No way the ink had time to dry on the AG’s press release announcing the State Farm settlement before the naysayers started chiming it – perplexing to some; not news to others; and, then, this morning we have an Anita Lee with a story quoting Commission Chaney saying the credit goes to George Dale!
With just 21 more lawyer-shopping days until the statue of limitations expires and 148 of the slabbed with policyholders claims added in the settlement, let’s take the major points in Hood’s press release; compare them with the record, and clear up the past so we can focus on the issues of the present.
Attorney General Jim Hood announced the settlement of the state’s breach of contract suit against State Farm, which was filed after State Farm refused to comply with a January, 2007, Hinds County Chancery Court settlement
The breach of contract suit was filed June 11, 2007. We’ve transferred the Statement of Fact into a timeline format that will, hopefully, make it easier to understand what took place from January and June.
With this background in place, let’s move to the contested statement in the press release.
Due to the state’s suit against several insurance companies, State Farm has paid an additional $74 million and Nationwide has paid an additional $40 million to Coast policyholders.
Is Hood claiming credit for an accomplishment of George Dale or did the lawsuit he filed actually produce these results in whole or in part? Consider these points:
The agreement George Dale negotiated with State Farm clearly violated the Agreement that State Farm signed to settle Hood’s case in State court – and it wasn’t an unintended mistake or a secret. On March 19, 2007, WLBT ran the story of Dale’s settlement with State Farm.
Thousands on the Mississippi Gulf Coast are getting a second chance to go after their Hurricane Katrina claims. It’s part of a major deal with State Farm insurance that ensures at least 50 million more dollars will be paid out. Insurance Commissioner George Dale says the insurer will reopen as many as 35 thousand homeowner and commercial claims…
…The State Farm readjustments will be done on a voluntary basis. All 35 thousand policy holders will get notices in the mail from State Farm in the next couple weeks. Dale expects the entire process to take about two months…
When Hood filed suit three months later, the AG’s press release suggested Dale’s March projections were way off.
We filed this lawsuit in an effort to help the more than 30,000 Gulf Coast policyholders who have suffered for nearly two years because of State Farm’s inaction,” said Attorney General Jim Hood. “
The State Farm reevaluation procedure through the Department of Insurance has only resulted in a little more than 300 new offers. That does not comply with the terms we have with them in black and white. We have a state court order that they signed and then backed out.
Hood’s lawsuit certainly appears to have had an impact as other sources indicated those 300 new offers came from an examination of less than 5000 claims in the three month period and certainly less than $74 million dollars was involved.
Here’s how I see the big picture after countless hours of researching and reading.
Dale and State Farm made a deliberate end run around the signed settlement Agreement for the case Hood filed in State court; and, Dale received a lot of favorable publicity – right around the time he was disqualified by the Democratic party in his bid for re-election.
George Dale, Mississippi’s long-time insurance commissioner who is planning a reelection bid this year, stated, “This is a big step in the right direction. I’m pleased that this agreement will quickly put money into the hands of those along the Gulf Coast without lengthy litigation.”
The quote above came from an article that ran in the Mississippi Business Journal that also included:
Managing risk is a tricky business. For now, the settlement money should accelerate the recovery process on the Coast. However, the long-range effects of this deal with State Farm on the overall Mississippi insurance market and its thousands of individual and business policyholders remain unclear.
And the risks remain.
The sticking point for Hood, reported in the WLBT story, was the lack of court supervision and the final settlement that would result from the agreed-to arbitration.
In a written statement, State Farm says it’s “moving forward to pursue the basic guidelines of that settlement. Unnecessary court battles and political rhetoric in this difficult post-Katrina environment serve no one’s interests.”
But Attorney General Jim Hood says State Farm isn’t off the hook in fulfilling its part of an agreement reached in state court. “They can come up here and have press conferences and do what they’re going to do, but they’ve got to have this approved in Federal District Court as far as the offers that are made,” Hood said. “That’s what they agreed to in state court and that’s what I’m going to hold them to.”
Hood did indeed try and hold State Farm to the Agreement. State Farm also negotiated an out-of-court settlement with the Scruggs Katrina Group and all of the following referenced motions were made as Judge Senter weighed various options. Hood filed a motion to intervene with Judge Senter and you’ll note on the timeline that State Farm filed objection to Hood intervention and Hood filed a rebuttal to State Farm’s opposition. Hood’s chief argument was the interests of the Attorney General were not represented.
The insufficiencies of the class action settlement proposed by the existing parties to this litigation demonstrate that the Attorney General’s interest is not adequately represented in this case. Clearly State Farm’s interest cannot be said to align with that of the Attorney General. By unilaterally withdrawing their motion for preliminary approval of the class action settlement, proposed class counsel have made clear that they have done all they can do to reach a fair, reasonable, and balanced settlement with State Farm.
Moreover, the Attorney General seeks to protect the interests of the State of Mississippi, which by nature are much broader than the interests of private litigants. Because the Attorney General must represent the public interest, his interest is not necessarily aligned with the economic concerns of private parties. (emphasis mine)
There is an on-going controversy between State Farm and the MississippiAttorney General, who has filed a motion  and an amended motion  to intervene in this action to enforce a state court settlement he reached with State Farm. The Attorney General contends that the state court settlement requires that State Farm submit a settlement proposal that this Court will approve, and his motion and amended motion to intervene are premised on this interpretation of the state court settlement agreement. I express no opinion on the merits of the controversy between State Farm and the Mississippi Attorney General. The settlement between State Farm and the individual plaintiffs in this action along with the plaintiffs’ counsels’ withdrawal of their motion for approval of the class action settlement proposal effectively ends this case,
and it will be dismissed. The dismissal of this action will render the Attorney General’s motion and amended motion to intervene moot, and his motion and amended motion to intervene will be denied without prejudice to his right to litigate the merits of his claim in any appropriate forum. (emphasis mine)
I’d be remiss if I didn’t include this related quote from Zach Scruggs as it speaks directly to why additional policyholders were added to this settlement and the cases that I believe will be filed between now and the 29th of August.
Attorney Zach Scruggs said later that most of the new deal between Dale and State Farm appears to be “an abbreviated, watered-down version” of the proposed settlement presented in federal court in January.
“There is nothing preventing State Farm from low balling the people the second time around, and there is no recourse for the policyholder other than nonbinding mediation if State Farm does low ball them after a second review,” Scruggs said…
…State Farm’s agreement with a “friendly insurance commissioner” may give policyholders fewer guarantees or protections because the latest deal doesn’t carry the benefits of a judge’s oversight or binding arbitration.
“Nothing was stopping State Farm from doing this all along…It just doesn’t have any teeth in it, from what I can see
And, equally remiss if I didn’t include these statements from State Farm.
“Today, we’re moving forward to pursue the basic guidelines of that (court) settlement,” Supple said. “Unnecessary court battles and political rhetoric in this difficult post-Katrina environment serve no one’s interests.”
“This is moving it from the litigation arena to the regulatory arena,” Supple said, noting that State Farm’s deal with Dale wouldn’t require a judge’s approval. (emphasis mine)