Like A Good Neighbor.. State Farm Charged Under RICO For Katrina Payments...

[BlooInBloo]

Not a good year for insurance companies. I wonder if they have actuarial analyses taking into account RICO convictions.

http://www.msnbc.msn.com/id/19337558/

"NEW ORLEANS - State Farm Fire & Casualty Co. engaged in a "pattern of racketeering" by manipulating engineering reports on Hurricane Katrina damage so the company could deny policyholder claims, lawyers for a group of Mississippi homeowners allege in a lawsuit filed Wednesday.

The federal suit against State Farm represents a new legal strategy for attorney Richard "Dickie" Scruggs, who has played a prominent role in challenging the insurance industry for its handling of Katrina claims.

Hundreds of homeowners in Mississippi and Louisiana have sued their insurers for denying their claims after the Aug. 29, 2005, storm. The suits typically accuse insurers of bad faith and breach of contract for refusing to pay for damage from Katrina's storm surge."

[Kerrytravelers]

1. Ugh. That's my auto and renters insurance company.

I feel dirty.

[BlooInBloo]

2. Inescapable. It's likely that all big insurance companies are scum.

[Selatius]

14. Many insurance companies also have a "health care" division.

Yes, the very same Michael Moore is aiming his guns at.

[EnviroBat]

5. Crap, me too...

They've been good to me, and my rates have dropped considerably recently. I hope they won't ask their policy holders to bail them out of this one...

[DemReadingDU]

10. Ugh, mine too

:(

[grace0418]

11. Both our cars and our condo. But like someone else said, I think they're all bad news.

It's either go without insurance (not even legal in most cases) or go with one of them and hope they don't screw you over. I have to admit State Farm has been very good to us. But then, we've only made a few small claims. If disaster struck, who knows?

[Solly Mack]

3. k/r

[Elidor]

4. A "pattern of racketeering"

Insurance by another name.

[spanone]

6. I believe it's called 'protection money'.

In spite of Katrina the ins. co's. have had record breaking profits.

[ThomCat]

9. That says a hell of a lot, and nothing good.

x(

[Firespirit]

7. I don't doubt this ONE BIT.

Thanks for the post! I used to live on the Gulf Coast and have been truly sickened, both by the way that regular people are getting screwed over, and by the lack of coverage for it.

I have come to suspect that there was some intimidation going on in the post-storm meteorological analysis of Katrina as well. As you may know it was considered a Category 4 at landfall, 140-145 mph winds. At the "official" end of the season, Nov. 30, 2005, the Hurricane Center issued a seasonal summary about all the storms that had formed up to that point. Katrina was still listed as a Category 4 with 140-145 mph winds. But two weeks later, the center issued its summary report on the hurricane, and it had been downgraded to a Category 3 -- a low-end one at that.

What makes it suspicious is this:
(1) Their reasoning for the downgrade is that "the storm was weakening at landfall" based on changes in the eyewall. Well, yes, it was weakening at landfall. But that's not proof of anything.
(2) There was a CONFIRMED report of Category Four winds in Louisiana, which is mentioned in this very same report. The winds just took place before the eyewall actually passed over land. Given that everything was utterly destroyed by Katrina's winds and surge at Ground Zero, I am not surprised that there's a lack of good data about the winds.
(3) However... residents on the Gulf Coast who were far enough inland that their homes weren't washed away reported Category Five wind gusts on their own equipment, indicative of Cat-4 sustained winds.
(4) There were confirmed reports of 100-110 mph sustained winds, upper end Category Two, in Laurel, MS, which is about an hour and a half inland. The storm was also verified to have been a hurricane when its center was FOUR hours inland. As it passed directly over me, uprooted massive trees, smashed in a window just by the force of the wind, and toppled a thick, old-fashioned (and recently re-pointed) chimney, I would confirm that as well.

This was happening at the same time that the Bush administration was trying to force the Weather Service not to issue emergency products regarding severe weather. Since then, the Bushies have gotten involved in a war of words with the new Hurricane Center director over budgeting. I have strong suspicions that the insurance industry put pressure on NOAA bureaucrats to have the storm officially downgraded, so it would be easier for them to claim it was all surge damage (and thus not covered for most residents) rather than wind damage. Many of the houses were certified to withstand Category 3 winds, but not higher. There was a definite need for the insurance to be able to claim that all those houses were structurally sound until the water came in.

[BlooInBloo]

8. Maybe they should rename Katrina to Hurricane Downsized.

[babylonsister]

12. GOOD! Any corporation capitalizing on others' misfortune deserves

to be caught and punished.

[Elidor]

13. Yes. Perhaps they'll pay a small fine

Nobody is likely to go to jail, and any damages awarded will probably reduced drastically by the appellate court, whose "conscience" will be shocked by any substantial award (and whose jurists have often worked for insurance companies in the past).

It often seems to me that we are little more than prey for predatory corporations in this country. Ford Motor Co. once did some math and found that it was cheaper to pay damages from wrongful death suits from its exploding Pinto than it was to pay $11 per vehicle to fix the problem.

And so it goes...

[babylonsister]

15. Yep-apply that to the healthcare industry, too. Sigh. nt

[Firespirit]

16. It's shameful

It's a very good thing that the homeowners in Mississippi have had an advocate in the state Attorney General, Jim Hood (who incidentally is up for re-election this year). He's the one who headed up the class action lawsuit against the insurance industry that won the damages. Under the administration of Haley Barbour, they sure wouldn't have gotten a cent. Haley Barbour's focus is on making the coast friendly for big business. There's actually an entire section in the rebuilding plan that he commissioned for rebuilding bigger and "better" Wal-Marts on the coast.

In the meantime, the people who have lost EVERYTHING are having to rely on volunteers from far out of state. I've blogged extensively about it.

The insurance industry is absolutely predatory. Earlier this year, they tried to cut off lots of Florida residents, but were stymied.

People who think that the homeowner's insurance industry is some benevolent, kind-hearted industry that wants to help you get back on your feet after a disaster need a big, loud wake-up call. They're in business for one purpose, and that is to make money off you.

[rasputin1952]

17. Not the first time SF gotinto trouble...they had problems

few years ago when they said the paid for original manufacuted equipmnet into cars that had claims on them, but told the repair shops to use other viable equipment instead. The parts went on as original, and SF and the repair shops shared in the savings.

They wee hit w/ahefty fine...this time, it could break them...:shrug:

[emulatorloo]

18. KICK AND NOMINATED n/t