Buck up Buddy, it’s time to sink or swim – Foti’s insurance antitrust suit dismissed

On his way out the door as Louisiana’s Attorney General, Charles Foti tossed a Hurricane Katina lawsuit into State court along with contracts to private attorneys.  With that, Foti set off a storm behind the storm and left the newly elected “Buddy” Caldwell treading water in his wake.

Apparently, Caldwell has been treading water for over a year instead of conducting the investigation needed.  In his absence, the defendants filled the leadership role and a federal judge in New Orleans declare this the official Buck up Buddy day with an Order for Caldwell to sink the case or swim in with an appeal.

New Orleans City Business is reporting the suit was dismissed today.

A federal judge today dismissed an antitrust lawsuit Louisiana’s former attorney general filed against some of the nation’s largest insurance companies after hurricanes Katrina and Rita.

The suit, filed in 2007 by former Attorney General Charles Foti Jr., accused Allstate Insurance Co., State Farm Fire and Casualty Co. and other insurers of conspiring to shortchange policyholders after the hurricanes struck the Gulf Coast in 2005.

The companies asked U.S. District Judge Jay Zainey in New Orleans to throw out the case, which Attorney General James “Buddy” Caldwell inherited from Foti. Zainey said he agreed with insurers that the suit failed to present evidence of a conspiracy among competing companies.

Obviously, Zainey is one of the brightest lights on the federal bench.

“So does this conclude this litigation?” Zainey asked after ruling.

Not a soul was reported as saying, “Yes, sir, that ought to about do it!” but the champions of justice for us were there to speak up.

“We felt these allegations were completely unfounded from the outset, and we’re pleased the court today agreed with our position,” said State Farm spokesman Phil Supple.

“Allstate agrees with the judge’s ruling to dismiss the case,” said company spokesman Mike Siemienas. “As we stated from the beginning, these are unfounded allegations.”

Also named as defendants in the suit were Lafayette Insurance Co., USAA Casualty Insurance Co., Farmers Insurance Exchange, The Standard Fire Insurance Co., Xactware Solutions Inc., Marshall & Swift/Boeckh and McKinsey & Co.

Foti’s suit accused McKinsey & Co., a consulting firm, of advising insurers to “stop ‘premium leakage’ by undervaluing claims using the tactics of deny, delay, and defend.”

Rebecca Mowbray had the story behind today’s ruling, Foti’s lawsuit targeting insurers faces uphill fight (Times Picayune; November 11, 2007)

The antitrust lawsuit that lame-duck Attorney General Charles Foti filed this week against major insurance companies will be an ambitious undertaking complicated by the impending leadership change in the office, leaving many to wonder why Foti waited so long to tackle the hurricane insurance issues facing the state.

On Wednesday, Foti filed a petition in Orleans Parish Civil District Court alleging an elaborate price-fixing conspiracy between six homeowners insurance companies, two claims software companies, a claims data aggregating firm and a consulting firm that violated the Louisiana Monopolies Act.

The effort came more than two years after Hurricanes Katrina and Rita precipitated 538,177 homeowners insurance claims in the state and nearly three weeks after Foti failed to make the runoff for a second term as attorney general.

The 538, 177 policyholders filing claims after the storms are left to ponder the words of Caldwell spokeswoman Tammi Arender Herring.

…Herring could not say whether the ruling will be appealed. “We’re going to have to confer with the attorneys to see where we go from here,” she said.

If Caldwell had been confering with the attorneys prior to the ruling, perhaps Caldwell would have known before it became Buck up Buddy day in federal court.

Foti teamed up with private lawyers to file the case about a month after he finished third in an October 2007 primary, ending his re-election bid. The suit accused insurers of working together to fix prices, manipulate storm-damage estimates and low-ball claim payments.

So, Buck up Buddy, show the good people of Louisiana you can swim!

More Sham Reinsurance Deals and 50 Lashes with a Wet Noodle for the Perp

If you steal $5,000 from a bank using a weapon the penalty is sure, swift and severe. Steal millions from everyday American citizens and one of Chris Dodd’s Hartford based federal judge friends will slap you with a minimal prison sentence. Pull out a chair and find out about justice for the super wealthy and politically connected – Hartford style.

Let’s start at the National Underwriter and yesterday’s sentencing of General Re’s former CEO Ronald E. Ferguson:

Ignoring a government request that he serve significant time, a federal judge today sentenced former General Re. Corp. chief executive officer Ronald E. Ferguson to two years in prison for securities fraud involving a sham reinsurance transaction.

U.S. District Court Judge Christopher F. Droney in Hartford, Conn., also imposed a $200,000 fine and two years of supervised release on the 66-year-old executive.

Mr. Ferguson was ordered to report to a Bureau of Prisons facility on Feb. 18, 2009, if he is unsuccessful in arguments at a prior court hearing that he should remain free on bond pending his appeal of conviction to the 2nd Circuit U.S. Court of Appeals.

He was convicted in February with four other executives of a complicated reinsurance deal with a hidden side agreement that permitted American International Group to inflate its financial picture.

The other defendants convicted with Mr. Ferguson–who remain to be sentenced–are Christopher Garand (a former Gen Re senior vice president), Robert Graham, (Gen Re’s former senior vice president and counsel), Elizabeth Monrad (Gen Re’s former chief financial officer) and Christian Milton (former AIG vice president for reinsurance).

Last month, Judge Droney found that the scheme cost shareholders more than $500 million. The government said the amount was up to $1.4 billion.

The judge ruled that the defendants did not have to pay restitution, because attempting to locate the thousands of investors would delay the sentencing process.

I find it curious that Droney did not make Ferguson pay restitution Continue reading “More Sham Reinsurance Deals and 50 Lashes with a Wet Noodle for the Perp”

Judge Senter lays down the law – Gagne v State Farm

The Court will not venture an opinion as to why this cause of action, which for all practical purposes is the only remaining insurance dispute between a homeowner and his insurance carrier filed in this Court in 2006 and which appears to be no different from any other typical Hurricane Katrina lawsuit, has more than 450 numerical entries on the docket sheet and is not set for trial until April 2009.

So began Judge Senter’s Order affirming the Magistrate Judge Walker’s Order in Gagne v State Farm – and the irony of this later statement is not lost:

It is not enough for Plaintiff to charge State Farm with sinister conduct or motives as far as the discovery process goes (which the Court does not find from a review of the materials supporting the application for review), and the Court is not going to allow Plaintiff to pursue a never-ending story backed by speculation.

Before going further, however, let’s take a look at Judge: Lecky King needn’t testify, Anita Lee’s related story in the Sun Herald

A federal judge agreed State Farm claims manager Alexis “Lecky”
King will not have to answer a policyholder’s questions about denial of
his Katrina claim for wind damage.

Judge L.T. Senter Jr. ruled Friday that King, a controversial figure in State Farm’s handling of expert damage reports, had no involvement with the South Diamondhead claim of policyholder Robert Gagne… Continue reading “Judge Senter lays down the law – Gagne v State Farm”

Dr. Payment “thows a shoe” at State Farm’s arguments

State Farm can’t duck the points Dr. Payment’s attorneys made in response to the dozen motions in limime the company filed in Payment v State Farm – and, at this point, it appears the Company won’t be able to duck a trial either.

Where to start? How about with what Payment’s attorneys had to say about the motion to exclude the results of MID’s Market Conduct Exam of State Farm’s claims handling?

Contrary to Defendant’s characterization, the Market Conduct Report is relevant to this case, and particularly the issue of Defendant’s motivation for conducting a reevaluation of Dr. Payment’s claim as well as the timing and scope of the reevaluation and delayed tender of uncontested benefits.

Evidence is relevant if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” FED. R. EVID. 401.

Defendant takes the initial position that, through no fault of its own, its adjuster, Howard Crosby, did not inspect the correct property. Defendant did, however, proceed to deny Dr. Payment’s claim in its entirety on the basis of flood with knowledge that it had not inspected Dr.Payment’s property…Defendant thereafter persisted in its denial of Dr. Payment’s claim on the basis of flood. Defendant later paid on this property (property of Dr. Payment’s uncle, adjacent to Dr. Payment’s property…) Further, this payment was made after Defendant had obviously confirmed that the dwelling had no flood coverage.

As set forth in Defendant’s claim file, following each inquiry or submission of information by Dr. Payment, Defendant closed its file. Prior to filing suit, Dr. Payment requested a review of his claim pursuant to Commissioner Dale’s resolution with Defendant. Despite agreeing to wind damage in excess of $240,000 and uncontested coverage of $25,742 (see Re-Evaluation Re-Cap Worksheet, attached as Exhibit E), Defendant did not advise Dr. Payment that it agreed that wind was a causative factor or tender uncontested sums until April 2008, eight months after litigation was commenced.

It is expected that Defendant will urge mistake, inadvertence, or simple oversight as explanation for its handling of Dr. Payment’s claim. Continue reading “Dr. Payment “thows a shoe” at State Farm’s arguments”