There is talk that Team Branch may appeal Judge Vance’s latest ruling as rumors of a malpractice suit swirl around Allan Kanner, the “Show me the money” man whose balls Judge Vance busted earlier this week. Nowdy assures me that Judge Vance has a few flaws in her reasoning but it is her opinion Judge Vance got the procedural problems with Branch right.
For my part I sense a budding soap opera in the making.
Judge Sarah Vance has busted Allen Kanner’s balls badly as Ex Rel Branch has been dismissed. Nowdy will have the particulars with respect to the insurers named, Allstate in particular. The Travelers and the insurance bastards at Liberty Mutual skate unscathed.
I’ve known Dave pretty much all my life. He comes from a fine family and is a fine choice for the insurance industry advisory board to the NFIP. Being from Bay St Louis he had a ring side seat after Katrina to the myriad of ways insurers defrauded the NFIP for example and witnessed first hand the human toll of the bad faith claims handling procedures employed by certain insurers, so he takes the human equation with him to the quarterly DC meetings as well. Dave’s business acumen means he also has a good understanding of the internal controls needed at NFIP, most notably a bit of oversight, to insure that major retail insurers never defraud the program again.
Anita Lee has all the details at the Sun Herald and in a great example of a broken clock being right twice a day, she even snagged some quotes from Jimbo the Clown’s sidekick, Mississippi Insurance commissioner Mikey “The Cook” Chaney who shares our sentiments about Dave and what he brings to the table. Unfortunately for the citizens of Mississippi, Mikey does not recognize fraud even when it bites him on the ass unless it is an individual defrauding a major multinational insurer. Fortunately for us at Slabbed, Mikey doesn’t know when to shut his mouth but such is a common trait with the political class. We’ll be visiting on him again soon.
Again our congratulations to Dave Treutel and we’re delighted to have in him as our voice within the NFIP. Well done Dave!
Kudos and props to Nowdy as all that time and hard work she put in reorganizing our legal pages has been recognized in the media. Jeff Amy has the story for the Mobile Press Register:
Pilot Catastrophe Services Inc. has been dismissed from a federal lawsuit in New Orleans that claims insurers overbilled the National Flood Insurance Program for flood damage so they could pay policyholders less for wind damage from 2005’s Hurricane Katrina.
The Monday ruling allowed the whistleblower suit by Branch Consultants, a group of former insurance adjusters, to go forward after two years of wrangling. But it severed Pilot and two other adjusting firms — NCA Group and Crawford & Co. — from the case.
State Farm Fire and Casualty Co. and Allstate Corp. were removed earlier. Left as defendants are Travelers unit Standard Fire Insurance Co., Liberty Mutual Fire Insurance Co., American National Property & Casualty Co., Fidelity National Property and Casualty Insurance Co., American Reliable Insurance Co., Colonial Claims Corp. and Simsol Insurance Services Inc.
Insurers say there’s no merit to claims that they pumped up flood damage and reduced estimates for wind damage to increase their profits. A similar suit is pending in Mississippi.
The long and short of Judge Vance’s latest order in the Branch Qui Tam case is LETS GET IT ON BECAUSE THIS BABY IS HEADED TO TRIAL. In a 69 page order and reasons Judge Vance lays out a well reasoned legal opinion with only one hiccup for the plaintiffs which we find on page 54:
Pilot Catastrophe Services, Crawford & Company, and NCA Group must be dismissed without prejudice
But even there the news isn’t so bad for the good guys as Judge Vance continues:
the Court grants Branch the opportunity to amend its complaint to allege an adequate factual basis for its allegations.
The whistleblower suit alleging that insurance companies overbilled the National Flood Insurance Program for flood damage so they could get away with paying policyholders less money for wind damage from Hurricane Katrina is about to begin subpoenaing claim files to get to the heart of the case.
Thanks to a 69-page ruling by U.S. District Court Judge Sarah Vance Monday that severed several adjusting firms from the proceedings, the procedural phase of the case is over after two years of motions and appeals.
CONGRESSMAN GENE TAYLOR
U.S. HOUSE OF REPRESENTATIVES
FOURTH DISTRICT OF MISSISSIPPI
2269 Rayburn HOB
Washington, DC 20515
Fax (202) 225-7074
FOR IMMEDIATE RELEASE
CONTACT: ANA MARIA ROSATO (202) 253-1308
July 1, 2009
Rep. Gene Taylor (D-Miss.): In Court, Insurance Companies Provided Evidence of Fraud
Companies Admit They Shifted Hurricane Katrina Wind Claims to National Flood Insurance Program
Today, Rep. Gene Taylor (D-MS) wrote Homeland Security Secretary Janet Napolitano to bring to her attention recent statements by insurance company attorneys that show beyond any doubt that companies shifted Hurricane Katrina claims to the National Flood Insurance Program that should have been covered by their own homeowners policies.
On June 9, 2009, the Mississippi Supreme Court heard oral arguments on the interpretation of “anti-concurrent causation” (ACC) clauses in homeowners insurance policies. The attorney for Nationwide, Christopher Landau, told the Supreme Court that Nationwide applies the ACC clause to exclude coverage of all damage caused by hurricane winds if subsequent flooding was sufficient to cause the damage.
In response to questioning, Landau answered that even if a house were 95 percent destroyed by winds before any flooding, Nationwide would owe nothing to the policyholder if the flooding was severe enough to have destroyed the house. USAA Attorney Greg Copeland even claimed that it was the intent of Congress when enacting the National Flood Insurance Program that the federal government should pay for all damage caused the combination of wind and flooding.
Randy Maniloff is a very familiar name to us at Slabbed as we’ve seen him used by reporters like Rebecca Mowbray at the Times Picayune as a source for business community legal reaction when she reports on Katrina policyholder cases. I’ve found Randy’s legal analysis (as reported) to be rigorous even in cases where we might not see things quite the same. As such I was honored that he sent us a link to an article he did for the latest issue of the Federalist Society’s Class Action Watch on the implications of the recent 5th Circuit decision reinstating Ex Rel Branch to the current massive money giveaways known as the bailout and stimulus package. He article begins on page 6 of the publication as he sets his piece up but it is on the bottom page 7 were I’ll begin as he gives a brief overview of Ex Rel Branch:
Branch Consultants (2009) has expanded plaintiffs’ ability to bring qui tam actions under the False Claims Act. At issue before the Fifth Circuit was an appeal of the Eastern District of Louisiana’s dismissal of Branch Consultant’s False Claims Act qui tam complaint against eight insurance companies and six adjusting firms. Branch’s claim was based on fraud allegedly committed by the insurer defendants in their role as participants in FEMA’s “Write Your Own” flood insurance program (WYO). Under this program, private insurance companies issue and service flood insurance policies, but any claims are paid from the federal treasury.
In the ordinary course, participating WYO insurers are required to comply with certain FEMA rules to ensure accurate estimates of flood damage. However, following Hurricane Katrina, FEMA was forced to waive certain of their rules in order to expedite payments to insureds. In general, a significant issue in the adjustment of Katrina claims (and source of substantial litigation) was the apportionment between wind damage and flood damage. According to Branch, waiver of the FEMA rules “created a perverse incentive for WYO insurers to understate losses due to wind (which an insurer would be required to pay under the insured’s homeowner’s policy) and overstate losses due to flood, thereby shifting the loss from the WYO insurers to the federal government.”
At the time that Branch filed its qui tam action, a similar action—Rigsby—had already been filed and was under seal—pursuant to False Claims Act provisions. It was alleged in the Rigsby complaint that four insurers in the WYO program “‘made a corporate decision to misdirect and misallocate claims from those of hurricane coverage to flood claims’ payable by the federal government.” The Rigsby plaintiffs made general allegations of fraud against the four WYO insurer-defendants and also made specific allegations of fraud against State Farm.
In the Branch Consultants complaint, Branch—just as the Rigsbys had done—generally alleged that the WYO insurer defendants defrauded the National Flood Insurance Program by improperly attributing wind damage and other non-flood losses to the flood policies subsidized or underwritten by the government. By doing so, the defendants were allegedly able to avoid attributing such losses to causes that were covered by homeowners policies largely underwritten by themselves. Continue reading “Randy Maniloff checks in with a good analysis of the recent 5th Circuit decision in Ex Rel Branch”
While I was making the online rounds Saturday I noted National Underwriter Editor in Chef Sam Friedman has yet another blog entry on “the need for an iconic insurance superhero to serve as a positive role model and help improve the industry’s poor public image. That line of blogging generated Mr Friedman “a fascinating letter from Donna J. Popow, senior director of knowledge resources and ethics counsel at the American Institute for CPCU and the Insurance Institute of America.”
“Shortly after Hurricane Katrina, I was asked to do a spot on a local Philadelphia news station. I talked about what homeowners could do to get ready for a catastrophic event.
“After that spot I went to the producers and suggested to them that the real story coming from Hurricane Katrina was the work of the adjusters on the ground handling claims. They agreed with me, and asked if I could find them adjusters to speak with.
“I contacted several adjusters who I knew were handling claims in Louisiana and Mississippi. Each adjuster I contacted thought the idea was a good one–and each of their employers refused to give them permission to participate.
“As a lawyer, I can understand why; as a claims person, I was bitterly disappointed.
“As an industry we have done very little to publicize the good that we do. Usually the only publicity we get is in a law journal, where even a win for the industry is cast is a negative light because it usually means a policyholder or a claimant isn’t getting paid.
“Why shouldn’t our industry pat itself on the back for mustering hundreds of adjusters on short notice to respond to a catastrophe? Why shouldn’t the rest of the TV-watching, newspaper-reading public learn that these men and women—many of whom are volunteers—leave their families for weeks (or even months) on end to work these catastrophes, meeting with policyholders in extremely stressful situations, and diligently settling claims?….. Continue reading “A Sam Friedman Must Read ….”
We are up to our eyeballs in national debt with a trillion dollar plus deficit staring us all in the face this year. While would anyone in their right minds excuse the fleecing wind insurers perpetrated on each and every taxpaying citizen in this great land? Word is getting out and it is leaving people “disturbed“. This was never about blind hatred of insurance companies; rather it is simple justice. No one and no company should be above the law.
The internet is our sword. The truth makes our blades sharp.