[StBernard] Homeowners in Katrina Case Get Checks

[Westley Annis]

Homeowners in Katrina Case Get Checks 


By MICHAEL KUNZELMAN Associated Press Writer 
C 2007 The Associated Press 

- More than 100 Mississippi policyholders who sued State Farm Insurance Cos.
for refusing to cover damage from Hurricane Katrina have been paid this week
as part of a multimillion dollar settlement with the insurer, attorneys for
the homeowners said.

State Farm agreed last month to pay about $80 million to settle lawsuits
filed by 640 policyholders whose claims were denied after the Aug. 29, 2005,
storm that destroyed tens of thousands of homes on Mississippi's Gulf Coast.

Richard "Dickie" Scruggs, an attorney whose legal team represents all 640 of
the policyholders, said Tuesday that more than 100 of his clients have
received checks this week. The rest are expected to be paid by the end of
next week.

"It's incredibly rewarding," Scruggs said. "This is something I wish I could
do for the whole Gulf Coast."

Max and Linda Ingram, who moved north to Carthage, Miss., after Katrina
leveled their beach-front home in Ocean Springs, drove down Monday to pick
up their check and sign the paperwork necessary to settle their lawsuit.

"It felt like justice had been served," Max Ingram said. "I just wish all of
the policyholders could experience the same thing. The coast can't rebuild
if the insurance companies don't pay."

State Farm had denied the Ingrams' entire claim, blaming the damage to their
home on Katrina's storm surge. The Bloomington, Ill.-based company and other
insurers say their policies cover damage from a hurricane's wind but not
from its rising water, including wind-driven surge.

Max Ingram, 70, said the terms of his settlement are confidential, but he
noted that his share of the money will allow him to finish building a new
home in Carthage.

"I didn't want anything more than what they owed me, and I didn't want
anything less," he said.

Sen. Trent Lott, R-Miss., and Rep. Gene Taylor, D-Miss., are among the
policyholders settling with State Farm. Both had homes destroyed on the
coast. Scruggs said neither has been paid yet, but he added, "I don't expect
any trouble with that."

State Farm's settlement with Scruggs' clients and Mississippi Attorney
General Jim Hood also resolves a lawsuit that Hood filed against the
company. Hood agreed to drop State Farm from the lawsuit and end a criminal
investigation of the company's post-Katrina claims practices.

A "class-action" portion of the deal also called for State Farm to pay at
least $50 million to thousands of policyholders who haven't sued the company
but can have their claims reopened, reviewed and possibly paid. However, a
federal judge has refused to endorse this part of the settlement.

U.S. District Judge L.T. Senter Jr. said in a Jan. 26 ruling that he does
not have enough information to determine how many policyholders would
benefit from that part of the deal or how much each can be paid.

Senter also said he is concerned about a lack of any guaranteed payments to
policyholders whose homes were not completely destroyed. And he noted that
cases already in litigation would be excluded from a procedure for resolving
disputes through binding arbitration.

"We're still trying to come up with a way to address the judge's concerns,"
Scruggs said. "I'm optimistic that we can better demonstrate the benefits of
the class settlement to the judge, given the alternatives."

State Farm spokesman Phil Supple said the settlements with Scruggs' clients
show that the company is "fulfilling our agreement" with the policyholders.
That part of the settlement is separate, he added, from the class-action
portion of the deal that Senter wouldn't endorse.

In the meantime, Senter is soliciting ideas from other lawyers with Katrina
lawsuits. In a letter Friday to 180 attorneys, Senter said he is looking for
a broader approach to a settlement.

"While the proposed class action is currently limited to State Farm
policyholders," Senter wrote, "any procedure the court approves as an
alternative to litigation would likely serve as a de facto model that would
apply to similar claims against the other major insurers, Allstate and
Nationwide."

Senter said he is open to establishing an "arbitration alternative" to the
binding arbitration procedure outlined in the proposed settlement, but he
added, "Unless such a procedure offers substantial benefits for both
parties, it will not succeed."

The judge asked the attorneys to respond to his letter by Feb. 12.