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.