this little piggy went to mediation…and this little piggy

This little piggy went to market mediation,
This little piggy stayed at home,
This little piggy had roast beef got taken
This little piggy had none.
And this little piggy Presentation2 aCSC went “Wee wee wee” all the way home.

Evidence was produced showing State Farm staged the mediations in advance and actively concealed material evidence from homeowners during the “mediation” process.

Bam Bam’s Bonnet was full of bees and following his buzz about the MID mediation led to a hornet’s nest of information stirred up during State Farm’s  May 1, 2007 deposition of Kerri Rigsby in McIntosh v State Farm.  Attorney Dan Webb, counsel for State Farm, asked the questions:

Q. Do you recall being involved…in putting on mock mediation?
A. We did put on mock mediation, that is correct.
Q. Do you remember you doing anything related to that?
A. Yes.
Q. What part did you play?
A. …Oh, okay. Yes. When we started mediation, they — they asked that — I guess because I had done mediation in Florida, they asked that Cori and I role play mediation for the entire mediation team.
Q. Did you do that?
A. And we did that.
Q. Did you play the insured?
A. No. I played the State Farm representative.
Q. The State Farm representative?
A. So it was all scripted out exactly how it was supposed to be done.
Q. Who scripted it?
A. We — they told us exactly what we were supposed to do.
Q. Okay. There’s that “they” again. Who is —
A. State Farm.
Q. Who specifically told you exactly what you were supposed to say?
A. State Farm team managers, people in charge of the mediation program…As far as prepping us for our first mediations, Doug Taber was responsible for that because he originally was the head manager over mediation.  And so what he had us do, is he had Cori, she was to be the policyholder, and I was to be the State Farm representative. And then he gave us our documents that we were supposed to follow as far as Haag Engineer… So, anyway, we — we were told what resources we were to use…Q. Okay. Had you done —
A. — was to show everyone.
Q. I’m sorry. Had you done that before with Renfroe in any other capacity on any other storm?
MR. HAWLEY: (representing Keri Rigsby in the Alabama case, Renfroe v Rigsby)
You mean mock mediation?
Yeah, mock mediation.
A. Mock mediation? Not that I recall.
Q. You had had experience in mediations, however, in Florida?
A. Correct.
Q. How long did you do mediations in Florida before you came to Katrina?
A. I don’t recall.
Q. How long were you involved in mediations or mediation work with respect to Katrina?
A. I was involved — I believe mediation started when we merged to the Biloxi office. Around that time, it would have been February, I believe, is when we started our mediations. And I was involved in mediation all the way until June.

Later in the deposition, Dick Scruggs, representing McIntosh, asked these questions:

Q. Ms. Rigsby, did you have a State Farm business card?
A. I did.
Q. Did you wear a State Farm uniform?
A. I did.
Q. Were you under direction and control of State Farm…?
A. I was.

SLABBED’s favorite mediator Victoria Pynchon recently wrote of her concern about court annexed mediation:

the justice system which not only sanctions but promotes court-annexed mediation is lending its imprimatur to an alternative that can and too often is abusive, coercive, biased, secretive and unpatrolled…

In the hands of MID, the mediation annexed by the Southern District Federal Court, the process Pynchon said all too often isbiased and secretive resulted in what plaintiff Glenda Shows called mediation fraud in the Shows v State Farm RICO complaint:

Had Ms. Shows known of the Inspection, Spoliation and/or Deceptive-Coercive Offers Phases of Defendants’ Racketeering Scheme, she would not have accepted this amount, and any purported release executed by Plaintiff at the mediation was procured by fraud and is void.

Ms. Shows was not the only State Farm policyholder who experienced “mediation fraud”.  Read as Keri Rigsby’s deposition continues with her description of the session held for Dr. McFarland in response to questioning from Dick Scruggs:

Q. Tell me about that episode.

A. Well, we had — prior to mediation, of course, we inspected the McFarland property, gathered our data, had a meeting, the three of us, Taber, Todd Zastrow, who is another State Farm adjuster. We discussed what the circumstances were and felt like — they felt like nothing would be offered, which, fine. You know, I said, okay. We went to mediation. And, of course, I continued to play my role as State Farm and how they wanted me to play it.

But when Dr. McFarland comes in, he comes in with mounds of information, documentation of things that had happened to and around his property. He had data — just page after page of data. Of course, all we were relying on were the Haag Engineering report and another report called Weather Data.  So he comes in. He presents his case, which is — mediation is a forum for each side to present their case. You go with an open mind. You tell the policyholder, we’re going to have an open mind, we’re going to listen to your case again, this is your opportunity.

After a brief discussion between Webb and Scruggs, Rigsby continues:

So. We were at mediation. Dr. McFarland presents his case. We listen.
Q. Well, let me stop you, if I might. Who came with Dr. McFarland?
A. His wife and his daughter, both named Rosemary.
Q. His wife and his daughter are both named Rosemary?
A. Uh-huh, correct.
Q. How old a gentleman is Dr. McFarland?
A. I don’t know his exact age, but I would say he is in his 80s.
Q. And his wife?
A. Same.
Q. Do you know what happened to her?
A. I do. I do know that she passed after our — since mediation. That was the last time I saw her, uh-huh, yes.
Q. She passed away?
A. In her FEMA trailer, yes.
Q. On the slab that you inspected with Mr. Zastrow?
A. On the slab I inspected with Mr.Zastrow.
Q. All right. Now, Mr. Taber was present at that mediation?
A. He was.
Q. And who else besides you were present at the McFarland mediation?
A. Todd Zastrow and then the mediator.
Q. And the mediator was a AAA mediator that the insurance commissioner hadencouraged people to go before; is that correct?
A. Correct.
Q. All right. And you had role played this out before the mediation?
A. Correct.
Q. And it was scripted. I think that was your term?
A. Yes.
Q. Did — and you said Mr. Taber was a lawyer?
A. Correct.
Q. Was that disclosed to the McIntoshes?
A. No.
Q. I mean, the McFarlands?
A. No.
Q. Or the mediator?
A. No.
Q. And the decision was made before you went to the mediation that regardless of what evidence was presented at the McFarland mediation, and perhaps others, but that one, that nothing would be offered?
A. …That’s correct…
Q. What was Dr. and Mrs. McFarland’s and their daughter’s reaction?
A. Well, they came there with high hopes. I mean, he came in. He was charged, motivated.
Please excuse me. I have Please excuse me. I have to object to this because now the witness is testifying about what’s in somebody else’s mind. She can’t possibly do that. The question is argumentative as well.
Q. Go ahead and answer it, please.
A. I observed him to be optimistic. I think we had given — I know I had spoken with him, given him hope that he was going to be able to come to this meeting, present his evidence and possibly go home with some type of settlement. He had no idea that when he was walking in that room, his fate had been sealed. He had no chance. He drove an hour and a half, an elderly man with his wife, who was ill, to Hattiesburg thinking that they were going to come to some resolution with State Farm. (emphasis added)
Same objection. Move to strike.
And we knew driving to Hattiesburg that he was not.
Same objection. Move to strike.

Viewed in this context, how is it that Shelia Birnbaum, representing State Farm, could write the Attorney General in June 2007 and state,

State Farm has acted in utmost good faith. Although it had fulfilled its obligations under Section III by submitting the Woullard settlement to Judge Senter, State Farm went beyond those obligations after the motion for class certification and settlement approval in Woullard was withdrawn by the Scruggs Katrina Group.

State Farm proceeded to establish a mechanism under the auspices of the Mississippi Insurance Department (“MID”) for the fair resolution of its policyholders’ claims to deliver funds quickly for rebuilding in the three coastal counties.

The terms of this resolution process mirrored the compensation to policyholders specified in State Farm’s Settlement Agreement with the Attorney General. The process was endorsed by Governor Haley Barbour as well.

The procedure agreed to with the MID not only is consistent with Section III
of State Farm’s Agreement with the Attorney General, but it also addresses an issue raised by Judge Senter in the Woullard case. One of Judge Senter’s expressed concerns in Woullard was that class members would be required to agree to binding arbitration, at the outset of the process, to participate in the class action settlement process.

This concern is obviated in the MID reevaluation process inasmuch as participation is completely voluntary. Consequently, there is no need for binding arbitration. Each policyholder who has a slab can agree to take the offer (on the same terms as included in the Attorney General’s negotiations with State Farm), or they may refuse, which means they retain all of their legal remedies. For policyholders desiring arbitration, the MID offers non-binding arbitration.

…State Farm does not receive any release until a policyholder accepts its offer. No one is bound to take the offer and, if they do not, policyholders retain all their legal rights. And, in addition to the arbitration program noted above, there is also a mediation process available to policyholders.

There are, therefore, at least three options to policyholders who want to resolve their claims without the expense of hiring a lawyer to pursue litigation or the delays and uncertainty inherent in litigation: the reevaluation program, non-binding arbitration and mediation.

Policyholders can elect to participate in any of these alternatives without giving up the right to pursue litigation if no settlement results from them.

If Ms. Birnbaum’s letter is, in turn, viewed in the context of the post Sop wrote over a year later, a clearer picture emerges of what can hardly be called “utmost good faith”:

I have yet to meet one person who went through the mediation process who did not describe it with words like ”glorified begging”, ”humiliating” or ”complete waste of time”.

In a comment on a related post of mine, he completes the picture citing what he considers the definative article:

(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 — gone without a trace. They spent five months living in a borrowed camper parked in a friend’s yard in Louisiana. With little income and having to spend $30 a day in gas just to get into town to get in line for a FEMA trailer, they took the check. And they took out loans.

“You never think about starting over at my age and owing a million dollars,” Panks says, noting that she’ll be 93 when her Small Business Administration loan is finally paid off. “I guess they can come to Shady Farms to collect,” she jokes.

Humor, Panks says, is the only way to cope with being 58, deep in debt, and having to cash your IRA in order to pay $25,000 for a year’s worth of flood, property, casualty, and wind insurance that may or may not pay off when you need it.

and that little piggy went wee wee wee all the way home with the policyholder’s $117,000.

11 thoughts on “this little piggy went to mediation…and this little piggy”

  1. None of this surprises me at all. SF’s use of the “non-binding” mediation process, which is sanctioned by the Court system (THIS policy-holder REFUSED to participate in mediation, so he/she MUST be a lying scum-bag, who is clogging the Courts with another frivilous claim, so we have to SHOW this policy-holder what happens to “people like that” in THIS Court!), benefits only SF, particularly in cases where the insured is not represented by counsel. In short, SF and its representatives can LIE in mediation, and no one is the wiser for it. The name of the game is to wear down the insured to the point where the insured has to “cave in”, which of course is purely “voluntary” on the insured’s part (Actually, what you have pointed out is, in legal circles, evidence of “adhesion” perpetrated on the weak by someone stronger, from which legal consequences may flow – IF, that is the argument is made). Also, the “punch-line” is going to be whether a jury will EVER hear such testimony. I’ll bet that if you read the Agreement to Mediate that must be signed before the mediation session even begins, the parties agreed that ANYTHING said in mediation is INADMISSIBLE to prove (or to tend to prove) liability or non-liability. Yep, the deck is decidely stacked in favor of SF, particularly where the insured is unrepresented.

  2. I have said for 3 polus years that Jim Donelon should be held accountable for promoting these “sham” mediations.

    I also think that anybody who “settled” at one of these sham mediations could have the settlement overturned based on a vice of consent, i.e. fraud.

  3. I think helping Dr. McFarland was the right thing to do. These are the people I see on a regular basis in the Bay. As I read the stories I recall hearing the same stories in person. It is rather surreal to say the least.

    But am I the only one to notice something about dehumanization?

    Everyone who came forward with information about the abuse of Katrina victims had one thing in common. They had family ties or lived themselves on the Mississippi Gulf Coast or South Louisiana. They were not able to dehumanize us so they had to either quit working or start working on defeating the industry.

    Some left. No A LOT of adjusters left citing moral problems with how the industry was treating Katrina victims.

    This was really scary to EXPERIENCE how during the worst disaster our Nation has ever faced the industry turned it into a process were one group(the industry) abused another group (their customers) and the only ones helping were your own who worked for the industry. There were dozens of “whistle blowers” involved in this mess and all have been shut up but these two ladies. I thank them for standing up and saying “Hey Ms. King you are not following the law…”

  4. When you read some of the comments submitted to the Federal Register on proposed changes to the NFIP around the time of Katrina, it is easy to see the contempt the industry has for its customers.

    Kerri and Cori have been sustained by the truth of what they were telling – were it not so, no one could have held up to what they’ve been subjected to and, no doubt, a “thank you” means a lot.

  5. I think Congressman Taylor said it best when he addressed the House of Representatives–

    Mr. Speaker, there is zero Federal regulation of the insurance industry. When people came to me with claims like that and said, “What can you do for me,” I had to give them the unfortunate answer, “Absolutely nothing.” But it wasn’t just these folks who were harmed by the storm, you see; it was every American.

    The people that did pay claims was our Nation’s flood insurance policy. The Nation’s flood insurance policy is written in a way that we hire the private sector to sell that policy, and we hire the private sector to adjudicate the claim in events like this.

    The problem that came in is, when those insurance agents went to those three properties, and even though the Navy tells us we had 5 hours of hurricane-force winds before the water got there, the insurance agents said, “We see no evidence of wind damage. So, therefore, we are not going to pay you on your homeowner’s policy; you have to pay your flood policy.”

    Under the law, they are required to have a fair adjudication of the claim. And yet, at the same time that they require our Nation to have a fair adjudication of the claim, folks like State Farm and Nationwide are sending out memorandum to their claims adjusters, and this is a quote: “Where wind acts concurrently with flooding to cause damage to the insured’s property, coverage for the loss exists only under the flood coverage.” That means that not only these folks were cheated out of their homeowners policies, but you as taxpayers were cheated to pay claims that should have been paid by the insurance industry.

    Now, the folks who run that company, a gentleman by the name of Ed Rust to be particular, rather than expressing remorse for what his company did to the people of America, was rewarded this year with a $9,890,000 bonus for telling folks like that, “We’re not going to pay you.”

    Madam Speaker, this needs to be investigated. There are claims adjusters who were so disgusted with what they saw and what they did to individuals that they have turned the insurance industry in for this fraud that has been perpetrated upon the American people.

    Madam Speaker, this Democratic Congress needs to keep faith with the people of America and investigate this, because I am convinced that the biggest Katrina fraud of all was ripping off the American taxpayer to the tune of billions of dollars.

  6. I’m just reading this for the first time; don’t know how I missed it the first time. This is extremely disheartening ~ gaming the system is what litigators do. It is WHAT WE DO. FRAUD is NOT what we do. Sometimes we come very very close to the line. Mock mediations are just like mock trials ~ there is nothing inherently deceptive about them. It is the job of the litigator to take every advantage ~ personally, procedurally, substantively ~ of the “other side” in an attempt to win. That’s what litigators DO. It IS gaming. See this: (“how can they hear the truth above the roar?”). That said, INSURANCE COMPANIES owe their insured an obligation to act in good faith and fair dealing. In regard to claims arising from public calamities, this obligation is particularly strong (it shouldn’t be; every insurance claim is a loss to the insured, often a loss of devastating, life-altering proportions). BUT here it appears that the State sanctioned these particular mediations as a way of dealing with the sheer number of claims and lent its good offices to a procedure that IS NOT SUPPOSED TO BE A GAME ~ that’s why it is an alternative to litigation ~ mediation – not a game; litigation – a game. Litigators, however, will use every available forum in the same way (as a win-lose game) because THAT IS WHAT WE DO. It does not mean we’re corrupt. It is a very old dispute resolution method (the adversarial system) and everyone knows how it’s played ~ VERY close to the line. When people, regular people, are told that mediation is different, that it is a way to collaboratively solve a problem without coercion, and when they’re told that by the STATE and when they believe that (naively from the point of view of the “opposition” and perhaps from the POV of the State) then the process is corrupted from the point of view of mediators who have stopped playing games because they believe they’ve found a better way to resolve people’s disputes. Repeat players (insurance companies) will, however, inevitably game any system they’re given because that’s just how things have always been done. I’m rambling, I know, just forming thoughts in response to this. When I have some true clarity about this I’ll post it to my blog. Thanks for being there. The line “she died in her FEMA trailer” on the slab is just heartbreaking.

  7. Thanks Vickie we look forward to it. There has been lots of smoke and mirrors put out by an industry with money to burn about what happened here. Our own Unslabbed was a mediator who posted first hand about the corruption of the process in Louisiana after Katrina though I do not have the link to that comment handy.

    The legal profession has earned a well earned black eye after Katrina from the big time corporate whores at Skadden all the way down. Our hope is when disaster visits again more people will be paying attention to the evil that exist among us in the corporate predators such as State Farm and their waterboy enablers like Mike Chaney and Jim Donelon.


  8. Well heck Vickie I wish you had given us an earlier heads up and we would have promoted it for you like we did Kathleen Koch’s book, which I know several members of the Slabbed Nation purchased.

    Besides telling the Katrina story straight from the heart, we’ve become the legal affairs blog of choice for this entire area which is a hoot considering Nowdy and I aren’t lawyers.

    Will you be in this area promoting your book?


  9. Love the book title – just the other day it struck me that if the Census dropped the head count and counted assholes puckered up over Scruggs/Katrina litigation – seemingly without heads or they’d be thinking – we’d probably have another member of Congress.

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