New GAO report pulls juggling act from qui tam Olympics – puts Rigsby and Branch in the lead!

With this week’s GAO release of Financial Management: Improvements Needed in National Flood Insurance Program’s Financial Controls and Oversight, there is no longer a need for a juggling act to find the truth of claims made in earlier reports and the evidence policyholders present the courts – and, in the interest of judicial economy, the qui tam defendants should just kiss their arguments goodbye:

FEMA’s Bureau and Statistical Agent (BSA) serves as a liaison between the government and WYO insurance companies. GAO identified weaknesses at three levels of the NFIP transaction accountability and financial reporting process.

  • First, at the WYO level, our internal control testing of a statistical sample determined that almost 71 percent of WYO company claims loss files did not have the necessary documents to support the claims, or reports were filed late.
  • Second, incomplete BSA-level premium data files (lacking key information such as insureds’ names and addresses) prevented an assessment of the reliability of reported NFIP premium amounts. Further, BSA-level internal control activities were ineffective in verifying the accuracy of WYO-submitted data.
  • Lastly, FEMA’s financial reporting process uses summary data that is overly reliant on error-prone manual data entry.

Apparently, the Branch Defendants decided no one would notice the OIG only examined .0062% of total claims and decided they would try and pass off Hurricane Katrina: Wind versus Flood Issues (Exhibit A, Response to the Branch Proposed Discovery Plan) as a statistically reliable report and sell it to Judge Vance: Continue reading “New GAO report pulls juggling act from qui tam Olympics – puts Rigsby and Branch in the lead!”

Breaking news from the Sun Herald! Warr pleads, charges against wife dropped

The Sun Herald has the breaking news!

Former Gulfport Mayor Brent Warr pleaded guilty Friday morning to one count of defrauding FEMA, and all other charges against him have been dropped. He was sentenced to three years probation and will have to pay $9,558 restitution.

Charges against his wife, Laura Warr, have been dropped by prosecutors.

About two dozens Warr supporters were in a federal courtroom this morning as Warr entered his plea.

A statement from the Warrs is expected shortly.

The Warrs had been accused of lying about their losses to receive relief funds from FEMA, a $150,000 homeowner’s grant and insurance proceeds. Prosecutors contended they did not live in a beachfront home they claimed as their primary residence when Katrina hit.

The Warrs were also accused of falsifying their income on bank loans…

Hopefully, Sop can add local color.


BREAKING NEWS! Judge Senter moves State Farm counterclaim to separate trial; will try Rigsby qui tam first

I am of the opinion that an attempt to try the Relators’ claim and State Farm’s counterclaim in a single proceeding is likely to hopelessly confuse the jury on the merits of both claims. Accordingly, I will bifurcate the trial of these two claims, and I will hear the evidence on the Relators’ qui tam claim first. I will stay discovery on State Farm’s counterclaim until the trial of the Relators’ claim has been completed, and I will schedule a separate trial to reach the merits of the counterclaim.

It’s been over a year since Judge Senter made his priority perfectly clear.

…I have watched the property damage insurance claims, the contract claims at the heart [of] these cases, being pushed off their rightful place at center stage by the escalating heat of the battles…it is my sincere hope that the type of normal, professional, and focused advocacy necessary to resolve the individual merits of the cases still outstanding will presently come to the fore.

SLABBED applauded him then and we applaud him again today.  Since this post started with his bottom line, let’s back up and look at his logic path.

The parties have submitted letters to the Court stating their respective positions on the discovery that must be conducted to prepare for trial on the merits of this action. The main disagreement between the parties is whether this discovery and the trial itself should include State Farm Fire and Casualty Company’s (State Farm) counterclaim for the Relators’ alleged misappropriation and misuse of certain claims documents. Continue reading “BREAKING NEWS! Judge Senter moves State Farm counterclaim to separate trial; will try Rigsby qui tam first”

The GAO does some more cussin’ and discussin’ on the National Flood Insurance Program

When I began blogging to what would become Slabbed my knowledge of complex finance was exceeded only by my ignorance of how the political process really worked.  What I found from my perch here in Soggy Bottom is that talking aka cussin’ and discussin’ dominates the process. And besides all the talking that goes on inside the beltway there is a mirror conversation that happens on the outside, in places like Yahoo Allstate finance message board and in Sheila Brinbaum speeches where alternate realities are peddled out of economic self interest.

Beyond the shilling however the Government Accountability Office has been looking at the NFIP and their findings tell the real story, of a program abused by private for profit insurers with no oversight on part of FEMA. For instance in September 2007 the GAO found:

FEMA’s payments to WYO insurance companies for operating costs ranged from more than a third to almost two-thirds of the total premiums paid by policyholders to the NFIP for fiscal years 2004 through 2006……

The approach FEMA uses to determine operating costs for WYO insurance companies, rooted in policies negotiated and established about 25 years ago, cannot ensure that payments are based on reasonable estimates of actual expenses because actual expenses incurred by the companies for their services to the NFIP are not considered. Although it has authority to do so, FEMA does not collect data on actual WYO flood insurance expenses that could provide a basis for insuring that the WYO payments are based on a reasonable estimate of actual expenses.

Fast forward to December 2007 and another GAO report which found FEMA asleep at the switch and a program structures to create “an inherent conflict of interest”:

Insurance coverage gaps and claims uncertainties can arise when coverage for hurricane damage is divided among multiple insurance policies. Coverage for hurricanes generally requires more than one policy because private homeowners policies generally exclude flood damage. But the extent of coverage under each policy depends on the cause of the damages, as determined through the claims adjustment process and the policy terms that cover a particular type of damage. This process is further complicated when the damaged property is subjected to a combination of high winds and flooding and evidence at the damage scene is limited. Other claims concerns can arise on such properties when the same insurer serves as both NFIP’s write-your-own (WYO) insurer and the property-casualty (wind) insurer. In such cases, the same company is responsible for determining damages and losses to itself and to NFIP, creating an inherent conflict of interest.

And the GAO continued looking at the program most recently with the issuance of this report dated last month. The professionals at GAO continue to find a program operated with little oversight and no internal controls: Continue reading “The GAO does some more cussin’ and discussin’ on the National Flood Insurance Program”

Judge Senter sends State Farm engraved invitiation to produce documents in Rigsby qui tam for his review

In the meanwhile, so I may know the outer limits of the potential claims involved in this action, I will require State Farm to submit, in camera, a list containing the name of the insured, the address of the property, and the amount of flood insurance paid, for all SFIP claims that meet the following criteria…

Clearly, Judge Senter thought his Order (August 10, 2009) was sufficient; but – well, his Supplemental Order Setting Deadline for State Farm’s in Camera Submission of List of Properties (September 11, 2009) speaks for itself:

On August 10, 2009, I entered an Order requiring State Farm to submit, in camera, a list of properties covered under its homeowners policies and meeting three specified criteria. State Farm has not yet responded to this portion of the Order, and I note that the Order did not specify a time-frame for the preparation and submission of this list. (emphasis added)

I find that setting such a time-frame is required in the interest of justice.

Accordingly, it is hereby ORDERED That State Farm Fire and Casualty Company shall submit the list called for under item number 6 in my order [344] of August 10, 2009, within thirty days of the date of this Supplemental Order, i.e. on or before the close of business on October 19, 2009.

Judge Senter obviously has mastered the art of diplomatic double speak – a credit to what some call good home training.  Note how gently he points out State Farm Continue reading “Judge Senter sends State Farm engraved invitiation to produce documents in Rigsby qui tam for his review”

Breaking Gene Taylor Press Release: Still Stuck on Stupid at FEMA






2269 Rayburn HOB

Washington, DC 20515

(202) 225-5772

Fax (202) 225-7074


For Immediate Release                   Contact: Ana Maria Rosato  
August 25, 2009                                                (202) 253-1308


U.S. Rep. Gene Taylor (D-Miss) Congratulates Harrison County

School District for Leadership in Reigning in Government Spending

While Getting Job Done

(Gulfport, Miss.) – A recent audit by the FEMA inspector General disclosed that the Harrison County School District saved taxpayers $4.1 million. The school district had been awarded $20.9 million in Hazard Mitigation Grants to build the new D’Iberville and West Harrison High Schools to the highest standards to function as shelters. The school district was able to contract for and complete the work for $16.8 million.

“Unfortunately, but not surprisingly, the FEMA audit did not thank the school district for saving $4.1 million in taxpayer funds.” stated Rep. Gene Taylor (D-Miss). Instead, FEMA criticized the state for not reprogramming the million funds to other projects right away. Continue reading “Breaking Gene Taylor Press Release: Still Stuck on Stupid at FEMA”

Another mother’s child and Judge Senter’s order – Rigsby qui tam goes to trial!

Based on the evidence I heard from the stand, particularly Kerri Rigsby’s own testimony, it appears to me there is sufficient evidence to support the conclusion that she does indeed possess direct and independent knowledge of the facts she has alleged in support of the allegations in the Amended Complaint. This evidence is also sufficient to create a genuine issue of material fact on the merits of the Relators’ substantive allegations.

Sop probably thought I’d want to start this post with, I told you so.  As tempting as that is, I chose to preface Judge Senter’s Memorandum Opinion with a tip of my hat to Pat Labrano, Cori and Kerri’s mother.  Known to the unwashed in the blogosphere as “Ma,”  I had the unexpected opportunity – and pleasure – to meet both Pat and Kerri several months ago when my search for Sushi landed us in the same Ocean Springs restaurant.

Kerri was, as Chip Merlin described her, the type you want to call your friend.  So was her mother and, clearly, the two of them were also friends.  I might add, they were also beautiful and gracious women.

With that truth told, I yield to Judge Senter to tell another – the story of the McIntosh claim, constructed in large part from Kerri’s testimony but clearly verified in other documents available to him.

I  have also included in total the section he titled, Scope of Further Proceedings and, in a separate post, I’ll cover the Summary Judgment awarded State Farm on the Risgby’s claim of retaliation.

Kerri Rigsby is an experienced insurance adjustor who had been working for Renfroe for approximately ten years at the time of Hurricane Katrina. She testified that within a few daysafter the storm, when State Farm was just beginning to adjust the losses under the SFIP policiesand under its homeowners policies, she attended a meeting convened by State Farm. Kerri Rigsby testified that during this meeting the person giving instructions for adjustors and their supervisors to follow told his audience Hurricane Katrina was a “water storm” and the adjustors should go out and “hit the limits” of flood insurance policies. Defendants deny these allegations. Continue reading “Another mother’s child and Judge Senter’s order – Rigsby qui tam goes to trial!”

Evidence of criminal wrongdoing cannot be a trade secret – Rigsbys answer State Farm’s Counterclaim

Evidence of criminal wrongdoing – documents which are the utensils through which a crime is committed – cannot be a trade secret.

Sop’s excellent post on behavioral economics provides the contextual frame for the Rigsbys’ Answer to State Farm’s Amended Counterclaim seeking Summary Judgment for Retaliatory Discharge. From that perspective, we start with the Conclusion:

All Of State Farm’s Damage Flows From Its Own Criminal Conduct, Not Relators’ Actions.

  • Since at least September 3, 2005, State Farm Insurance, E. A. Renfroe & Company,and its other many co-conspirators have been engaged in a concerted effort to defraud the United States through its National Flood Insurance Program.
  • State Farm sent a “catastrophe team” to the Gulfcoast for the purpose of carrying out a complex scheme to reduce the amount of cash outlay that State Farm and its reinsurers would have to expend.
  • One mechanism selected for this purpose and process was a plan to push as much of  the coverage issues as possible off on the National Flood Insurance Program through the submission of false and fraudulent claims.  The chief facilitator of this plan was a State Farm employee by the name of Alexis King.
  • Any damages sustained by State Farm as a result of its own criminal and unlawful conduct flow from its own inequitable actions and are not the result of the Rigsbys’ reporting that criminal and unlawful conduct to federal and state authorities.
  • State Farm cannot pawn off on the Relators the costs relating to the defense of their own criminal conduct by claiming that the damages relate to the access of its computer systems.
  • Neither can State Farm make out a claim that a systematic plan to cheat the federal government, the roughly 173,000,000 United States taxpayers, and the Mississippi policy-holders out of billions of dollars is a “trade secret” as that term is commonly understood.

If the logical thinking of Counsel Continue reading “Evidence of criminal wrongdoing cannot be a trade secret – Rigsbys answer State Farm’s Counterclaim”

Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!

Thanks, Sop! Perfect music for today’s post on Merlin’s blog: Property Insurers Have An Obligation To Investigate All Facts Supporting Coverage.

An attorney from another law firm asked me whether an insurer is obligated to investigate facts supporting coverage in a property insurance coverage dispute. It is common for colleagues to share information and help when they can. It seems that the more one shares, the more one receives –usually with compound interest.

Although SLABBED is more often on the receiving end, our standing “share and share alike” agreement with Chip paid compound interest today:

…an insurer cannot reasonably and in good faith deny payments to its insured without fully investigating the grounds for its denial…. Indeed, in Egan v. Mutual of Omaha Ins. Co… the Supreme Court emphasized that, in order to protect the interests of its insured, it was “essential that an insurer fully inquire into possible bases that might support the insured’s claim.”

Today’s “compound interest” also includes this comment from one of Merlin’s readers:

I often wondered why we spent so much time in elementary school diagramming sentences. Now as an adjuster I have a clue.

More about the “language of Katrina litigation” later.  Now, and with a big tip of the SLABBED hat, here’s Merlin:

Currently my favorite case on the topic of an insurer’s obligation to investigate fully for facts supporting coverage (rather than facts supporting only denial) is Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062 (Cal. App. 2d Dist. 2007). Continue reading “Merlin: Court rules them that’s got your policy have good faith obligation to investigate all facts supporting coverage, not just those that do not!”

Eleuterius is named defendant in a second State Farm case

Pages from Anthony exhibit photos policy fema elevation
Anthony property: Pre-Katrina photograph documenting elevation before renovation/addition .

Once again, Marshall “Rocky” Eleuterius appears to be a super salesman and named defendant in Katrina litigation – first in O’Keefe and now in Anthony v State Farm.

According to the Complaint, the State Farm policy covered the Anthonys property located in close proximity to the Bay of St. Louis on the Gulf of Mexico.

State Farm and its agent Eleuterius expressly represented to the Plaintiffs that they would have full and comprehensive coverage for any and all hurricane damage to the insured residence, including any and all damage proximately, efficiently and typically caused by hurricane wind and “storm surge” proximately caused by hurricanes.

A particularly interesting section of the Complaint addresses “storm surge”. Continue reading “Eleuterius is named defendant in a second State Farm case”