I found a great explanation, beginning on page 20 of the Answer to the Defendant’s Counterclaim in the Affirmative Defense section. I wondered aloud if State Farm were grasping at straws in their recent filings on the Qui Tam case. I wondered privately if the lawyers at Butler Snow knew anything about the False Claims Act after reading their briefs. I’ve seen far better work out of that firm.
The salad days of using Dickie Scruggs as a boogie man to bulldoze the insurance civil litigation are over. The McIntosh family has a real blue Chipper on board in Chip Merlin. The Rigsby sisters, who happen to be clients of the Missouri duo, have specialized False Calims Act Lawyers who actually appear to know their Qui from their Tam. Let’s join them in reading some excerpts from today’s Answer to Defendant’s Counterclaim. You can find that and all of today’s filings on our Qui Tam page.
Since at least September 3, 2005, State Farm Insurance, E. A. Renfroe & Company, and its other many co-conspirators have been engaged in a concerted effort to defraud the United States through its National Flood Insurance Program.
State Farm sent a “catastrophe team” to the Gulfcoast for the purpose of carrying out a complex scheme to reduce the amount of cash outlay that State Farm and its reinsurers would have to expend in paying Katrina damage claims.
One mechanism selected for this purpose and process was a plan to push as much of the coverage issues as possible off on the National Flood Insurance Program through the submission of false and fraudulent claims.
The chief facilitator of this plan was a State Farm employee by the name of Alexis King.
Alexis King, in every deposition since the Katrina cases were filed, has, on information and belief, consistently pleaded the Fifth Amendment privilege against self-incrimination.
While such invocation of the right against self-incrimination may not be used by the state or federal government in a prosecution, it has long been accorded an evidentiary presumption under the common law that a truthful answer would have incriminated the witness.
Alexis King issued strict “lock and key” orders in order to segregate the evidence of her wrongdoing as an agent of State Farm. These orders were not designed to protect trade secrets because the engineering reports were eventually provided to policyholders. Rather, they were placed under lock and key to further a criminal and fraudulent scheme aimed at milking the National Flood Insurance Program.
The relators, because they eventually became aware of King’s goals in this project, were also aware that King planned to spoliate the evidence of her conduct.
USC § 1341 makes it unlawful to use the mails to defraud. “There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts), and (2) use of the mail for the purpose of executing, or attempting to execute, the scheme (or specified fraudulent acts).”…….
18 USC § 1343 makes it unlawful to use the wires to further a fraud scheme. The elements of wire fraud under Section 1343 directly parallel those of the mail fraud statute, but require the use of an interstate telephone call or electronic communication made in furtherance of the scheme…….
Relators were aware that King had made phone calls to the engineers at defendant Forensic, firing them, as a key component to advancing her fraud scheme to have engineers submit false engineering reports.
Relators were aware that Forensic and the other conspirators were sending in reports both by U.S. Mail and by facsimile transmissions.
Relators knew that co-conspirators, including E. A. Renfroe and Company, and their agents and employees, were fully aware of the scheme.
Relators were asked to perform tasks ancillary to the fraud scheme, and although they had no fraudulent intent, felt compelled to carry out the orders of those appointed above them in order to retain employment.
As a result of becoming aware of what they believed to be criminal conduct, the relators sought counsel.
In order to permit counsel to properly evaluate the nature of the fraud schemes, relators provided copies of documents found in the claims files of State Farm customers Mullins and McIntosh, among others.
In order to permit counsel to evaluate the nature of the fraud schemes, and to assist them with preparing a case pursuant to 31 USC § 3729, Relators dragged emails to the desktop of their laptop.
The emails that Relators dragged to the desktop of their laptops were, at all times, emails that had been sent to the Relators by those who advocated, orchestrated, engineered or facilitated the criminal and civil fraud scheme at issue.
Relators provided these documents to their counsel.
Relators provided these documents to the United States Attorneys office in advance of filing a False Claims Act case.
Relators provided these documents to the Mississippi Attorney General prior to filing a False Claims Act case.
Relators at some time in late May, or early June of 2006, after the False Claims Act case was already on file, became aware of the increased spoliation of evidentiary material relevant to their complaint.
Without consulting the qui tam counsel, Relators downloaded electronic files and printed these documents in an effort only to preserve evidence of criminal and civil wrongdoing.
Relators never used the documents for their own purposes; their use at all times was in furtherance of their duty to report criminal wrongdoing.
Relators were privileged to make copies of information in order to report criminal activity. See Lachman v. Sperry-Sun Well Surveying Co., 457 F.2d 850, (10th Cir. 1972).
Relators may not be held liable for their good faith belief, supported by the repeated invocations of the Fifth Amendment by State Farm’s agent, employee and co-conspirator King, that State Farm was engaged in criminal conduct and civil fraud on the National Flood Insurance Program.