About that State Farm Shredder Truck……

By the Spring of 2006 I had settled my insurance claims and we began planning the rebuilding process that continues to this day. The practice was overloaded with work as my flooded out construction clients were booming with rebuilding related business. I still remember that day in the late spring of 2006 when Steve called my cell phone, “The shredder truck is at (the State Farm) office”. He told me he had noticed the truck there more than once.  This office like all State Farm offices in Bay-Waveland were flooded out just 7 months before.

By March of 2006 State Farm had denied most of the claims for wind coverage where there was also flood damage. In that instance, State Farm would have also previously adjusted the flood claim and paid it. This detail is worth noting now because it is important to the concept of “double-dipping” where an insurer gets to take credit for NFIP payments even if it over apportioned total damage to NFIP (more on that a bit later).

As featured in the 4th video clip of the CNN special by Kathleen Koch featured in our memory lane post, by March of 2006 angry policyholders were picketing local State Farm offices. Steve had noticed the shredder truck at one and given what had happened to the policyholders since the fall of 2005, drew the only conclusion his experiences with State Farm would let him. They were destroying evidence in advance of the litigation. To memorialize the event he bought a disposable camera and took some pictures of the truck. He gave them to Zach Butterworth.

Those that are familar with my posts since the Scruggs scandal broke know that my friend and occasional slabbed commenter Steve had helped his neighbor Jim Beckham track down engineer Paul Monie. Mr Beckham was in possession of Mr Monie’s first engineering report on his residence that he prepared for State Farm. He was shocked to find a different report had accompanied his denial of coverage letter and was interested to find out why from the engineer. Like many adjusters and engineers that came to the coast after Katrina, Mr Monie was not from this area. Steve was successful in finding Mr Monie who claimed to have no clue as to the existence of a second report bearing his name. State Farm quickly settled with Mr Beckham after he tracked down Mr Monie.

Steve was not a State Farm insider but because of his experience with Mr Beckham he drew a very logical conclusion regarding the purpose of the shredder truck. By March of 2006 the community was banding together with neighborhood groups like the Slingshot group forming for a common good. There were no secrets in the community back then with insurance claims.  Imagine if you were on the inside like Kerri Rigsby, who had adjusted Dr McFarland’s wind claim and knew you screwed an elderly man at the behest of upper claims management? Imagine if you knew from the inside that State Farm was destroying evidence?

This context is important because as noted on pages 24 and 25 of the answer to State Farm’s counter claim the Rigsby sisters knew, as we did that State Farm was purging their files of evidence of their misdeeds:

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.

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.

It is worth noting at this time that per the False Claims Act statute the Rigsby lawyers headed up by Todd Graves and Tony DeWitt had already met with US Attorney’s office. These documents taken in June 2006 by Kerri and Cori Rigsby were also subsequently turned over to both the US Attorney and Jim Hood.

I noted this quote on page 35 of the answer to the defendants counterclaim found on our Qui Tam page.

“He who doeth fraud, may not borrow the hands of the chancellor to draw equity from a source his own hands hath polluted.”

The quote from Lachman v. Sperry-Sun Well Surveying Co., 457 F.2d 850, 10th Cir. 1972 makes sense. What the Rigsby’s did in downloading State Farm documents as proof of the alleged crime after the fact can’t be used as a defense by State Farm against the contents of those documents. State Farm lacks the clean hands needed to make their argument.

This brings me back to David Rossmiller, who our readers may remember was a forceful advocate for allowing Dunn Carney client Allstate to do claim NFIP credit for their bad wind-water adjustment while Weiss was ongoing. While he terms his analysis the majority viewpoint, it is a decided minority viewpoint of the courts here. Rebecca Mowbray told that story best in an article we featured in our post Louisiana Wind Water News from March. So far, Mississippi and Western Louisiana do not allow private insurers to benefit from the flood proceeds they paid on claims that were badly adjusted in favor of the insurer.

Missing in the legal wrangling is the interests of the Flood Program which in my mind should be reimbursed by the private insurer if wind damage was under apportioned. The basis for that argument is found in the National Flood Insurance Program regulations themselves that makes it clear the insurance company has the entire “responsibility for providing a proper adjustment for both combined wind and water claims..” The federal court in New Orleans missed that part of the equation in while reading David Rossmiller’s blawgwigging analysis of the issue while Weiss was an ongoing case. Perhaps that is what the courts are seeing in Western Louisiana and Mississippi.


9 thoughts on “About that State Farm Shredder Truck……”

  1. Incredible, Sop. The birds-eye view from Katrina Ground-Zero really puts the pieces of the puzzle together and you did a great job connecting the dots.

    This is the first chance I’ve had all day to get to the computer – and as you know that means I’ve had an incredibly busy day. I’ve got several things to post but won’t have time until later tomorrow.

    A big Happy Birthday to your son.

  2. Happy Birthday to son from me too, Sop! I always thought parents ought to get some credit for birthdays, too. 😉

    Wow. There doesn’t seem to be anything beneath State Farm’s tactics does there? They particularly like this one as described in my comments on The Good Neighbor?

    Channel 7 & KGO Investigation Into How State Farm Does Business (Part 3) Windows Media Video Monday, November 06, 2006
    Investigation into the way State Farm does business: Employees instructed to destroy documents that could be used against them and the use of

  3. Thank you both. Everyone had a great time. Belle your links are one step ahead of my thought process which makes your timing impeccable. Absolutely State Farm knows it’s way around a shredder and with the document dump they had to cease and desist.


  4. My house in Jackson was destroyed in the tornadoes and so far, Safeco has been great to me. My insurance used to be with State Farm but they redlined me when my neighborhood started to go ghetto. Apparently, that was the best thing that could happen to me. I was walking my dog in the neighborhood where Safeco has rented me a house. My dog started playing with a contractor’s dog and when he left he handed me a card and said if he could help, to give him a call. I told him I had someone who was supposed to start tomorrow. He then said that he also helps people when their insurance companies act recalcitrant. I told him I’d had no problems so far with Safeco. He laughed and said he knows their local rep. and that they are GREAT. Don’t know if you coast guys can get Safeco insurance but I’d recommend them. And thank you, State Farm, for redlining me. Probably the only decent thing that has ever happened to me.

  5. Jane I am glad to hear you are progressing well in the aftermath of the tornado in Jackson with Safeco. Slabbed will have served it’s purpose when everyone impacted by natural disaster is treated fairly by their insurer. The customer is at a huge disadvantage when their house is destroyed and their insurer plays hard ball.

    My take is a shade different regarding claims handling in general. State Farm plays a good Katrina villian but they have no lock on playing claims hardball. This site is one of many on the topic that I found interesting.

    Welcome to slabbed.


  6. I’m just so glad State Farm dumped me. The woman at Safeco in charge of getting us housing said she was sending me a survey to grade their service thus far. She told me they have to get all “10”s and if there were any reason I wouldn’t give them 10s in every category, to tell them now so that they could fix it.

  7. Nice article SOP. The human impact of our Nations broken insurance model is great. The blow to the false beleif that you do have an insurance industry that is capable of providing insurance for your risk is the end result of Katrina in terms of insurance.

    We all held a belief that our homes were protected and State Farm would be there. What we found out was that while State Farm and others continued to charge very high policy prices, the coverage we needed had been deleted(from the policy language by the con-current clause).

    I would only add to the pre-trial behavior included intimidating the family in question by calling their friends and family to question them about the plantiff’s. The call started with the person on the phone noting that they had been called as a witness to the Katrina loss of the Bechman’s and the call was being made to aid in preparing for the upcoming court case. These calls were NOT made to people on the witness list but WERE made to people who might know something negative about the Bechmans. Too bad for State Farm that the Bechmans are one of the few families in America that are 100 percent clean. A statement which can be made to a high degree of certainty because after you allege State Farm has engaged in improper behavior YOU will be their target for investigation. Not State Farms own employees or claims processing system. You are the problem. So much for changing State Farm from within. This sheds light on the corperate culture.

  8. Jane, welcome. Next time you talk with Safeco, will you ask if they sell on the Coast. Also, I’d love the know if they were there before Katrina and their claims handling experience.


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