Insurance Crooks at Marsh Convicted of Price Fixin'

Hey pardners why don't we go help State Farm beat up on Jim Hood. Not!

Two ex-Marsh executives convicted of bid-rigging

NEW YORK (Reuters) - Two former executives at Marsh Inc, a unit of Marsh & McLennan Cos Inc (NYSE:MMC), were found guilty on a monopoly charge on Friday for participating in an insurance bid-rigging scheme, court officials said.

William Gilman, a former executive in Marsh Inc's Global Broking unit, and Edward J. McNenney, a former global placement director, were acquitted of all other charges they faced in the ruling handed down by New York State Supreme Court Judge James Yates.

The ruling was confirmed by clerks for the judge.

"All of the charges that were thrown out sort of gutted (the government's) case, in my view," said Stephen Neal, a lawyer for McNenney. "We are going to appeal the conviction on the anti-trust count vigorously."

"Bill Gilman was really the client's best friend and the insurance carrier's worst enemy," said Gilman's attorney, Robert Cleary. "We look at this as merely round one."

The case, first brought in September 2005 by the New York Attorney General's office, was part of a sweeping investigation of insurance industry practices.

"We are gratified that the court found the defendants guilty of felony bid rigging," Jeffrey Lerner, the spokesman for Attorney General Andrew Cuomo, said in a statement.

"Bid rigging is a serious offense which deprives customers of the benefits of a competitive marketplace and this office will continue to prosecute it vigorously."

Eight former Marsh executives, including Gilman and McNenney, were indicted in September 2005 and their 10-month bench trial was the first trial in the case.

At the time of the indictments, then-Attorney General Elliot Spitzer said that between November 1998 and September 2004, the defendants colluded with executives at ACE USA (NYSE:ACE), American International Group Inc (NYSE:AIG), Liberty International Insurance Co, Zurich American Insurance Co (VTX:ZURN.VX) and others to rig the market for excess casualty insurance.

Gilman and McNenney were acquitted of charges of scheming to defraud and 19 counts of grand larceny.

Marsh, a unit of the world's largest insurance broker, itself did not face criminal charges. The company agreed to pay $850 million in January 2005 to settle Spitzer's civil lawsuit accusing it of bid rigging.

Yo Allstate: Florida Isn't Amused OIR Moves to Ban Allstate

Earlier this week there was some improtant developments involving Florida's battle with Allstate. As we have repeatedly noted in our continuing coverage of Allstate there is a pattern of behavior exhibited by this insurance giant of ignoring lawful subpoenas and court orders. Worse according to the Florida Office of Insurance Regulation complaint:

Encompass Floridian Insurance Company’s chief executive officer knowingly made and filed a false certification.....

This charge involves a certification on the rate filing that the CEO of the operating company has reviewed the entire application. When sworn under oath the CEO of Allstate's Florida subsidiary admitted he signed the document only reviwing the execuitive summary and thus was unable to answer detailed questions by the Florida Senate committee.

To put this into context this was the type of defense by ignorance used by Ken Lay at Enron (the three wise monkeys). It resulted in CEO's and CFO's being required by Sarbanes-Oxley to affirmatively certify their companies financial information submitted to the Securities and Exchange Commission. Here is a link to Thomas Wilson certifing the last quarterly corporate financial statement and in the process doing what the CEO of his Florida subsidiary did not do, reading and certifing that an important document is accurate and complete. I now wonder if those internal controls Mr. Wilson swore were working on October 30, 2007 really are in light of the FLOIR Complaint. After all a good system of internal controls include those which insure compliance with applicable laws and regulations.

In any event here is the press release from Commissioner McCarty's office for our readers to consider. Events in Florida are heating up and as pointed out elsewhere by Mr CLS could directly tie into the shareholder derivative suit styled Fojas v. Ackerman.

Florida Insurance Commissioner Kevin McCarty today announced that the Office of Insurance Regulation (Office) has filed an administrative complaint on a non-emergency basis seeking to suspend the certificates of authority of the Allstate Companies (Allstate) to write new insurance policies in Florida.

The complaint is based in part on Allstate's failure to provide witnesses and documents as subpoenaed by the Office; falsely labeling subpoenaed documents as trade secret and falsely certifying its rate filings.

"Seeking to suspend a company's license is not something we take lightly," said General Counsel Steve Parton. "However, in light of their defiance of the Florida Insurance Code, we think it is necessary to make the point that actions such as we have seen by Allstate will not be tolerated."

Allstate was to have provided all appropriate company documents related to the Office's investigation at or before the Jan. 15 hearing. Instead, in late November, Allstate filed 51 pages of objections to the subpoenas. Allstate has been delivering documents to the Office since the Jan. 15 hearing, but has not delivered all documents requested by the subpoenas and is maintaining claims of privilege to some of the documents.

The Office has been asking for documents about Allstate's reinsurance program, its relationships with risk modeling companies, insurance rating organizations and insurance trade associations. The subpoenas also required appropriate witnesses to appear at the January hearing to be able to discuss issues that were subjects of the subpoenas.

The complaint also alleges that Allstate has violated Florida law by not properly certifying its rate filings as required by House Bill 1A, which passed in January 2007.

Filing the complaint is required under Florida law as part of the process that began when Commissioner McCarty issued the Immediate Final Order (IFO) Jan. 17, suspending Allstate from writing any new business in Florida. Allstate is expected to request an administrative hearing on the Office’s complaint. If requested, a hearing would be held at the Division of Administrative Hearings (DOAH).

An administrative law judge will hear the evidence and then make findings of fact. Commissioner McCarty could then issue a Final Order, which may include a suspension of Allstate's certificates of authority. Allstate could then appeal to the First District Court of Appeal.

The DOAH hearing is separate from the ongoing matter that Allstate initiated in the First District Court of Appeal (DCA) by filing its Jan. 17 notice of appeal of the commissioner’s IFO. That matter is still proceeding in the DCA.

The Allstate suspension was the first time the Office had suspended a company for failure to "freely" provide documents as required by Florida law.

The Order would apply to all Allstate companies on which the subpoenas were served:

Allstate
Floridian Insurance Co.
Allstate Indemnity Co.
Allstate Property &
Casualty Insurance Co.
Allstate Insurance Co.
Allstate Floridian
Indemnity Co.
Allstate Fire and Casualty Insurance Co.
Encompass
Insurance Co. of America
Encompass Indemnity Co.
Encompass Floridian
Insurance Co.
Encompass Floridian Indemnity Co. A copy of the subpoena is available
to review.

sop

Xavier University v. Travelers / Chehardy v. Allstate

"The wise man listens to meaning; the fool only gets the noise."
Poet C. P. Cavafy

"Favor distilled thinking, by which I mean the thinking based on information that is around us that is stripped of meaningless but diverting clutter. For the difference between noise and information has an analog: that between journalism and history."
Nassim Nicholas Taleb in Fooled by Randomness

For whatever reason I was reminded of those quotes yesterday while reading the Jim Hood commentary in yesterday's Clarion Ledger, the Folo Blog and David Rossmiller's blog. Those that have actually read Taleb's books understand he harbors a general disdain for "journalists" though the main object of his sarcastic wit in "Fooled" is George Will who is a commentator, rather than a journalist. All in the blogosphere are guilty of being Talebesque noise makers including your authors here at the Insurance Issues Forum. The trick is distilling the commentary, which task all three sources of noise I listed above failed miserably yesterday in my opinion.

So while much of the local blogosphere goes off chasing the Jim Hood br'er rabbit, some fresh off their unsuccessful chase of Billy McCoy, we will stick to our knitting of providing analysis of the insurance news which impacts so many coastal residents across this nation.

I saw this news item in today's Sun Herald and thought it most worthy of mention, mainly because we will surprise some of our readers with our take. It deals with two court cases on appeal out of the New Orleans area related to Katrina and the Supreme Court shooting down the appeals of Xavier University.

The Supreme Court refused Tuesday to offer help to Hurricane Katrina victims who want their insurance companies to pay for flood damage to their homes and businesses.

The justices rejected appeals from Xavier University and 68 other individuals and businesses seeking to allow their lawsuits against the insurers to go forward.

Xavier asked the court to step in after the 5th U.S. Circuit Court of Appeals ruled the policies did not cover damage from floods, even those that resulted from man-made failures such as the collapsed levees in New Orleans.

Other cases working their way through state courts have so far reached differing conclusions. A Louisiana appeals court has said language excluding water damage from some insurance policies was ambiguous. The Louisiana Supreme Court will hear arguments in that case Feb. 26.

Xavier and the other plaintiffs had asked the federal court to allow the state Supreme Court to rule on their suits as well. The 5th Circuit refused and the U.S. high court upheld that ruling Tuesday.

While we are certainly sympathetic to the arguments of the dubious effect the Chamber of Commerce has exacted on our judiciary we agree with the Supreme Court's ruling. The Flood Exclusion found in all private insurance policies is not ambiguous and these suits succeeded only in muddying the waters for all insurance litigation, much of which are far better grounded in insurance law. These Louisiana cases are not wind versus water; rather all the parties seem to agree flooding was the cause of damage. In our minds the obligations of insurers stop when excluded events are the clear cause of damage as is the case in these suits.

Finally we welcome Bellesouth, a real life example of the firehouse syndrome at work in the blogosphere. To their credit the Clarion Ledger has not banned Belle simply because she has a differing viewpoint though I am fairly certain Sid Salter would love to strangle her. Belle is new to the blogosphere and comes equipped with some strong opinions. We hope she will find the environment here conducive to learning the ropes and finer points of effective blogging.

sop

Nationwide: Not on Your Side?

Pardners when this Cowboy says big insurance will go to great lengths to screw the elderly for a buck he means it! Pull up a chair and listen to this poor ole woman's nightmare dealing with her own insurance company Nationwide Insurance. I hope insurance industry waterboys like Senators Chris Dodd and Richard Shelby are proud of themselves and their service to big insurance. Bless their hearts their mommas must not have taught them right from wrong when they was growin' up.

AIken v USAA: The Verdict

Hailed in some circles as a major victory for insurers, the jury has spoken and awarded David and Marilyn Aiken $64,000 in their suit against USAA. We certainly respect the jury verdict and will no doubt find irony in the praise accorded our gulf coast based jury by some who previously had written us off as incapable of fairly dispensing justice. That praise will last until Nguyen v State Farm begins next month, but that is a different case with different fact patterns. A tip of the hat also to David Rossmiller for his analysis of the verdict though I would add the "jury pummeling" of Allstate in Weiss was deserved despite Mr. Rossmiller's earlier protestations to the contrary. As I mentioned yesterday the fact the Aiken's received anything from the jury indicates they felt USAA was not monetarily fair in how this claim was adjusted.

In any event here is the story in today's Sun Herald on the Aiken verdict and link to the jury instructions as we close the curtain on Aiken and await Nguyen.


By ANITA LEEmailto:LEEcalee@sunherald.com

A jury in U.S. District Court awarded USAA Casualty Insurance Co. policyholders only $64,000 for wind damage to their Pass Christian vacation home, which was destroyed by Hurricane Katrina.

David W. and Marilyn M. Aiken already had received $178,205 from USAA, including loss of use, but sought total coverage for their home, boat house and contents. Full payment would have amounted to $427,087 more.

The Aikens also sought damages to punish the insurance company, claiming USAA purposely minimized their claim. But District Judge L.T. Senter Jr. did not allow the jury to consider punitive damages, ruling USAA had legitimate reasons for its decision.

The Aikens maintained a tornado destroyed their home long before Katrina's tide, covered by federal flood insurance, surged ashore. However, USAA said it covered damage that could have been caused by wind and excluded from payment any damage caused by tidal surge or by wind and tide acting together. The property was subjected to 20 feet of water, minus wave action, according to USAA's experts.

The plaintiffs argued those experts were biased, but the evidence failed to support this contention.

Senter told the eight jurors before deliberations that they should take into account the Aikens' acceptance of $278,000 in coverage from the National Flood Insurance Program, which indicates they acknowledged some damage from the tide. The jury also had to consider the previous USAA payment and could not award the Aikens more than the total policy coverage.

That left the jury to consider an amount from $0 to $272,238 for structural damage and $0 to $154,849 for destruction of contents. Based on the evidence, the jury awarded $17,000 for structural damage and $47,000 for contents.

Senter also told the jury the Aikens had met their initial burden under the insurance policy of showing windstorm caused an accidental direct physical loss of their property.

USAA then had the burden to prove the portion of the loss excluded by its policy, which is storm surge or a combination of surge and wind.

Tidal surge damage is excluded from coverage, Senter instructed, "even if wind contributed to cause this flood damage." He explained to the jury: "All damage to the property that was caused by storm surge flooding is excluded even if the storm winds concurrently or in any sequence caused or contributed to this excluded storm surge flood damage."

Senter's instruction on the so-called "anti-concurrent cause" exclusion dovetailed with a recent ruling from the 5th U.S. Circuit Court of Appeals in the lawsuit Tuepker vs. State Farm, a Katrina case from the Coast. The ruling clarified when a homeowner can expect to recover wind damage. As State Farm argued, the appeals court found the wind damage must occur independently of storm surge for coverage to apply.

Washington State Voters Say No to Big Insurance and Yes to Ending Institutionalized Claims Abuse

This past November, despite insurance companies spending millions on the election, Washington State Votes passed the "Insurance Fair Conduct Act" which allows for treble damages against insurance companies that treat their customers in bad faith. Predictably the insurers played from the old script of threatening higher rates if they were forced to behave responsibly. Not as predictable were the voters that ratified the law, evidently tired of being mistreated by insurance companies.

"Companies (that) act in good faith are not going to have a problem, its not going to cost any more money , its not going to be any legal action and its not going to cost them treble damages because if companies deal with their customers in good faith, there is no penalty." said Mike Kreidler, Washington State Insurance Commissioner when interviewed about Washington State Fair Claims Act.

Why would any business be against treating it's customers fairly? One look at the profit made from institutionalized customer/claimant abuse reveals the answer.

Anderson Cooper has reported on the issue of insurance bad faith repeatedly since Hurricane Katrina, possibly because he was moved by the treatement of ordinary men and women here in Mississippi by their insurers after the storm. The following video clip is from a report on CNN on the Washington State Vote and is well worth watching. Enjoy.

sop

AIken v USAA Continues: More Employees Take the Stand

Yesterday the trial resumed after the holiday break with Rimkus and USAA employees taking the witness stand. From the looks of the Sun Herald story, yesterday was not very eventful as employees from Rimkus and USAA took the stand to deny the engineering reports were changed simply to save USAA money. Given what we have found regarding the McKinsey consulting recommendations regarding claims handling and its apparent widespread use across the insurance industry as the new claims adjusting bible I have a hard time believing those statements. This would never come out in Court but I'd love to see if just one of these altered engineering reports resulted in a favorable change for the claimant/insured. Forgive the sarcasm but I suspect if such were the case pink pigs really do fly.....

sop

USAA employees testify in case
By ANITA LEE calee@sunherald.com

GULFPORT --Employees testified that USAA Casualty Insurance Co. did not conspire with engineering firm Rimkus Consulting Group Inc. to deny coverage to a couple after Hurricane Katrina.

"Absolutely not," said Rimkus manager Paul Colman, whose denial was echoed by two USAA claims managers testifying in the second week of the U.S. District Court trial.

The three were called to the stand Tuesday by the plaintiffs' attorneys, who are trying to prove USAA pressured Rimkus to change reports that would minimize what the company owed for wind damage.

USAA paid David W. and Marilyn M. Aiken $178,205 for wind damage on a policy that exceeded $680,000 in coverage for their Pass Christian vacation home. The Metairie couple is seeking full coverage, plus punitive damages based on the allegation their claim was denied in bad faith.

USAA employee William McNamara, who supervises adjusters and coordinated work by engineering firms after Katrina, testified Tuesday afternoon. He said Rimkus provided reports for USAA on 200 properties. McNamara also verified he called Rimkus to request its engineering report on the damage be corrected and include more detail.

McNamara said he was not attempting to change the engineering company's opinion about the cause of damage. Instead, he said, USAA needed the wind damage detailed in order to estimate what the Aikens were owed.

Rimkus had closed the file in December, after sending USAA a report that said, in part: "It cannot be visually determined from the remaining physical evidence the percentage of damage resulting from surge forces and the percentage of damage resulting from wind forces." Federal flood insurance covered the Aiken's damage from storm surge, paying them policy limits of $250,000 - less than half the home's value.

A day after McNamara contacted Rimkus in March 2006, the engineering firm sent USAA a "supplemental report" that listed construction components most likely damaged by wind, including gutters, the roof, siding and trim. The supplemental findings also said a storm surge of 20 feet above ground, excluding waves, destroyed building super- structures.

Bad Faith Claims Handling: The New Norm for Big Insurance

Folks we got sold a pig in the poke with tort reform as our legislators just give them crooks in Gucci suits a bigger club to hit the common man right in the head. That's right boys and girls, insurance companies will deny legitimate claims knowing most folks won't fight 'em but occasionally people do like this Tow Truck outfit. So pop some pop corn, pull up a chair and see if Pink Pigs Fly. This video is dedicated to this Cowboy's favorite corporate insurance lawyer in Portland Oregon, Mr. David Rossmiller.









Like this story says and Sop can personally vouch, there is no dollar amount too low for these crooks to try and screw you. And don't you know that corporate insurance lawyers love making big fat fees fightin' for a year over $3000. If you want to be paid fair like, be prepared to sue!

Crooks in Gucci Suits? You Betcha. Put the Screws to the Customer

Insurance companies and their scallywag lawyer enablers like Ronnie Musgrove and Greg Copeland have no problem screwin' the common man for a fee. Folks, this Cowboy won't sell you a Pig in the Poke and neither will Anderson Cooper with CNN. Ole Anderson details first hand the underhanded tactics these crooks in fancy Gucci suits use to take advantage of old folks and the general public. Pull up a chair and take a look how the bad hands people treat accident victims.

Let the Lawsuits Fly: Good Hands in Boxing Gloves

We are diligently working rumors of a shareholder suit being filed against Allstate over the ramifications of their claims practices for investors. If the rumors hold another significant legal front has opened against this embattled insurance giant.

Allstate is not sitting still though obtaining a stay against the Florida Department of Insurance Regulation's ban of the company announced last week:

Appeals Court Blocks Allstate Order

Friday January 18, 5:18 pm ET
By Brent Kallestad, Associated Press Writer

Court: Allstate Can Keep Selling Insurance Pending Appeal


TALLAHASSEE, Fla. (AP) -- A court Friday allowed Allstate Corp. to keep selling insurance in Florida while the company appeals an order barring it from writing new policies.

State regulators told Allstate on Thursday to stop writing policies for what officials said was a failure to comply with a state subpoena in a dispute over the premiums the company charges for homeowners insurance in Florida.

The 1st District Court of Appeal stayed the order from the Office of Insurance Regulation pending the appeal, although it gave the office 10 days to show why the company shouldn't be allowed to sell insurance in the meantime.

"This allows our more than 1,100 agents and their employees across the state to continue to do business in Florida, to create jobs and to serve their communities," said Allstate spokesman Adam Shores. "We're going to continue to work with OIR to provide the information they've requested in their subpoena."

Ed Domansky, a spokesman for the Office of Insurance Regulation, said the state has 10 days to file its response but would probably file sooner.

"This is just another step in the process that enables Allstate to further delay production of the documents we requested," Insurance Commissioner Kevin McCarty said Friday. "I will do everything within my authority as Florida's insurance commissioner to ensure that the suspension remains in effect."

McCarty has demanded information about why the company hasn't dropped rates to the satisfaction of insurance regulators following last year's passing of a bill meant to lower premiums. As part of that investigation, McCarty subpoenaed the company and officials at OIR said this week that the company appeared to be stalling and not giving up documents state investigators wanted.

The suspension had applied to all types of insurance sold by Allstate's 10 insurance companies doing business in the state, but does not affect existing policy owners.

Aiken v USAA Casualty Insurance Company Day 4: Expert Cross Examination

The trial continues as does the Sun Herald coverage. My own opinion based on the following story is that despite vigorous questioning from Mr. Copeland, the basic facts as introduced into evidence remain unchanged.

USAA trial testimony continues

Engineer: Tornado destroyed house
By PAM FIRMINpfirmin@sunherald.com

GULFPORT --Hours before Hurricane Katrina's storm surge arrived, the Henderson Point home of David and Marilyn Aiken had been hit by a tornado and was long gone, forensic engineer Charles Ivy told the court Thursday morning.

He agreed reluctantly under questioning by Greg Copeland, attorney for USAA Casualty Insurance Co., that the surge would have been enough to destroy the house if the house were still there.

The report Ivy prepared to back up his findings went under the microscope with intensive questioning by Copeland, who lost patience with the witnesses' often rambling responses and complained to U. S. District Judge L.T. Senter Jr., "He is not responding in any way."

"Repeat the question," Senter instructed.

The Aikens, represented by George W. Healy IV, are suing USAA and Rimkus Consulting Group Inc., which was employed by USAA, for conspiring to defraud them. They seek full payment of their $680,000 homeowner-insurance policy with USAA, which paid them $178,000.

Earlier testimony came from Rimkus engineers. One inspected the Aikens' property and the other later made changes to that report without communicating with its author, which is against the company's policy.

Rimkus attorney David Ward read verbatim from Ivy's pretrial statement that he got data for his report from a preliminary storm model, and questioned Ivy's reasons for not updating it when better data became available as time went on.

Healy's next witnesses were to be Rimkus employee Paul Coleman and USAA employee David Rummel.

Aiken V USAA Casualty Insurance Company Day 3: The Experts

In our first post on the trial, testimony revealed Rimkus Engineering supervisor James Jordan altered the onsite engineer's report on the Aiken site favorably towards Rimkus client USAA without consulting the onsite engineer, Roverta Chapa in direct violation of Rimkus procedure. The following Sun Herald story recounts the testiomony of two plaintiff experts, a metorologist and structural engineer who both introduced evidence supporting the conclusions of Rimkus onsite engineer Roverta Chapa who also found strong evidence of wind damage to the property:

Experts assert pre-surge tornado damage

Testimony in trial against insurer USAA

By PAM FIRMINmailto:FIRMINpfirmin@sunherald.com

GULFPORT --Testifying as expert witnesses, a meteorologist and a forensic engineer Wednesday afternoon described why tornadic force rather than storm surge was most likely responsible for the Katrina destruction of David and Marilyn Aiken's home in Henderson Point.

A lawsuit filed by the Aikens seeks damages and full payment of their $680,000 insurance policy with USAA Casualty Insurance Co., which paid them $178,000 in structural and contents damage. The suit claims USAA and Rimkus Consulting Group Inc., which was employed by USAA, conspired to to defraud them. Earlier testimony revolved around whether changes to a property report by structural engineer James W. Jordan were made to downplay wind damage so USAA would owe less money.

On Wednesday, Day 3 of the trial projected to last several weeks, presiding U.S. District Judge L.T. Senter Jr. frequently tried to move proceedings along, one time telling attorneys who haggled over details of intricate meteorological documents that it was "not necessary to go over every bit of the document" and later that "everybody's tired of hearing his jabbering back and forth."

Documents were provided by meteorologist Charles Barrere of Norman, Oka., formerly of the New Orleans area, who said they showed a tornado being tracked by the National Weather Service in New Orleans around 3 a.m. Aug. 29 most likely passed directly over the Aikens' house hours before the waters rose. The eight jurors were able to look at these on monitors in front of their seats.

Dr. Charles Ivy, a forensic engineer from Florida, said it was significant that 90 percent of the nails on surviving beams at the Aiken property were bent in a direction from north to south and that four sturdy frames still standing were "whipped toward the west, leaning toward the direction the water came from. If water caused the destruction, they would have been leaning toward the east."

Court begins today with cross examination of Ivy by USAA attorney Greg Copeland and Rimkus attorney David Ward.

Follow the Money Part II: Putting the Screws to the Common Man

Folks this Cowboy saw this in today's Sun Herald and would like to give a big tip of my 10 gallon hat to Anita Lee over Sun Herald way. Our work raising insurance awareness would not be possible without the bang up job done by Ms. Lee covering these issues and this Cowboy would like to thank Ms. Lee for her dedication to this issue. Notice who represents USAA. It's none other than our boy Greg Copeland who has his fingers in every insurance pie here in Mississippi.

Today we see her story on the Aiken lawsuit against USAA and once again the hos at Rimkus and their proclivity to change on site work sight unseen is on display. Don't worry folks them boys are telling us all these changed engineering reports are just an honest mistake.....and if you believe that I got some gold spray painted Pig Scat I wanna sell you for $400/ounce. The story in it's entirety:


Structural engineer testifies in USAA trial

By ANITA LEE
SUN HERALD

GULFPORT --A structural engineer admitted he changed a report that detailed Hurricane Katrina damage to a homeowner’s property, but told a jury he did so for accuracy and clarity rather than to downplay wind damage so USAA Casualty Insurance Co. would owe less money.


Structural engineer James W. Jordan reviewed several changes he made to the report completed by engineer Roverta Chapa, who actually inspected the property at Henderson Point on the Bay of St. Louis in Harrison County. Chapa and Jordan did not communicate before Jordan made the changes, which was against policy established by Jordan’s employer, Rimkus Consulting Group Inc.

Policyholders David W. and Marilyn M. Aiken claim Rimkus and USAA conspired to defraud them. They want their insurance claim paid in full, plus extra damages to punish the companies. Their lawsuit will resume this morning with testimony from Chapa.

Rimkus and USAA claim the Aikens are seeking more money than they deserve because federal flood insurance paid them policy limits for tidal surge damage, while USAA offered a check to cover what the wind could have destroyed. USAA and other insurance companies exclude such flood damage from coverage, which has led to hundreds of disputes between policyholders and insurers. However, this is the first case with claims of fraudulent engineering reports to reach trial in federal court.


The Aikens maintain a tornado destroyed their vacation home before 25 feet of water inundated the property.

USAA attorney Greg Copeland told the jury during opening arguments that the Aikens simply wanted to maximize their payments for Katrina damage. Their flood coverage totalled $278,000. USAA paid $178,205 in structural and contents damage on a policy that provided more than $680,000 in coverage.

But the Aikens’ attorney, George W. Healy IV, told the jury that evidence would show the companies “intentionally and with forethought came up with a plan to deny legitimate claims.”


Rimkus attorney David Ward said testimony will show the Aikens hired their own engineer because David Aiken accompanied the Rimkus engineer on his inspection and knew the engineer thought water had caused most of the damage. Ward told the jury they would hear firsthand about communications between Rimkus and USAA, so they should not believe Healy. “You can be the judge of the facts,” he said, “not the allegations.”

Merlin Law Blog

Folks, this Cowboy has been letting the totality of this mess sink in and then I read this comment on David Rossmiller's blog that appears to sum things up well:

"For those scoring at home:
1.Maria Brown blew the whistle and sued Nutt & McAlister of SKG, alleging sexual harassment, hostile work environment, and mentions N&Ms failure to turn over records to Judge Acker.
2. Scruggs and Bartimus, Frickleton, Robertson & Groney have filed suit against State Farm, Nationwide, Allstate, USAA, and several engineering firms for overbilling the federal government for Hurricane Katrina damage.
3. Jones, Funderburg have sued Dickie Scruggs, Don Barrett, Scruggs law firm, Barrett law office, Nutt & McAlister, and Lovelace law firm over payment of disputed funds. Jones and Funderburg have asked to court to take control of SKG assets.
4. United States of America v. Dickie Scruggs, Zach Scruggs, Sidney Backstrom, Tim Balducci, and Steve Patterson for attempting to bribe Judge Henry Lackey.
5. Balducci blew the whistle against Scruggs & Co, and pleads guilty to bribing Judge Lackey.
6. Jim Hood, AG, sued State Farm for breach of the settlement agreement.
7. State Farm sued Jim Hood, AG for breach of the settlement agreement.
8. State Farm sued to disqualify Dickie Scruggs from Katrina cases.
9. E.A. Renfroe & Co sues whistleblowers Cori and Kerri Rigsby for violating the Alabama Trade Secrets Act and breaching confidentiality agreements.
10. Judge Acker appoints special prosecutors to prosecute Dickie Scruggs with criminal contempt related to the E.A. Renfroe suit against the Rigsby sisters."

Except this post really sums up nothing about the real insurance issues or insurance law. Notice folks the implied threats against the Rigsby sisters, who by all accounts have had no involvement with the allegations against Scruggs. Most of what makes the so called insurance blogs these days is either old news, or half the story as Mr. Rossmiller himself pointed out in an rare moment of balanced commentary.

Well folks, here on the Mississippi Insurance Forum you'll get just insurance talk; straight talk in fact, the kind that even a Cowboy can understand without a bunch of frue-frilly legal double talk. That's probably why this Cowboy-farmer enjoys reading Mr. Chip Merlin's insurance law blog. While the talking heads sit in places like New York City and Portland Oregon ole Chip was over New Orleans way at the Fifth Circuit Court of Appeals listening to the actual arguments. He presents an analysis of the recent Broussard arguments that you won't find anywhere else and he makes it understandable. I highly recommend it.

In his reply to me there he summed up why you can't trust a carpetbagger with this issue. Like in most cases it's what these talking heads don't tell you that matters most. Remember folks, State Farm threatened the engineers with termination because they found 2 instances of wind rather than flood in over 90 reports. Whadda you think the "boxing glove" hands people would do to a lawyer that doesn't tote the company line?