An outside look at the False Claims Act cases: Holding State Farm Accountable (Why McIntosh is Evidence of Fraud)

Occasional slabbed commenter James Barbieri was kind enough to share his May 2009 law school thesis which thoroughly analyzes the 2 False Claims Act cases against Team Insurance Inc and concludes, as this post title indicates, that the McIntosh adjustment is evidence of fraud against the US Government. For anyone interested in this topic it is an excellent read. Given the recent GAO report on continued financial management problems in the National Flood Insurance Program that Nowdy recently profiled and its implications for the previously completed MID State Fram Market Conduct Study and the Department of Homeland Security OIG’s report I was immediately attracted to this passage which shows that people do get it:

……..OIG and the Mississippi Insurance Department (“MID”) have already conducted sufficient post-Katrina claims analysis to warrant reopening all Katrina files.

OIG published results of an audit of 131 combined wind and flood claims. In the Executive Summary, OIG “concluded that the NFIP did not pay for wind damage for structures included in our sample.” But on page six of the same report, OIG provides evidence of NFIP paying for wind damage:

“Based on the review of files in our sample, we did not find material evidence that the NFIP paid for wind damage. Although 44 out of 131 cases (34%) included errors that related to cause of damage resulting in some degree of duplication, e.g. flood and homeowners policies paying for the same type of damage…, only two (1.5%) of these cases clearly identified wind as the preponderant cause of damage, thus resulting in an improper payment by NFIP in the amount of $432,600.”

It is contradictory for OIG to conclude: “we did not find material evidence that the NFIP paid for wind damage” and then reveal “an improper payment by NFIP in the amount of $432,600” in a sample of 131 cases. Extrapolation to the total population of 209,404 Katrina flood claims (on which the Federal Government paid $15,850,563,024) would yield in excess of $600 million in improper NFIP overcharges. Continue reading “An outside look at the False Claims Act cases: Holding State Farm Accountable (Why McIntosh is Evidence of Fraud)”

Qui Tam Olympics

Yes, Sop, you heard someone say there was a qui tam hearing today before Judge Vance!  It must have been a hoot, too!  I wrote about defendant Fidelity’s bright idea to collect any NFIP overpayments from the policyholders paid by the defendants in taproot- digging up the fact.  However, my bad for not realizing until today’s Minute Entry that Fidelity was represented by none-other than the self-proclaimed King of Flood, Gerald Nielsen:

Currently, virtually every major participant “Write-Your-Own Program” (“WYO”) insurance company in the NFIP utilizes Nielsen Law Firm, L.L.C. to handle its NFIP-related litigation on a national basis. If one were to run a Westlaw search of the undersigned’s name and the word “flood,” one would find that the majority of all Program caselaw being announced in the country over the last few years lists the undersigned as the attorney of record for the WYO carrier.

Believe me, readers, this is not encouraging!  Nielsen likely conceived the convoluted reasoning in the Company’s Answer and Third Party Demand and argued it before Judge Vance today – telling her, “It would be morally correct to sue the homeowners to collect the overpayments.” I bet she thought she he’d lost his scienter – actually, I bet she thought she was hallucinating!

The Minute Entry of the hearing does show she issued an Order ensuring there will be no service of the Third Party Demand until  she decides the matter.  In a related decision, Magistrate Judge Sally Shushan re-issued the Scheduling Order with notes about matters still to be decided. The biggest issues among the big issues on the table – the Branch Motion to File an Amended Complaint and the limits on Discovery- should be somewhat familiar to readers of the Qui Tam Olympics.  The set of slides that follows below introduces the Discovery issues in the context of the Supreme Court’s Rockwell decision:

[slideshare id=2960402&doc=theprotectiongamebranch3-100120202317-phpapp01]

For all the out of state readers wondering about Jefferson Parish. Shades of Rossie?

James Gill of the Times Picayune has all the skinny plus takes a few jabs at so called legal experts. Does this remind anyone else of insurance defense attorney David Rossmiller, who let State Farm ghost write his blog with the accompanying savage attacks on the whistleblowers Cori and Kerri Rigsby.  Dave and those who lapped up his line of BS evidently never bothered to find out how much water flooded the McIntosh residence but I’m sure the blood money was good, especially for a firm that has most likely never tried a wind-water case. I wonder if Mr. Barbieri ever heard back from Rossie on that apology to the Rigsby sisters?

sop

USA Ex Rel Rigsby v State Farm: An analysis of the McIntosh Claim: Updating the original post Not to belabor the point

In response to the re-run of our archival post not to belabor the point, which originally ran on April 7, 2009 a reader sent in some observations referring us to documents we already linked which gives us the correct flood level at the McIntosh property.  I actually did the research on the official flood levels for a companion post to the original (which never ran) so I am happy for the steer, especially since we had all the data.

Before we get to the pictures it and the original text of the post (as corrected) it would help to revisit with State Farm’s own experts, a dubious lot as a whole that often has trouble keeping their lies straight. In particular we are going to focus on one “rent-a-doc” in University of Florida Engineering professor Robert G Dean. It is with Dr Dean’s own report, which we linked originally in this post that we begin:

As seen in this figure, the elevation of the McIntosh property is approximately 14 feet. Menhennett (2007) conducted a survey at the McIntosh property and found that the adjacent ground elevation ranged between 12.5 ft and 15.4 ft, the top of the bottom floor of the residence was 16.5 ft and the slab of the connected garage was 14 ft. Figure 4 presents the FEMA-developed Advisory Base Flood Elevations and any High Water Marks (HWMs) in the general vicinity. Two HWMs are identified in Figure 4 and adjacent charts that are in reasonable close proximity to the McIntosh residence and their elevations as determined by survey and other characteristics are summarized in Table 2.

Dean’s choice of watermarks is interesting as one of the official measurements was taken literally within feet of the McIntosh property which in my mind makes his second choice, from over a mile to the south irrelevant. Already having one data point, which is the elevation of the McIntosh house at the top of their slab, all it takes is a trip down Dr Dean report to the official watermark measurements to find the flood level on the ground at water mark reference KMSC-02-21 was 18.6 feet which means there was 2.1 feet of water on the outside of the McIntosh residence above their slab. That is important because it would include any wave action. I am told the proper forensic engineering technique is to take inside water mark measurements.  You won’t see any such reference to that data point in Dr Dean’s report. With that point made here is the text of the original post as corrected.

….Pictures are truly worth 1000 words. For instance take these from our archives of the McIntosh residence which is one of the focal points in the False Claims Act lawsuit against State Farm. There was around 4 2 feet of water inside the residence when the storm surge peaked in the Biloxi Bay several hours after Hurricane force winds began blowing.

mcintosh-exteriorRemember the neighbors said the house next door blew apart and into the McIntosh residence which in turn breached its structural integrity. I wonder whose roof trusses are in the picture? The McIntosh residence still has its roof and there is no house between them and the water. Continue reading “USA Ex Rel Rigsby v State Farm: An analysis of the McIntosh Claim: Updating the original post Not to belabor the point”

Not to Belabor the Point…..

But pictures are truly worth 1000 words. For instance take these from our archives of the McIntosh residence which is one of the focal points in the False Claims Act lawsuit against State Farm.  There was around 4 feet of water inside the residence when the storm surge peaked in the Biloxi Bay several hours after Hurricane force winds began blowing.

mcintosh-exteriorRemember the neighbors said the house next door blew apart and into the McIntosh residence which in turn breached its structural integrity. I wonder whose roof trusses are in the picture? The McIntosh residence still has its roof and there is no house between them and the water. Continue reading “Not to Belabor the Point…..”