.
But beyond upholding flood exclusions, his rulings have put the onus on insurers -- not homeowners -- to prove which damage was caused by wind and to pay for it, or risk costly penalties.
"Judge Senter has laid out a framework that is likely to be followed by most courts" in future hurricane-related cases, says John Ellison, an attorney with New York-based Anderson, Kill & Olick PC, who is representing Louisiana plaintiffs in other Katrina-related cases.
Judge Senter is not the first to address the wind vs. water issue. But this is "the first time we're seeing it on a massive scale," says Tom Baker, director of the Insurance Law Center at the University of Connecticut Law School.
Judge Senter himself is a relative newcomer to the Gulf Coast, having grown up in Aberdeen in the north. It is a once-prosperous town on the Tombigbee River, where the movie house on Commerce Street still sells popcorn for $1. He was a sure-footed high-school quarterback until he was stricken with polio, which later forced him to walk with a leg brace and crutches. He now uses a wheelchair.
After working as an attorney and serving as a state judge, he was nominated to the federal bench by President Carter in 1979. He later became chief of the Northern District, sitting in Aberdeen, where he garnered a reputation as a thoughtful, fair and even-tempered jurist who combines small-town practicality with a scholarly interpretation of the law.
"This is a guy that sees both sides to everything," says Danny McKittrick, a probation officer at the district court. "He never claims to know it all and works hard to get the information necessary to understand what he's hearing."
The judge, who sometimes introduces himself as "Tommy" outside the courtroom, played trumpet with a jazz band in college. He once used the trumpet to ease tensions in a case, recalls Ron Welch, a Mississippi lawyer. Mr. Welch and another attorney were in chambers strenuously arguing a point when Judge Senter began asking about their personal interests and then steered the conversation to music. He then suggested they take a break, and they wound up at Judge Senter's house, where he pulled out his trumpet and played "Summertime," the lullaby from "Porgy and Bess."
"We ended up settling that point," says Mr. Welch.
In 1998, Judge Senter became a senior judge, and he relocated to the Southern District of Mississippi in 2002. When Katrina hit, Judge Senter rode out the storm with friends in Pensacola, Fla., and took over Katrina-related cases afterward.
Some of the judge's recent rulings could have added import as Katrina cases work their way through the system in the Gulf. Among those rulings was his call on how insurers should proceed when both wind and water cause damage to a home. The insurer -- not the policyholder -- bears the burden of proving which part should be excluded.
That came into play last month in the case brought against State Farm by Norman and Genevieve Broussard, of Biloxi, Miss. Their home was wiped away. State Farm denied the claim. "State Farm attempted to shift its burden of proof to the plaintiffs to establish the portion of their losses that were caused by wind," Judge Senter said in his ruling. He ordered the insurer to pay to the limits of the policy, $211,222 for the home and its contents.
A jury then awarded the couple $2.5 million in punitive damages, which Judge Senter later reduced to $1 million.
"If that's the law, then that will have a huge impact on how future cases are handled," says Randy Maniloff, an attorney for insurance companies at White & Williams LLC in Philadelphia who has written about Judge Senter's rulings.
State Farm, which is based in Bloomington, Ill., says it is likely to appeal the entire case, and adds that the company is working on answering the judge's questions about the proposed settlement.
Write to Liam Pleven at [email][email protected][/email] and Paulo Prada at paulo.prada
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Hood now wants to make them sell insurance. yeah. I wonder if he can control the weather.