Breaking: Several Insurers Dropped from Whistleblower Suit

It’s mono y mono now. The Rigsby sisters against State Farm.

Read Anita Lee’s story Three insurance companies dropped from whistle-blower suit.

Ocean Springs whistle-blowers are dropping three major insurance companies from a lawsuit filed over Katrina claims handling, choosing to focus on State Farm insurance companies as they press for damages under the federal False Claims Act.

Attorneys for the whistle-blowers Cori and Kerri Rigsby, who are sisters, expect a federal judge to approve the request that Allstate, Nationwide and USAA be dismissed from the lawsuit.

“We wanted to focus our case and make it as detailed as possible against State Farm,” said Anthony DeWitt, a Missouri attorney who specializes in False Claims Act cases. Such cases allow employees who uncover fraud against the government to file lawsuits.

The government is given the opportunity to press the claim. In this case the U.S. Attorneys Office for the Southern District of Mississippi has so far decided against intervening, leaving the sisters to pursue the case. They would be entitled to up to 30 percent of any damages assessed if fraud is proven.

The Rigsbys claim State Farm used biased vendors to blame Katrina damage on tidal surge covered by federal flood insurance in order to avoid paying claims for wind damage. State Farm has denied the allegations, saying the company covered Katrina damage owed under its policies.

Along with State Farm, the Rigsbys are suing seven engineering firms that assessed damage for the insurance company, a State Farm claims manager and the couple who employed the sisters as claims adjusters.

Famed attorney Dickie Scruggs filed the lawsuit on the sisters’ behalf, but is no longer active in the case because he faces unrelated charges involving bribery of a state court judge. DeWitt said he expects that Scruggs will at some point officially withdraw, as he did from lawsuits being pursued on behalf of Coast policyholders.

The Rigsbys worked on State Farm claims under a contract between the insurance company and their employer, Alabama adjusting firm E.A. Renfroe. Renfroe is suing them in Alabama, claiming they breached their contract to keep State Farm records confidential.

A judge in the case issued an injunction in December 2006 that required the Rigsbys to return State Farm records they took while adjusting claims, from September 2005 until they downloaded thousands of State Farm computer records in June 2006. DeWitt said the Rigsbys will seek permission from the Alabama court to use those records in their lawsuit.