that special relationship of trust and a deep sense of betrayal

Insurance is a very special product. You pay and you pay and you pay premium dollars, often for your entire life. In return you only get a promise. A promise that if you ultimately have a covered claim, and you’re paid up, they must pay that claim. The problem is that they must have that money, for years and years, kept safely and invested legally in order to be able to pay your claim if they so choose. It’s that special relationship of trust that imposes on an insurance company an obligation of truthful financial reporting in their financial statements.

If you, too, consider insurance a very special product, as you read AIG CEO formerly headed up Allstate insurance company you will see how the industry’s conduct following Hurricane Katrina caused that special relationship of trust to become a deep sense of betrayal.

To many on the Gulf Coast, watching AIG chief executive officer Ed Liddy talk about the sanctity of contracts in defending the award of $220 million in bonuses to employees at the embattled insurer was an ironic moment.

If only Liddy held that same view of contractual obligations to policyholders after Hurricane Katrina when he was at the helm of Allstate, Louisiana’s second largest insurer.

“How about that?” quipped Bob Hunter, a New Orleans native who is director of insurance at the Consumer Federation of America and the author of a 2007 study documenting the decline of claims payout ratios at Allstate during Liddy’s tenure. “He’s always disregarded contracts to maximize profits.”

Liddy was appointed by the federal government in September to run AIG when the ailing insurer got its first installment of taxpayer bailout money, which now totals $170 billion.

Before caving to pressure on Wednesday and saying that he would ask those who received more than $100,000 in bonuses to return half of the money, Liddy argued that the money needed to stay where it was because contracts are sacrosanct.

That Liddy was forced to cave in to pressure is eye for an eye– justice to policyholders pressured to settle for less coverage than they purchased.  Many had to fight for even that; and, sadly, some still are. Continue reading “that special relationship of trust and a deep sense of betrayal”

Speaking of lobbying – NFIP pays insurance company legal fees in flood claims disputes!

We are pleased to transmit to you the Federal Insurance Administration’s (“FIA”) new Guide for Write Your Own Counsel. This Guide provides important information on the policies and procedures to be followed by Write Your Own Companies (“WYO Companies”) and their counsel in litigation involving the National Flood Insurance Program (“NFIP”)…

Since the inception of the WYO Program in October 1983, defense of lawsuits based on the SFIP has generally been handled smoothly and effectively. We stand ready to continue to offer support to WYO Companies in all litigation matters concerning the NFIP in our ongoing spirit of partnership.

Can you believe it? I can not – but google search results for “NFIP litigation” offered a copy.

This Guide for Write Your Own Counsel (“Guide”) has been developed by the Federal Insurance Administration (“FIA”) and the Federal Emergency Management Agency (“FEMA”) Office of General Counsel (“OGC”) to assist Write Your Own (“WYO”) Companies and their counsel defending National Flood Insurance Program (“NFIP”) litigation.

So much for thinking it is the deep pockets of the insurance industry that put most NFIP policyholder-plaintiffs at a financial disadvantage in litigation – those deep pockets are in Uncle Sam’s pants!

The FIA and WYO Company share a unique and common interest in the defense of cases related to the NFIP. Among other factors that give rise to this shared interest are the fiduciary responsibilities of the Company, the statutory and regulatory basis for the NFIP, the Federal government’s administrative and oversight responsibilities for the program, the need to share privileged information, and the fact that Federal funds are at risk. Accordingly, through the Arrangement, the FIA and the WYO Company have entered into a joint defense agreement to implement FEMA’s oversight responsibilities for the purpose of any litigation related to or arising under the NFIP to enable the free flow of information between the FIA, FEMA OGC, the WYO Company, and its legal counsel.

“Unique” is not exactly what I’d call the the government’s “common interest” with the insurer defendants in Katrina litigation.  I wonder if Judge Senter had a better word in mind in the “opinion” he would not “venture” in his December 12, 2008 Order in Gagne v State Farm. Continue reading “Speaking of lobbying – NFIP pays insurance company legal fees in flood claims disputes!”

Adjusting the adjuster defendants in Katrina qui tam litigation…

While the 5th Circuit reinstated the Branch Consultant’s qui tam claim reasoning Rigsby was no longer the “first to file” after dismissing a defendant named in both suits, I see a clearer distinction in the two cases based on the composition of the group of named defendants in each.

The Rigsby sisters, for example, cite only their employing adjuster, E.A. Renfroe; but, include a group of engineering firms associated in the claims handling process:

Defendant Structures Group, Rimkus Consulting Group, Inc, Haag Engineering Company, Jade Engineering, Exponent Failure Analysis, Forensic Analysis Engineering Corporation are all collectively referred to herein as “Engineering Defendants.”

Earlier this year, Judge Senter granted the Relators’ motions…to dismiss this action as to Rimkus Consulting Group, Inc.; Jade Engineering; Exponent, Inc.; and Structures Group – leaving only Haag and Forensic as named “Engineering Defendants” as the case moves forward.

The qui tam claim filed by the Branch Consultants, on the other hand, names no “engineering defendants” but has a named group of “adjuster defendants”:

Defendant Pilot Catastrophe Services, Inc…Defendant Crawford & Company…Defendant NCA Group, Inc…Defendant Simsol Insurance Services, Inc…Defendant Allied Claims, Inc…Together, these are the adjuster defendants.

Colonial Claims Corp., the sixth of the named defendants was cited by the 5th in the footnote listing of Appellees; as was Allied Claims, an adjuster defendant dismissed by Branch in October 2007 [a]fter due diligence investigation and discussions with Allied.

What little I know about the group of Plaintiff adjusters is a patchwork centered with this information from their qui tam claim.

Branch Consultants is an insurance and construction consulting firm that has been retained by numerous insureds to re-examine adjustments done by the WYO insurers’ in-house adjusters or other adjuster agencies employed by them following Hurricane Katrina. The principals and consultants of Branch Consultants include experienced adjuster and construction personnel with many decades of construction and construction-estimating experience.

One source added there are four unidentified adjusters known as the Branch Consultants; another referred to them as former adjusters; and a third indicated they were retired.  A group of Zorro-wannabe plaintiff adjusters might bear more scrutiny if I weren’t so interested in the  capacity of the remaining five “adjuster defendants”. Continue reading “Adjusting the adjuster defendants in Katrina qui tam litigation…”

Allan Kanner can just evermore kiss my *** ex rel

The 5th Circuit has released its long awaited Opinion on the Appeal of the Katrina Qui Tam claim filed by a group of public adjusters as the Branch Consultants – an Opinion that references this year’s award-winning snark –

and the Big Sleazy in the Big Easy Award goes to…

Here, Sop, hold the envelope a minute while I direct readers to the excellent background you posted last March and April; and, take a quick look at the 5th’s Opinion – including a significant error.

We AFFIRM the district court’s dismissal of Branch’s claims against State Farm and Allstate. We REVERSE the dismissal of Branch’s claims against all other Defendants based upon the ground of the first-to-file bar. Rather than address Defendants’ alternative grounds for affirmance, we REMAND the cause so the district court can consider those arguments in the first instance…

The Court’s error is dismissing Allstate in light of the stated intent to dismiss the only Branch Defendants that Rigsby names.

Although Allstate was one of the four insurers named when the Rigsby sisters filed suit in April 2006, they later (March 05, 2008) filed a Consent Motion to dismiss three insurers – Allstate, Nationwide, and USAA.   Judge Senter issued the Order on the 10th and received the needed approval of the Department of Justice a week later.  Consequently, State Farm has been the sole insurer named as a defendant in the Rigsby qui tam for almost a year.

The obvious question is how did the Court make such an error and I have no answer.  However, there are other misrepresentations of fact in the Opinion; and, on several of those I have more than a guess.

The envelope, please, Sop, and Continue reading “Allan Kanner can just evermore kiss my *** ex rel”

The Scheme: What’s the first case on the docket – the blame game (Chapter 4 qui tam)

Judge I got a boy here who can’t dance
Can’t dance?  Ah
Ninety days, thirty days for boogaloo
Thirty days to learn how to shing-a-ling
And thirty more for the Afro twist
Can’t dance, what is this

What is this? It’s more of the schemethe shing-a-ling part of the scheme to boogaloo Judge Senter. It’s the twist danced with Judge Acker to conceal technology that would prove no documents were stolen. Don’t nobody buzz. Here comes the judge.

What is this? It’s more of the scheme – another one of the games.  First, there were word games; then, mind games; and now, the blame game. The games can be played separately; but, in the scheme they blend and layer- word games blend into mind games; and, the mind game, drama triangle, provides the victim needed to lead the blame game.  The insurance industry fits the role to a tee.

In an attempt to ease feelings of guilt or discomfort about something, the victim-role thinking of Look what you made me do…If it wasn’t for you drives the blame game even when those words are never spoken.  Play the game and shift the blame – others become your victim and they appear guilty instead.

We’ve certainly seen the blame game played since Katrina – often, in fact, most often, it follows one of these themes but not always the same routine:blame the whistleblower, blame the trial lawyers, or blame the victims. The playing field is nationwide; but, since our focus is Katrina, I’ll narrow the field accordingly with examples from here in Mississippi and our neighbor Louisiana andthe four insurers known to have used the Haag report as a claims handling bible of the storm’s damage – State Farm, Allstate, Nationwide, and USAA. Continue reading “The Scheme: What’s the first case on the docket – the blame game (Chapter 4 qui tam)”

The “F” word hits the road – finds Wall is dead end Street (Part 3 of 3)

Sop knows finance and I, on the other hand, know about working with people who would water a “hedge” if they had one, invest in “cats” that kill mice, and think exotic credit comes from a payday lender.

Hurricane Katrina, however, was a great equalizer; and, three years after the “F” word took people in Mississippi-Louisiana for a ride, the driver reached the end of the road on Wall Street – and was last seen frantically looking for a payday lender.

Financial Crisis: Wall Street dead end for disaster protection.

In the rear view mirror is the “F” word’s detachment as coverage issues became the focus of litigation following Katrina and an OIG report suggesting why – which explains how the “F” word made it all the way to Wall with the financial crisis. Continue reading “The “F” word hits the road – finds Wall is dead end Street (Part 3 of 3)”

The "F" word hits the road – finds Wall is dead end Street (Part 3 of 3)

Sop knows finance and I, on the other hand, know about working with people who would water a “hedge” if they had one, invest in “cats” that kill mice, and think exotic credit comes from a payday lender.

Hurricane Katrina, however, was a great equalizer; and, three years after the “F” word took people in Mississippi-Louisiana for a ride, the driver reached the end of the road on Wall Street – and was last seen frantically looking for a payday lender.

Financial Crisis: Wall Street dead end for disaster protection.

In the rear view mirror is the “F” word’s detachment as coverage issues became the focus of litigation following Katrina and an OIG report suggesting why – which explains how the “F” word made it all the way to Wall with the financial crisis. Continue reading “The "F" word hits the road – finds Wall is dead end Street (Part 3 of 3)”

The “F” word hits the road – finds Wall is dead end Street (Part 2 of 3)

Wind sucks, wind damage to your house sucks, having coverage denied because someone can’t figure out how much damage wind did to your house sucks, having one policy for wind damage and another for flooding sucks – but what really sucks is the “F” word doesn’t know a suckin, f’n thing about wind damage from a hurricane and if you don’t believe that, read the report. JMHO

Final statistically unreliable report- Hurricane Katrina: Wind Versus Flood Issues.

When Congress passed the Department of Homeland Security Appropriations Act 2007, language was added requiring the OIG to investigate whether and to what extent insurance companies participating in the NFIP improperly attributed damages from Hurricane Katrina to flooding rather than to windstorms covered under homeowner policies or wind insurance pools.

There were 209,404 NFIP flood insurance claims filed for Hurricane Katrina, according to the table on page 6 of the OIG report.

  • 98-100 paid claims were reviewed prior to the interim report released July 2007.
  • The number of paid claims reviewed increased to 131 – .0062% of total claims -in the final report.
  • 123 of the 131 paid claims also received payment for wind damage – 94% of those reviewed

Sop, who actually conducts investigative GAAS audits and prior to specializing in construction performed Single audits for certain state governemntal entities, is going to follow with our collective opinion on the disconnect we found between reported data and the OIG’s findings (Results of Review, page 5) – hopefully explaining how data show 1.5 % of the NFIP claims paid for wind damage while the related finding states, Based on the files in our sample, NFIP did not pay for wind damage…duh!

However, because the sampling technique selected by the OIG is indicative of the larger problem created by the “F” word following Hurricane Katina, it is important to point out the 131 paid claims were a Judgmental Sample. Continue reading “The “F” word hits the road – finds Wall is dead end Street (Part 2 of 3)”

The "F" word hits the road – finds Wall is dead end Street (Part 2 of 3)

Wind sucks, wind damage to your house sucks, having coverage denied because someone can’t figure out how much damage wind did to your house sucks, having one policy for wind damage and another for flooding sucks – but what really sucks is the “F” word doesn’t know a suckin, f’n thing about wind damage from a hurricane and if you don’t believe that, read the report. JMHO

Final statistically unreliable report- Hurricane Katrina: Wind Versus Flood Issues.

When Congress passed the Department of Homeland Security Appropriations Act 2007, language was added requiring the OIG to investigate whether and to what extent insurance companies participating in the NFIP improperly attributed damages from Hurricane Katrina to flooding rather than to windstorms covered under homeowner policies or wind insurance pools.

There were 209,404 NFIP flood insurance claims filed for Hurricane Katrina, according to the table on page 6 of the OIG report.

  • 98-100 paid claims were reviewed prior to the interim report released July 2007.
  • The number of paid claims reviewed increased to 131 – .0062% of total claims -in the final report.
  • 123 of the 131 paid claims also received payment for wind damage – 94% of those reviewed

Sop, who actually conducts investigative GAAS audits and prior to specializing in construction performed Single audits for certain state governemntal entities, is going to follow with our collective opinion on the disconnect we found between reported data and the OIG’s findings (Results of Review, page 5) – hopefully explaining how data show 1.5 % of the NFIP claims paid for wind damage while the related finding states, Based on the files in our sample, NFIP did not pay for wind damage…duh!

However, because the sampling technique selected by the OIG is indicative of the larger problem created by the “F” word following Hurricane Katina, it is important to point out the 131 paid claims were a Judgmental Sample. Continue reading “The "F" word hits the road – finds Wall is dead end Street (Part 2 of 3)”

State Farm talks "innocent" walks "guilty"

Although, as Sop said yesterday, there are days when SLABBED is a burden; but, when I’m having one of those days, I think about the slabbed and how every day is a burden when your insurance policy proves to be little more than paper.

All human learning is based on what we experience as we interact with our environment beginning at birth. Learning continues throughout the lifespan as we master a predictable sequence of increasingly complex concepts and skills; but, our experiences remain the source of our knowledge – a yardstick for measuring the authenticity of claims made about something are true.

Consequently, when I read State Farm spokesman’s Fraser Engerman comments in Anita Lee’s follow-up story on the dismissal of extra-contractual claims in McIntosh, I knew it was bullshit spin with just enough truth tucked in to fool those without the experience on the post-Katrina Coast to know better.

You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.

State Farm’s spend-for-spin approach to Katrina litigation will prove eventually prove Lincoln right because what no one, including Engerman, can spin is that State Farm hasn’t walked the talk of the innocence he claims for far longer than the two years it has taken to get to this point. Continue reading “State Farm talks "innocent" walks "guilty"”