AG Hood and the State Farm settlement – by the record

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)

Judge Senter addressed Hood’s concerns directly in the memorandum-opinion he issued with the order of dismissal

There is an on-going controversy between State Farm and the MississippiAttorney General, who has filed a motion [76] and an amended motion [109] 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)

32 thoughts on “AG Hood and the State Farm settlement – by the record”

  1. Excellent work and analysis, Nowdy! Attorney General Hood stuck to his guns and would not and did not allow State Farm to shirk its duties to the policyholders in his state as laid out in his settlement agreement with them! Good Job, General Hood! All those naysayers should apologize to General Hood.

  2. Wow.

    You guys never quit.

    You cite Zach Scruggs as a credible commentator about this issue. Zach Scruggs! What’s the matter? You couldn’t get Dickie? Oh, that’s right: he’s indisposed.

    So Zach doesn’t like the deal? Geee. Could it be that he doesn’t like it because there isn’t anything in it for HIM? Is it unfair of me to point out that Zach and his bunch were just a little self-motivated here? I don’t think so.

    Final note: I like how the beginnings of this on your site was your uncritical publication of a Hood press release. A press release. Could there be a less credible source?

    Have you guys EVER disagreed with Hood? Have you ever offered up an ounce of critical thinking regarding anything he has said or done? Just curious.

  3. They really should belle but don’t hold your breath – and State Farm should be held to the Agreement they signed with the State – It’s pretty clear that what they accomplished was not what was required but what was allowable or difficult to litigate.

    The 74million is way short of the estimated maximum in unpaid claims. Hood mentioned that – and any of those who settled but aren’t satisfied can come back and file suit by the 29th.

    Glenda Shows was one and someone commented here that the mediation was not satisfactory or even mediation – just a “here it is take it” proposition in a different setting. Remember the comment? Whoever it was had to drive from the Coast to mediation in Hattiesburg!

  4. They should apologize to Bellesouth too. You called this thing straight beginning with the hearing in Natchez but it didn’t fit the fairy tale being spun at the time.

    Mike Chaney would have been better served had he simply said something like, “We are pleased the Attorney general and State Farm have finally settled their litigation.”

    I’m beginning to wonder if Lee Harrell doesn’t have too big of a policy making role at MID. I don’t believe his name appeared on any ballot.


  5. Read again Claimsguy, that was Zach responding to State Farm going to Dale last year. Where’s your credibility?

    Yes, I remember that Nowdy. That’s why they call them Snake Farm, right?

  6. It was the couple in the CNN special Nowdy. Her parents owned the roller rink and died in the storm. They were fighting Nationwide.

    This is what I consider the definative article on the goings on in Hancock County in the run up to AG Hood’s suit. There is some quotes in it concerning the mediation program. The elderly were especially vulernable to being taken advantage of by the process.

    (Robert) Hunter’s assertion is perfectly illustrated by the story of Pam Collins and Joy Panks, co-owners of the Twin Lights gift shop in Old Town Bay St. Louis.

    “Our insurance company owed us $172,000,” Panks says. The last time she and Collins drove to Hattiesburg for mediation, a representative from their insurance company met them with a check for $55,000. The check was physically placed on the negotiating table, and the two women were given three chances to accept it. “The fourth time, they said they were going to pick it up,” Panks says.

    “We were begging,” Collins confesses, thinking back over all the company’s previous offers. The bargaining started at $30,000, then went up to $40,000. “They said $55,000 was the last offer.”

    Collins and Panks’ shop was wrecked by Katrina and wiped clean by looters. Their Cedar Avenue home in Pass Christian was completely destroyed

  7. Yeah, Sop, I could have started with quotes like that instead of Hood’s press release – or a quote like the one below – btw the bold text was in the article – emphasis is
    not mine

    State Farm Insurance is suing Mississippi

  8. The journalistic record is very clear that it was State Farm that wanted a global type of settlement. It became fashionable to say Dickie Scruggs coerced Jim Hood into settling later after he got in trouble but that is spin not fact.

    Hood should have known better to agree to anything Nowdy. He should have told State Farm to work things out with Scruggs and he’d weigh in after. Instead he allowed himself to get sucked in, I think with good intentions but with bad results in hindsight.

    Just so you’ll know Dimechimes has just labeled us anti-insurance. They could not be more wrong as we are pro professional adjustment. Part of the problem IMHO is computer programs that can be manipulated for profit have taken the place of human judgement in the claims adjustment process.

    Regardless of what they think we think I enjoy reading dimechimes having had the pleasure of good post Katrina experiences with both Tammy Hardison and many other State Farm and Allstate cat adjusters.


  9. Here’s some good data from an August 13 press release issued by George Dale.

    Got your calculator Sop?

    Commissioner of Insurance George Dale announced today that State Farm Insurance Company, who agreed to voluntarily re-evaluate Hurricane Katrina slab cases in April, 2007, has paid more than $29.8 million additional dollars in claims payments since the re-evaluation process was undertaken.

    As of today

  10. Lets put it this way Nowdy, the 1591 policyholders that gave up ended up with an average of $9,993.71 per the quote in your comment.. On the coast itself, the 904 offers averaged $26,216.81. Most of these people had been paid little to nothing to that point.

    It would be hard to project to the entire claims populations because some HO claims were wind excluded on the coast. You’d need to know that to get a good estimate.

  11. Nowdy as an aside that quote you linked was from Victoria Pynchon, a lawyer and mediator from California. She doesn’t write about Katrina or claims handling litigation much but when she does it is always very good.

    Her blawg is well worth reading.


  12. Dimechimes made a mistake, Sop, Not only are we’re not anti-insurance, we’re very pro-independent adjustors.

    I do think insurance as it currently exists is headed for a museum. Air &Space is my best guess cause the prices given the sky-rocketing cost.

    My vote is to give the NFIP to the states, add wind, house it in the commissioner’s office and let the state IC hire independent adjusters when a disaster strikes.

    Get a load of these prices and you’ll see how it will actually save money and increase coverage.

    WYO insurers get paid fees for handling flood insurance policies and claims

  13. This is the thread where I got kicked off folo for defending Attorney General Jim Hood.

    there are 154 comments. One of mine reads:

    23 bellesouth // Feb 18, 2008 at 12:46 pm

    All you have is speculation, mere speculation, nothing more that speculation. Do you actually think the judge would dismiss this case if he didn

  14. The rest had a different motivation Belle and it wasn’t he best interests of the people impacted most directly by Katrina.

    Everybody makes mistakes, I wouldn’t hold my breath waiting for those that treated you the worst to fess up.

    It worked out well for us though as you are well meaning. Your service to the slabbed has been well noted where it counts the most right here at ground zero. I think I can safely say I speak for all of us on that.

    This was never about blindly taking up for Jim Hood it was about making certain the record was right. The context of the events is what conveys their true meaning. Jim Hood’s role in the State Farm litigation has been misrepresented for legal and political reasons. Doing that was a disservice to every citizen of this state IMHO, especially the slabbed.


  15. Did the judge render a verdict? Hood threw in his cards when he realized he wasn’t holding a winning hand — he settled. Hood didn’t prove anything.

  16. Sid, are you talking this case? He sued State Farm – they settled – then violated the settlement agreement with the AG/State with the terms of the settlement they reached with Dale. He surely proved that – and that a group of 150 slabbed cases had been left out.

  17. Where have you been? The judge didn’t accept the settlement. SF then cut a deal with Dale. Hood’s PR yesterday was a salvage operation because, facing the facts of SF’s post-Dale agreement performance, he had no choice but to drop his 2nd lawsuit … though I understand how the groupies here are blind to Hood real intent.

  18. I’ve been here – still am- and I’ve been reading all the motions and so forth filed in this case and any/everything else related to it that I can get my hands on. I was just asking you for clarification before I answered.

    The judge wanted a settlement – just one better defined and more inclusive. ( we’re talking Woullard/”class”here)

    Hood already had a separate signed settlement agreement with State Farm when the Woullard settlement was presented to Judge Senter – that Agreed settlement was end result of his case in state court.

    State Farm was unresponsive to Senter’s request to “correct” and resubmit the settlement proposal (re settlement with Scruggs/SKG/”the class” ) – the settled out of court and got by with less.

    Worse yet, they actually negotiated another out-of-court settlement with George Dale – one that did not meet the requirements of the Agreement they made in state court under the case filed by Hood.

    I don’t think State Farm’s post-Dale agreement performance has been very good at all. Did you see the numbers I put up in comments?

    I don’t know that Hood’s dropped his second lawsuit – or that he doesn’t have a third in mind – and I’m not a “groupie” for anyone but the slabbed.

    btw, I linked more documents from the case after the post went up and will pull them together under legal along with some others I found.

  19. Worse yet, they actually negotiated another out-of-court settlement with George Dale – one that did not meet the requirements of the Agreement they made in state court under the case filed by Hood.

    What? Hood’s PR yesterday conceded that SF’s performance in response to the Dale agreement did met the minimum requirements. That is why Hood had to drop the 2nd lawsuit. He had no choice. This from Hood’s own presser:

    The Hinds County Chancery Court settlement required that State Farm establish an administrative procedure to be approved by the Federal Court for the Southern District of Mississippi to reevaluate claims of its policyholders in Hancock, Harrison, and Jackson counties and make new offers to its policyholders for no less than 50% of Coverage A limits to slab or pier only claims, subject to policy limits and prior payments. The controversy leading to the breach of contract suit resulted when State Farm refused to comply with the requirements set forth by Federal District Court Judge Senter in order to obtain his approval of the class action settlement submitted to the Court by State Farm and the class plaintiffs.

    State Farm instead set up the process with the Mississippi Department of Insurance to reevaluate these claims. After the Attorney General

  20. Actually, Sid, why are you saying dropped instead of settled? Dropped would mean he walked away and he did not. His review obviously turned up 148 policyholder claims that needed to be addressed and State Farm agreed to that.

    There was some obvious give-and-take on both sides to reach the settlement Hood announced yesterday.

    What is it that you think Hood should and could have done that he didn’t do?

    Who gets your “free pass” – State Farm?

  21. At the lemonade spring State farm gets a pass Nowdy. The facts are too painful for some people to grasp. Hood had his way with the Farm and it short circuited some ppls wiring.

    What kind of company tries to weasel out of it’s negotiated settlements? The same group that brought you Watkins.


  22. Nice work Bellesouth. You went against the PR talking points that others promoted as the truth. Nice to have someone who shows up at the courthouse with an open mind and a computer to blog on. Thanks for the only reports which turned out to truth and not spin. Good job.

  23. As for the idea of a “free pass”, so typical of you slabettes to conclude that should someone criticize one of your sacred cows that the person must automatically be a SF cheerleader. Show me one place where I have posted anything positive about SF.

    Scruggs, Moore, Hood and the Rigsby sistas have screwed the people of the coast over with their get rich quick scheme and in Hood’s case his naivette and vain desire to achieve his own Mike Moore level of political notoriety.

    They’ve done more total harm than good though I realize anything contrary to the hymnal verses sung here in this slabbed echo chamber are unlikely to be considered, let alone heard.

  24. Look Sid, none of us would be in this mess had State Farm not devised a fraud not to pay policyholders their due. They would rather pay lawyers to screw everyone within their sites than act like a good neighbor. Quit blaming all of this on everyone but State Farm.

  25. Oh yes, thank you Steve for your kind words. I had no idea of the PR campaign I was running into when I stepped into that court room and then out of that courtroom into a world of ridicule! State Farm and the Farmettes were already in full gear by the time I got here. They are the masters of smoke and mirrors — not very good neighborly at all. It is a shame that a company with good agents and adjusters have to ruin their own reputation.

  26. Checking in after really packed day to say that I do hear you Sid – and what echoes through this chamber is the anger you direct at Hood and the others you named – and me/us for not being angry along with you.

    I try to understand how so much anger can be directed toward those who tried to help – regardless of their motivation – and none directed toward the source of the problem…

    In other words, it wasn’t anything you said about State Farm, it’s that you made no mention, that caused me to suggest you were giving them a free pass.

  27. And that is how it was, August 8, 2008.

    On the finance boards we simply say bump.

    I wonder what happened to ol’ Sid. 😉


  28. I don’t know what happened to Sid, Sop, but I have an update to this post that I’ll get up today – computer willing.

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