BREAKING NEWS – new Katrina qui tam unsealed: ex rel Denenea v Allstate

With the MSM starting to call and ask about this case, it’s time for this breaking news to break!    Louisiana Federal District Judge Carl Barbier has unsealed ex rel Denenea v Allstate!  The Complaint , filed in May 2007 and amended in November 2009, indicates this litigation will get the truth out about Allstate’s handling of policyholder claims following Hurricane Katrina:

Relator is John H. Denenea, Jr. (“Denenea”), an individual domiciled in the Parish of Jefferson, State of Louisiana and a United States citizen who brings this civil action for violations of 31 U.S.C. § 3729(a)(1) and (2) for himself as relator and for the United States Government (the “Government”) as plaintiff pursuant to 31 U.S.c. § 3730(b)(1)…As an attorney licensed to practice law in the State of Louisiana who represented the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson in connection with their homeowners insurance claims against Allstate, Denenea acquired and has direct and independent knowledge of the information on which the allegations set forth herein are based, and he voluntarily provided that information to the Government before filing this action…

Denenea, who, “on behalf of himself and the Government, respectfully demands a trial by jury of all issues so triable” is known to SLABBED readers as the attorney who embedded hyperlinks to video depositions in the briefs he filed with the federal court, Southern District Mississippi. Rick Trahant, Jack Morris and Brian Sherman are representing Denenea:

Made defendant is Allstate Insurance Company (“Allstate”), an insurance company authorized to engage in the insurance business under the laws of all fifty States with its principal place of business in Northbrook, Illinois…

Allstate and the Government are parties to a “Financial Assistance/Subsidy Arrangement,” 44 CFR, Part 62, Appendix A (the “FASA”), entered into under the National Flood Insurance Program, 44 CFR § 59.1 et seq. (“NFIP”), pursuant to regulations promulgated by the Federal Insurance Administration (“PIA”) by authority of the National Flood Insurance Act, 42 U.S.C. § 4001 et seq. (the “Act”).

The FASA requires Allstate to “investigate, adjust, settle and defend all claims or losses arising from policies issued under this Arrangement. Payment of flood insurance claims by the Company shall be binding upon the FIA.” 44 CFR, Part 62, Appendix A, Art. lI(F).

In adjusting and settling the claims of the Weisses, Majoue, Shearman, Whelan, and Richardson under their respective homeowners policies and Standard Flood Insurance Policies for combined wind and flood damage to their respective insured properties, Allstate, unbeknownst to the insureds, knowingly and systematically fabricated and falsified documents including but not limited to proof of loss forms, flood narrative forms, WYO flood processing request forms, NFIP preliminary report forms, property loss worksheets, and/or other documents, forms, and/or information which substantially inflated the amounts of these insureds’ flood insurance claims at the expense of the Government, while at the same time enriching Allstate by substantially deflating the amounts of these insureds’ homeowners insurance claims.

In adjusting and settling Smith’s claims under his homeowners policy and Standard Flood Insurance Policy for combined wind and flood damage to his insured property at 1546 Marina Drive, and Johnson’s claims under his homeowners policy and Standard Flood Insurance Policy for combined wind and flood damage to his insured property at 286 Marina Drive, Allstate, unbeknownst to Smith and Johnson, knowingly estimated Smith’s and Johnson’s losses utilizing substantially inflated replacement cost values for items comprising their flood insurance claims at the expense of the Government, while at the same time enriching Allstate by substantially deflating replacement cost values for identical items comprising their homeowners insurance claims.

Allstate’s actions described herein and in Denenea’s original complaint comprised an overall system and process of fabricating data and information necessary to obtain federal flood benefits, including but not limited to a pattern and practice of knowingly and systematically fabricating water line measurements on and in homes that no longer existed, all unbeknownst to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson.

Allstate thus engaged in a fraudulent scheme to submit and to cause to be submitted to the Government a series of false claims, records, and statements fabricating flood losses where none existed and substantially inflating the amounts of its insureds’ flood insurance claims at the expense of the Government, while at the same time enriching Allstate by eliminating or substantially deflating its insureds’ private homeowners wind insurance claims, all in violation of 31 U.S.c. § 3729(a)(1) and (2) and unbeknownst to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson.

Allstate thus knowingly and systematically presented, or caused to be presented, to the Administrator of the FIA and other officers and employees of the Government, unbeknownst to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson, false and fraudulent  laims for substantially inflated flood insurance benefits under these insureds’ Standard Flood Insurance Policies in violation of 31 U.S.C. § 3729(a)(1).

Unbeknownst to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson, Allstate also thus knowingly and systematically made, used, and caused to be made and used, false records and statements to get false and fraudulent claims for substantially inflated flood insurance benefits under these and other insureds’ Standard Flood Insurance Policies paid and approved by the Government in violation of 31 U.S.c. § 3729(a)(2).

As a result of Allstate’s violations of 31 U.s.c. § 3729(a)(1) and (2), the Government has been damaged because Allstate, unbeknownst to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson, knowingly and systematically utilized Federal funds to pay false and fraudulent claims for substantially inflated flood insurance benefits under these and other insureds’ Standard Flood Insurance Policies, and those payments are binding on the FIA.

On information and belief, Allstate, unbeknownst to its insureds, knowingly and systematically has engaged and engages in the practice of paying false and fraudulent claims for substantially inflated flood insurance benefits under Standard Flood Insurance Polices it sold to policyholders in addition to the Weisses, Majoue, Shearman, Whelan, Richardson, Smith, and Johnson who were also insured by Allstate under its property business lines of insurance and whose insured properties sustained catastrophic combined wind and flood damage in 2005, but Denenea presently has no means of ascertaining the full extent to which Allstate has engaged and engages in this practice in violation of 31 U.S.c. § 3729(a)(I) and (2) except through the  production of evidence thereof now in Allstate’s possession and control.

The Government presently has means of ascertaining the full extent of Allstate’s violations of 31 U.S.C. § 3729(a)(1) and (2) pursuant to the FASA, which provides: “The PIA and the Comptroller General of The United States, or their duly authorized representatives, for the purpose of investigation, audit, and examination shall have access to any books, documents, papers and records of the Company that are pertinent to this Arrangement,” including records of “claims paid or payable under policies issued pursuant to this Arrangement.” 44 CFR, Part 62, Appendix A, Art. XIV.

The FASA further provides: “Inasmuch as the Federal Government is a guarantor hereunder, the primary relationship between the Company and the Federal Government is one of a fiduciary nature, i.e., to assure that any taxpayer funds are accounted for and appropriately expended.” 44 CFR, Part 62, Appendix A, Art. XVI.

SLABBED previously reported Weiss v Allstate in Please Release Me, Let Me Go – all but certain to now be the Company’s theme song!

4 thoughts on “BREAKING NEWS – new Katrina qui tam unsealed: ex rel Denenea v Allstate”

  1. I’m not an attorney, and I’m probably completely wrong on this, but I think there may be something called an exception or something like that. If an attorney learns of someting during litigation, the information is public, and he can’t be a relator.

  2. from one “not an attorney” to another, NAAS, I know of no statutory “exception” that would preclude an attorney Relator. Not only is there no statutory exclusion, the recently amended FCA relaxed the standard for public disclosure and put the emphasis on the claim itself in an effort to encourage Relators to come forward. In Denenea v Allstate, it appears the Relator’s allegations are based on a pattern he discovered in the multiple exemplar claims and not a single case. That said – and given the response of insurers to both the Branch and Rigsby qui tam cases – I would expect Allstate to come up with all sorts of distorted citations and attempt to wiggle away.

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