Category: Flood Insurance

Dean Starkman – SunHerald

Dean Starkman’s very fine writing about the insurance industry’s response to Hurricane Katrina, Insurance Transparency Project blog, continues to be an invaluable resource for SLABBED.  In fact, it was my search for something he’d written that led me to the Columbia Journalism Review where I found (much to my delight)  SunHerald’s Lee, Times-Pic’s Mowbray: Still on it

One of the true pleasures of reporting on the insurance industry’s response, or non-response, to Hurricane Katrina was meeting, and reading the reporting of, the principal Gulf-area papers’ reporters on the insurance angle, Rebecca Mowbray of the Times-Picayune and Anita Lee of the SunHerald of Gulfport and Biloxi, Miss.

It is heartwarming to see them still on the case, four years later. It is heartbreaking to read what they are reporting.

Mowbray: “Report dubs FEMA poor watchdog”

That one, from September 22, is about how the government fails to supervise the private insurers who administer the federal flood program under a “private-public partnership” (always a good idea to check your wallet when you read those words):

FireShot capture #104 - 'SunHerald's Lee, Times-Pic's Mowbray_ Still on it _ CJR' - www_cjr_org_the_audit_sunheralds_lee_timespics_mowbr_php

That’s for expenses, people. Insurers under this program bear no risk. What financial product comes with a 66% load? Continue reading “Dean Starkman – SunHerald”

Let’s talk – the Branch qui tam, Rigsby, and Judge Sarah Vance

SLABBED has been talking about the Maustaud directive on expedited claim handling process. Like most good conversations, one thing led to another – and the most recent “another” was a discussion of the relative merits of the qui tam claims filed by the Rigsby sisters and the Branch consultants.

The last SLABBED update on Branch – Support for Rigsby qui tam found hanging on the Branch qui tam docket – reported Judge Vance had requested the parties submit an order for preservation of documents.

The content of that post as well as that of a more recent post on an order issued by Judge Vance – Federal District Court Judge offers tutorial – proof of loss and segregation of damages – is relevant to the ongoing conversation about the Maustaud directive.

For example, the June update on Branch reported a Statement of Interest in Opposition to Defendant State Farm’s Motion to Dismiss filed by the United States among the entries made before the Order dismissing Branch was issued:

The fact that FIA and the WYO carriers enter into an agreement, and the agreement relates to the WYO carriers’ alleged violation of the FCA, does not mean that the FCA claim is founded on that agreement. Rather, the FCA claim is founded on the defendants’ alleged violation of a federal statute which prohibits a person, like the defendants, from acting with appropriate scienter to submit false or fraudulent claims to the government or make false statements in order to avoid an obligation to the government. Further, the FCA provides for relief – treble damages and penalties – that is not available under the Arrangement but that arises instead by statute.

The Fifth Circuit reinstated Branch, in part, last February.  The current conversation, like an off-blog mention of the case last June, reminded me to check the docket where this time I found the most recent entry was this past July, the Order and Reasons of Judge Vance’s decision on the preservation of documents : Continue reading “Let’s talk – the Branch qui tam, Rigsby, and Judge Sarah Vance”

Editilla asks What if Hurricane Katrina impacted your city?

FireShot capture #095 - 'New Orleans Ladder' - noladder_blogspot_comSLABBED does love to read the Ladder – and Editilla had a big question and great maps hung on the first rung today.  (thanks Editilla!)

If hanging on the Ladder, a click of the headline will take you to a set of incredible maps showing the impact of a Hurricane Katrina on other cities – Washington, D.C. for example (shown below) – and, if you keep scrolling down, you’ll find the radar map of Katrina making landfall on the Coast and see tornado after tornado on the coast (the ones that didn’t exist to insurance companies).

wdc flood projection

 
 
 
 

 

Let’s talk – the Maurstad directive on post-Katrina Expedited Claim Handling UPDATED

Can you post Senter’s Order from August 10? Order 344. I’d like to see the “criteria”.

In my hurried response to this request from SLABBED reader James Barbieri, I provided the link to Judge Senter’s Memorandum Opinion.  However, both the Order and Opinion contain the criteria Judge Senter established for the list of claims he has ordered State Farm to deliver for his in camera review:

  • The insured property did not fall within any of the three categories of storm damage for which FEMA approved payment of SFIP limits, i.e. insured dwellings that were not left as slabs, pilings, or empty shells; and
  • For which SFIP limits were paid on the grounds the property was a constructive total loss; and
  • For which no “stick built” or Exactimate estimation of the flood damage was made before the SFIP limits were paid.

Mr. Barbieri also requested the Attachments to Maurstad’s letter, which I’ve linked here as Memo and attachments Expedited Claim Handling Process – and added:

I’m also very interested in starting a discussion on the Maurstad letter. Continue reading “Let’s talk – the Maurstad directive on post-Katrina Expedited Claim Handling UPDATED”

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”

Rigsbys respond to Forensics – an impermissible attempt to relitigate issues that were correctly decided in the first place

SLABBED provided the post-hearing briefs – Read ‘em while they’re hot – briefs filed by State Farm, Haag, Forensic, and Rigsbys post-hearing in the Rigsby qui tam – and linked the documents filed by the defendants following Judge Senter’s Order – Evideniary disclosure is Michael Oher of Rigsby qui tam.

Claiming the Forensic motion for clarification is an impermissible attempt to relitigate issues that were correctly decided in the first place, today the Rigsbys filed Relators’ Opposition to Motion of Forensic Analysis & Engineering Corporation for Clarification of Order Denying Motion for Summary Judgment.

Forensic’s Motion to Reconsider should be denied because it merely rehashes the arguments Forensic previously made without pointing to any newly discovered evidence or identifying any manifest error. See also… (“F.R.Civ.P. 59. . . is not a vehicle for a litigant to ask the Court to reconsider adverse decisions it is simply unwilling to accept.”)…

Forensic, like Haag, attempts to hang its hat on the date the McIntosh claim was paid – grasping at a straw man, no doubt encouraged by State Farm.

Forensic argues that, notwithstanding the evidence of its conspiracy, the Relators’ claims against it should be dismissed for the simple reason that Forensic’s involvement in the McIntosh claim began after the flood claim had already been paid. Motion to Reconsider at 3-4. This argument is wrong for several reasons. Continue reading “Rigsbys respond to Forensics – an impermissible attempt to relitigate issues that were correctly decided in the first place”

Behind door #1 – Xactware come on down!

A number of complaints have been filed with the Justice Department regarding what appears to be an effort to fix prices in the property insurance claims repair business. It involves a company called Xactware, which is a wholly-owned subsidiary of the Insurance Services Organization.

The writer,  an independent business owner, was concerned because the practices in question impact my business, my employees and my family – raising the question:  What practices?

As a practice, insurers, through their adjusting procedures, attempt to impose compliance with these “pricelists” by contractors as a broad group. Because of Xactimate’s position in the industry, at the very least I believe they should be enjoined from presenting their data as a “pricelist”.”

Again, a question is raised: What is Xactware’s data in Xactimate if it isn’t a “pricelist”?

They produce a pricing database, which they market as a “pricelist”, which is actually a database of information of previously submitted settlement numbers for typical processes heavily dependent on “feedback” from insurance companies and from captive contractors who have agreements with those insurers to use the database as a “pricelist”. This methodology results in a self-fulfilling prophecy as insurers and their contracted companies feed back information to establish a “pricelist”…

There is also no doubt that these so-called price lists can be manipulated BOTH downwards and upwards if the client requesting the “price” has a vested interest in doing so.

But, wait, “these client” are insurers –  insurers that own a controlling interest in ISO and ISO owns Xactware. Continue reading “Behind door #1 – Xactware come on down!”

How hot is the hot spot for Rigsby qui tam?

Really hot – and much larger than the hot spot identified here and here – if Derek Wyatt’s 30(b)(6) deposition of Stephan Hinkle in Pontius v State Farm is considered:

FireShot capture #024 - 'Popps Ferry Rd, Biloxi, Harrison, Mississippi to 1982 Bayside Dr, Biloxi, MS 39532 - 2
Area identified in quoted text from 30(b)(6) deposition of Stephan Hinkle (A - C) shown with location of McIntosh (D) and Bossier property (E)

I actually was in Biloxi when I wrote…[the Wind-Water Protocol]… And I had done — Iwent out and saw the damage, basically, and saw the — well, the first area I went to when I was there was right near this claim office on Pops Ferry Road in Biloxi (Location A). There’s this development called Destiny Plantation. (Location C) It’s right on the back bay of Biloxi. And I had occasion to drive down there. And I — there, I comprehended the nature of the damage, is what made me kind of outline in my mind how to do this.

But the gate to Destiny Plantation is on Brody Road (Location B), which is about a half a mile inland from the shore. You go in the gate and there was no damage whatsoever to the homes immediately  around the gate. You take the road south toward the bay, and immediately you notice where the water stopped. And by the time you get down to the bay itself, the homes that were built were totally destroyed. They were slab homes. Which indicated to me that we’ve got a situation here.

How many other hot spots were there given the estimated number of  State Farm policyholders with dual coverage Hinkle provided applied to the flooded areas of all three coastal counties and not just this one area in Biloxi?

BY MR. WYATT:

Q. Okay. Before I get too far afield, I want to remember where we started, but you mentioned something yesterday. Mississippi had about 80,000 P&C Katrina claims. Continue reading “How hot is the hot spot for Rigsby qui tam?”

Judge Senter modifies Magistrate’s Order in part – Bossier v State Farm

Plaintiff does not have carte blanche in the discovery process (and Plaintiff’s thoroughness in the pursuit of information may not equate to discoverability), but at the same time Defendant should not unilaterally determine that certain material is restricted.

Judge Senter’s Order granted the Bossier’s motion in part and modified Magistrate Judge Walker’s order in part.  However, what he means by, “The issues in this case appear to be no different from those in other typical Hurricane Katrina lawsuits” is very different from what a good many others would mean by those same words – and that part confounds the total impact of the Order.

For example, when Judge Senter repeats and expands on this position again later, he states:

In light of the Court’s observation that this case is no different from other Hurricane Katrina insurance litigation, the remainder of Plaintiff’s discovery requests are overly broad…

Yet, what he sees as “overly broad,”  others might see as merely scratching the surface :

“meetings [and other events] of any description”; documents (and other items) “of any sort whatsoever” related, inter alia, to handling “Hurricane Katrina claims” and “wind vs. water claims”; and the handling of NFIP claims (when there was no flood insurance in this case)…

Likewise, what he sees as unreasonable, some would say is the only reasonable way to discover why the typical Hurricane Katrina insurance lawsuit includes property near the water with no flood insurance:

…the Magistrate Judge required State Farm “to produce those documents containing [Defendant’s] directives, guidelines, policies and procedures for handling Hurricane Katrina claims in general or Plaintiff’s claim specifically.” Anything beyond, including the formulation of those directives, guidelines, policies, and procedures, is unreasonable.

However, the modification Judge Senter made was to a portion of Walker’s Order that was in dire need of correction: Continue reading “Judge Senter modifies Magistrate’s Order in part – Bossier v State Farm”