Ahoy WYO Fiduciary, Icy Waters of NFIP Lie Ahead!

Katrina through the eyes of State Farm: a now familiar story that begins in Bloomington, in a boardroom, awaiting an angry sea. August 29, a third of Mississippi is nuked. In comes a headline-starved lawyer, well healed and ready to “save the people.” State Farm repairs to Birmingham, a Roveside rat’s nest. Alas, the 4 year odyssey begins.

In the meander of this cyclonic tragedy, countless homes, lives, reputations and chattel are ravaged like the spoils of war. A senior federal judge, bent on political revenge, soils the bench he occupies. Two “factory” girls of the Cat adjusting world, forthright and honest-to-a-fault, are savaged by a $56 billion racketeering monopoly and its Hessian body broker. Associated hard-driving plaintiff lawyers, indispensible lifelines to thousands of victims, are systematically slandered by thug corporate lawyers, and then, through no fault of their own, thoughtlessly disqualified by a rudderless federal court. Behind the scenes, lifer law clerks – insidious martinets of the inner sanctum – work the ex parte back channels for ways to advance their impish political agendas. A 30 year pimp politician is stripped bare and lampooned, a righteous comeuppance for the thousands of lives he’s ruined. A neophyte lawyer-journalist who wouldn’t know a hurricane loss if it bit his private parts off, shills and cons his way into the affray, and trafficking on scandal, emerges as a self-ordained insurance expert.

Four (4) years of rampant fraud, $13 million a day in falsely settled claims, without so much as a single uptick on the legal side. Think of the money spent, the millions wasted, the dreadnought trial schedules, as if the whole thing were an interminable English parlor game. Motions, replies, briefs, extensions, sanctimonious trials, an endless procession of mindless bureaucracy, saddling already helpless people with cost in the hundreds of thousands, all just to get a contract debt paid. Unable to deliver even basic service, the court outsources, dumping bereft insureds in the laps of purchased mediator-lawyers, eager to stay in good with their fee paying, corporate check writers. Judged for fidelity of service and “get-er-done” efficiency, the legal system is an antideluvian disaster, a deus ex machina, lacking rope and hoist. Continue reading “Ahoy WYO Fiduciary, Icy Waters of NFIP Lie Ahead!”

The Price We Pay For “Pro-Business” Courts

As I’ve said in prior posts, I firmly believe Americans can no longer claim we’re “a government of laws not of men” as John Adams, our 2nd US President once pronounced. Adams’ words came to epitomize the venerable “rule of law” in America. In his era, the critical debate was “rule of law” vs. “rule of man.” The prospect that America might become “a government of men not of laws,” is exactly what Adams and our founders feared most, and warned us to stay away from. In their day, “rule of man” referred to the British King George III, who . . . well, just take a look for yourself:

In 1776, the year of our Declaration of Independence, Thomas Paine anonymously wrote a pamphlet titled Common Sense which stated: “in America, the law is king. For as in absolute governments the King is law, so in free countries the law ought to be king; and there ought to be no other.” Adams, a contemporary of Paine, expounded on Paine’s Common Sense, and made sure the Massachusetts Constitution of 1780 included the words “a government of laws not of men.”

In Adams’ and Paine’s day, the King was law, and he served no one except himself. Today, billionaire monopolies are the “King makers.” By purchasing our legislatures, individual judges and elected officials, they bastardize “the rule of law.” Their aim is make America a government of men, not law. This is what happens every day in Latin America, and why we call them “third world.” If we acquiesce, and accept their bastardization of America’s founding premise, we’re right back where we started in 1776. Put another way:

we cannot let this ↓ Continue reading “The Price We Pay For “Pro-Business” Courts”

What Can Happen When One Honest Judge Takes on a Giant Corporation

Justin Maxon / The New York Times
Justin Maxon / The New York Times

Bam Bam readers know my feelings about this great man, Judge Jed S. Rakoff, a federal district court judge in Manhattan. Because Judge Rakoff’s bench is located at the epicenter of corporate greed on planet earth, he’s uniquely positioned to effect real change. It would be so easy to give in to Citigroup, Bank of America, Goldman Sachs and their pack of vampire lawyers who’ve damn near bankrupted the best government system humankind ever conceived.

The case in Judge Rakoff’s court is SEC v. Bank of America (BofA). A month ago, SEC and BofA concocted a phony settlement proposal and wheeled it out to Judge Rakoff. The SEC agreed to drop its case against BofA and its sub Merrill Lynch, which admitted no wronging, and close the investigation forever, if BofA paid the nano fine of $33 million. Judge Rakoff sniffed out the fraud, called them out, and refused to approve the so-called “settlement.” This sent the thieves and their lawyers into a tizzy. Rakoff wanted facts, names and dates concerning why BofA and Merrill concealed material facts on giant exec bonuses from shareholders, lied in certified proxy statements filed under SEC law, and purposefully understated Merrill Lynch’s financial condition by $20 billion. All this occurred in connection with BofA getting federal bail out funds, used by BofA to purchase Merrill last year. The BofA tab at present = $45 BILLION.

BofA and its New York power lawyers decided to dig in, invoke lawyer-client privilege, and lock the court out of critical documents. Congress jumped in and called for hearings, looking for a quickie PR boost with BofA shareholder/voters . (See previous Slabbed post on Edolphus Towns’ committee hearings).

Last Friday something tangible happened. The Board of Directors of BofA voted to abandon the lawyer-client privilege argument and cooperate in providing information. Continue reading “What Can Happen When One Honest Judge Takes on a Giant Corporation”

Chip Merlin asks Why is the property insurance industry against its own customers?

Many of my retail corporate clients and their general counsel have told me that if they advertised and then performed in the manner of their insurer, the federal and state trade commissions would be holding “bait and switch” hearings. But, this is exactly the type of treatment insurance executives are calling for when they support the propaganda against their own customers through spokespersons such as Hartwig.

I am not the only one to have noticed this…The editors of Slabbed were pretty blunt about what they think about Hartwig.

Chip linked two recent SLABBED posts –  Bam Bam’s The Push Back on Corban – “You’re gonna pay for this” and Sop’s Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news – and added his thoughts as he raised the question Why Is the Property Insurance Industry Against Its Own Customers?

The response by Robert Hartwig of the Insurance Information Institute to the landmark Corban decision typifies how executives at many insurance companies feel about their customers. If not, Hartwick would be out of a job. Here is his quote taken from Anita Lee’s article: Continue reading “Chip Merlin asks Why is the property insurance industry against its own customers?”

The Push Back on Corban

THE PUSH BACK ON CORBAN – “YOU’RE GONNA PAY FOR THIS!

A few days ago Slabbed carried a Bam Bam post on State Farm’s new 45% rate increase, and the process of “whipsawing.” It explained how State Farm uses the media and purchased politicians to manipulate and scare homeowners in depleted Cat markets, who are compelled by lenders to buy adhesion insurance contracts, and pay ever escalating premiums.

The ink was still wet on that post when 2 days ago the Mississippi Supreme Court ruled that the ACC clause as interpreted by the notorious, corporation loving 5th Circuit ain’t the law in Mississippi. The tragedy is that hundreds of thousands of claims were illegally mishandled for 4 years before we got word. Anyway, State Farm, Allstate, Nationwide and USAA got bitch slapped, and they’re some kinda pissed. I knew there’d be press statements coming, all calculated to terrorize homeowners as soon as the shills got their poison pens loaded. We all know who they are: Robert Hartwig being foremost among them. So here’s what he comes out with after Corban:

“What this basically suggests is that the cost of claims is going to be higher than insurers anticipated,” Hartwig said, “so there are direct consequences for the price of insurance in Mississippi, and potentially for the availability as well. Continue reading “The Push Back on Corban”

Corban v. USAA

CORBAN v. USAA – THE 1500 DAY GREEK TRAGEDY

Pardon the obvious patronage, but it’s fitting that Slabbed pay homage to the dedicated lawyers and astute circuit judge who were involved in Corban’s journey to the Mississippi Supreme Court. FOR THE PLAINTIFF: Judy Guice; Clyde Gunn; Richard Phillips; Christopher Van Cleave; Neil Harris; William Corban Gunn. THE CIRCUIT COURT OF HARRISON COUNTY: Honorable Lisa Dodson.

Yesterday, October 8, 2009 – exactly one thousand five hundred (1,500) days after Katrina – the Supreme Court unanimously ruled that the Harrison County Circuit Court erred in applying the Fifth Circuit’s interpretation of an ACC clause.  First, when I say “erred,” that doesn’t mean the Judge botched it. She didn’t. As a matter of fact this particular Judge, Lisa Dodson, did exactly what a judge is supposed to do in this situation – defer. Asked to rule on competing summary judgment motions, Judge Dodson was forced to chose between the devil – in this case 5th Circuit Judge Edith Jones – and the deep blue sea – our own Supreme Court. She did the right thing, though it meant walking with the devil a while. More on “Dodson’s dilemma” below.

First, let’s de-bone Corban. The decision says the ACC clause cannot be used to defeat a wind loss, unless the insurer, by a preponderance of the evidence, first proves that wind and water acted indivisibly, and “contemporaneously converged” in causing the loss. Second, the Court trashed the “in any sequence” language in the ACC, finding it “ambiguous.” So, post Corban, “Mississippi Insurance Law for Dummies” might read something like this: “in Mississippi, the ISO-type ACC clause does not apply to all-risk policy losses, and can’t be legitimately invoked, except in one rare instance: when the loss was caused by the indivisible forces of wind and water, and the insurer can prove it.” In a word, Corban says “you get the loss you bought.” But, as astute Bam Bam readers will see, there’s still a problem.

The heart and soul of Corban is on page 22 of the opinion: “The ACC clause applies only if and when covered and excluded perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” See the problem yet? Let me re-write the quoted part putting “wind” and “water” where they belong:

“The ACC clause applies only if and when [wind] and [water] perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” Continue reading “Corban v. USAA”

State Farm to Coast: Get ready to grab yer ankles

STATE FARM TO COAST:

FUGETTABOUDIT, YA WANT ‘DA POLICY, GET ‘DA 45%

We’ll talk State Farm in a minute. It’s a small pleasure to me that readers of Slabbed can tell you in a single sentence why we’re being devoured by insurance companies – they operate regional monopolies, and keep them going by purchasing judges, legislative bodies, and regulators who could take away the anti-trust exemptions. Coached by people like McKinsey & Co., we know how big insurers follow a scripted Machiavellian model:

risk transference is sales pretext only;

the objective is profits;

claims threaten profits;

policyholder dollars go to defeat, not pay claims;

↑ premiums + ↓ scope of coverage = ↑ profits.

America is being eaten from within. Wall Street pigged-out and bankrupted our treasury. Health insurance pigged-out and drove consumers to go uninsured and file bankruptcy in record numbers (62% of all). Banks pigged-out and destroyed home values and credit markets, and auto makers cowboyed a world class manufacturing business into oblivion. On the legal side, so-called “pro business” types – mere bribe payers to me – replaced the jury system with forced arbitration, repealed punitive damage law and bought off the appeals courts. If our Constitution was a car note, I’d say we’re “upside down.”

At the moment, the Machiavellian health insurance model is under attack. In recent months, health insurance monopolies have forked out $380 million in new Congressional bribes to protect their profit model. Their business model: sell a promise to cover medical bills, exclude most medical needs and all pre-existing, don’t pay claims, keep the money. It’s a simple but solid racketeering strategy that spits out money like an ATM machine run amuck. In the seven years from 2000 to 2007, profits rose 428%, while insurers steadily shrank coverage.

Ok, on to State Farm’s latest. Continue reading “State Farm to Coast: Get ready to grab yer ankles”

Federal Flood Coverage, A Love Story

*Bam Bam readers, astute observers they are, will readily detect that certain events in the “Story” are dramatized for effect, including the anonymous dialogues below.

state_farm HQ
State Farm Corporate Headquarters

In August 2005, the month of Katrina, headquarters in Bloomington was bedlam. For all its awesome power, State Farm could do nothing but watch the leviathan hurricane augur the Gulf, trying to decide which sovereignty it would smash to smithereens. Didn’t really matter, State Farm was sure to hemorrhage its record profits, and the thought of it was killing everyone. No one . . . no select senator, congressman, lobbyist, corrupt federal judge or ex-FBI man could do anything this time.

Katrina was aiming for Louisiana-Mississippi. Hourly alerts spewed out to department heads, permeating every building on the so-called Bloomington “campus.” In the days ahead, scores of corn fed, flat-butted minions – “Stepfords” – the townspeople called them, would be summoned from various corporate divisions: legal, claims, Cat services, underwriting, media relations, data management, etc. Even the draconian “Claims Counsel” would be called into session.

Katrina threatened to burn a hole in the company’s record profits. With 800 in-house lawyers, State Farm had nearly perfected the art of defeating claim payments, but given the scale of Katrina, this simply wouldn’t do here. The situation demanded that the smartest guys in the room come up with a solid mitigation strategy. Continue reading “Federal Flood Coverage, A Love Story”

A Corporate Predator

The Rigsbys’ qui tam claims are now set for trial. State Farm’s favorite strong arm tactic – a slap suit aimed back at the relators as a counterclaim – has been mooted by severance, with all discovery stayed. In a word, the Rigsbys’ qui tam case is now early stage radioactive. For those of you who care to study the pathology of corporate monopolies, now is the time to tune in, lock your dial and follow State Farm’s every move.

You’ll likely see State Farm agents turn up in hometown newspaper photos, handing a giant copy of State Farm’s check to the fire chief, buying the police department some pricey crime fighting device, or donating education funds to the local school board. As trial approaches, the number and frequency of “Good Neighbor” TV ads in the broadcast markets of the jury venire will double. Typically, these ads falsely portray State Farm as a deeply caring protector of America’s families. You’ll see lots of minority face time, puppy dogs, tearful then happy children and so on. Not much different than the “family values” theme some of our best pimp politicians like to market. That’s what you will see; what’s more important is what you won’t see.

You won’t see the “Shred-it” trucks pulling up to State Farm’s and Renfroe’s lawyers’ offices. (They needn’t go to State Farm’s regional or headquarter offices, they have their own shredders and corporate employee operators. In fact, State Farm shredded copies of altered engineering reports and corresponding invoices right there in their temporary Katrina claims office off Pops Ferry Road). Also, you won’t see State Farm’s creepy data managers systematically scrubbing data off the head office’s mainframes and hundreds of work stations. You won’t see this same thing happening behind the walls of State Farm’s and Renfroe’s lawyer’s offices either, or even within the offices of the federal court in Birmingham. You won’t see crooked law clerks scurrying to isolate and delete phone logs or emails proving hundreds of unauthorized ex parte contacts with State Farm’s and Renfroe’s case lawyers. You won’t see the destruction of records detailing communications with FEMA’s David Maurstad or James Shortly, or with FEMA’s shadow manager, Computer Science Corporation (“CSC”), all to get the proof of loss requirements under the flood program waived, and in place within 48 hours of Katrina. Continue reading “A Corporate Predator”

Judge Jed Rakoff Wakes Up Congress

Those of you who have followed the Judge Rakoff posts are keenly aware that Bank of America (“BOA”) is up shit creek. Not only did it lie in a certified proxy statement filed under SEC law, it looks a lot like BOA purposefully understated Merrill Lynch’s financial condition by $20 billion. All of this was done in connection with a request for federal bail out funds, used by BOA to purchase Merrill last year. None of this would probably matter if BOA wasn’t in court before Judge Jed S. Rakoff.

Judge Jed Rakoff, a great American judge, rejected a phony-assed settlement agreement BOA and the corrupt SEC tried to float by him last week, and told them he wanted names and dates of the fraudulent activities. BOA is scrambling to keep the information secret, claiming attorney-client privilege among other things. Bam Bam readers en garde! There is no privilege when an attorney assists someone in committing or planning to commit, fraud. See Rule of Evidence 502. Don’t ever let anyone tell you different.

Well now Jed Rakoff has thumped Congress out of its slumber, and shamed it into action.

A House panel called the Committee on Oversight and Government Reform has told BOA that it cannot use attorney-client privilege in refusing to answer questions about the BOA-Merrill deal. Chairman Edolphus Towns wants BOA to reveal information that could affect Judge Rakoff’s case and the New York AG’s investigations into the BOA scandal. Continue reading “Judge Jed Rakoff Wakes Up Congress”