We are pleased to transmit to you the Federal Insurance Administration’s (“FIA”) new Guide for Write Your Own Counsel. This Guide provides important information on the policies and procedures to be followed by Write Your Own Companies (“WYO Companies”) and their counsel in litigation involving the National Flood Insurance Program (“NFIP”)…
Since the inception of the WYO Program in October 1983, defense of lawsuits based on the SFIP has generally been handled smoothly and effectively. We stand ready to continue to offer support to WYO Companies in all litigation matters concerning the NFIP in our ongoing spirit of partnership.
Can you believe it? I can not – but google search results for “NFIP litigation” offered a copy.
This Guide for Write Your Own Counsel (“Guide”) has been developed by the Federal Insurance Administration (“FIA”) and the Federal Emergency Management Agency (“FEMA”) Office of General Counsel (“OGC”) to assist Write Your Own (“WYO”) Companies and their counsel defending National Flood Insurance Program (“NFIP”) litigation.
So much for thinking it is the deep pockets of the insurance industry that put most NFIP policyholder-plaintiffs at a financial disadvantage in litigation – those deep pockets are in Uncle Sam’s pants!
The FIA and WYO Company share a unique and common interest in the defense of cases related to the NFIP. Among other factors that give rise to this shared interest are the fiduciary responsibilities of the Company, the statutory and regulatory basis for the NFIP, the Federal government’s administrative and oversight responsibilities for the program, the need to share privileged information, and the fact that Federal funds are at risk. Accordingly, through the Arrangement, the FIA and the WYO Company have entered into a joint defense agreement to implement FEMA’s oversight responsibilities for the purpose of any litigation related to or arising under the NFIP to enable the free flow of information between the FIA, FEMA OGC, the WYO Company, and its legal counsel.
“Unique” is not exactly what I’d call the the government’s “common interest” with the insurer defendants in Katrina litigation. I wonder if Judge Senter had a better word in mind in the “opinion” he would not “venture” in his December 12, 2008 Order in 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.
However, according to the Guide, any of the “more than 450 numberical entries on the docket sheet” filed by State Farm would have been in an approved Case Plan and Budget for NFIP Litigation required for reimbursement from NFIP/FEMA.
Within forty-five (45) days of service of process of any lawsuit involving the NFIP, a WYO Company must provide the FIA Legal Liaison: 1) three copies of all initial court documents, and 2) a Case Plan and Budget for the case (See Appendix 2 for a sample Case Plan and Budget). Supplying these documents to other than the FIA Legal Liaison may result in a failure to achieve sufficient notice within the required time period.
The Case Plan should summarize the WYO Company’s defense strategy and projected schedule for preparing and trying the case. Complex or time-consuming activities should be divided into subparts. FIA must be provided with sufficient information to determine the basis of a claim. The Budget should translate the case plan into financial expectations. At a minimum, the budget should reveal major assumptions, conform to the case plan, identify specific phases of the case, and estimate the cost of each phase…
Federal funds to pay a settlement or judgment under the Arrangement will be determined by the FIA in consultation with the FEMA OGC the initial case management plan and budget must be supplemented in a timely manner as the lawsuit proceeds. The WYO Company counsel should also submit to the FEMA OGC attorney assigned to the case significant pleadings or other documents, such as dispositive motions, which might reflect significant changes in the legal nature of the case…(emphasis added).
Gange v State Farm grew to 533 docket items by the time it settled – a number that pales in comparison to the 1316 item, 135 page docket of McIntosh v State Farm at settlement.
By regulation (44 C.F.R. § 62.23(d)) and the terms of the Arrangement, the WYO Company is obligated to arrange for the defense of claims arising under the NFIP, including settlement when appropriate…Accordingly… The settlement strategy should be noted in the Case Plan and Budget submitted to the FIA Legal Liaison.
When considering settlement options, the WYO Company should act in a manner consistent with its fiduciary obligations as a “fiscal agent” of the Federal government, and the propriety of a settlement will be considered on that basis.
Surely, Congress did not intend to place taxpaying policyholders at a legal disadvantage when filing suits that protect both their property and the government’s interest or consider the possibility of a WYO handing claims in a way that would be subject to litigation under RICO or the FCA. Nonetheless, that is unarguably the case.
Counsel should be aware that legal defenses that otherwise may not be available to a private sector insurer may be asserted due to the Federal nature of the NFIP. Various defenses are discussed in the Digest and Guide on Litigation Concerning the National Flood Insurance Program .
Like the referenced legal defenses, this Digest and Guide also appears to be unavailable to the private sector – that sucks – so did Katrina’s power sucking wind – and, in some cases, the water then poured in; but, according to the 5th Circuit, that’s not a flood!