State Farm Ordered to Pay $3 Million in Hurricane Katrina Whistleblower Case By Tod Aronovitz | 03/25/14 | 0 Comment

State Farm Fire and Casualty Co. of Bloomington, Ill., was ordered to pay legal fees and damages worth more than $3 million after a jury decided the allegations brought by two whistleblowers against the insurance company were well-founded.

The whistleblowers, identified as sisters Cori and Kerri Rigsby, were former insurance adjusters who worked for an Alabama contractor hired by State Farm to conduct damage assessments after the August 2005 hurricane, a recent article in the Claims Journal said.  The two alleged that State Farm defrauded the National Flood Insurance Program (NFIP) by falsely attributing much of the hurricane damage to storm surge, instead of wind.  Consequently, State Farm unlawfully shifted the responsibility to the government insurance program in order to reduce the amount it had to pay out to its policyholders, the sisters contended.

The Rigsbys wanted to broaden their case to include multiple claims on other State Farm-insured properties, but U.S. District Court Judge Sul Ozerden ruled that whistleblower law allows them to pursue only one claim for which they can offer knowledge, an article in the Sun Herald reported.  As a result, the two are appealing his ruling to the 5th U.S. Circuit Court of Appeals in New Orleans.

The single case taken to trial involved a claim filed on the Mississippi home of Thomas and Pamela McIntosh. According to testimony, Kerri Rigsby discovered documents that showed an engineering firm initially concluded that wind caused the homeowners’ loss, but due to State Farm pressure, the report was later altered, ascribing storm surge as the cause.

Per State Farm recommendation, NFIP paid the homeowners’ policy limits of $250,000, while State Farm paid them $36,000 for wind damage on a policy that had more than $500,000 in coverage.

Judge Ozerden tripled the amount of the false NFIP payment to award damages.  Accordingly, State Farm will pay $750,000 in damages to the government. The Rigsbys will share in that award, each receiving 15 percent of the $750,000.  In addition, $2.6 million, plus $303,078 in expenses, was awarded to the Rigsbys’ attorneys, who pursued this case after the federal government chose not to intervene and prosecute.

State Farm has denied any wrongdoing and is still determining if it will appeal. State Farm also filed a counterclaim against the Rigsbys alleging that they broke federal fraud laws by taking company-owned computer and paper files while employed as independent adjusters.  The claim is currently pending.

How to Report Fraud in a Whistleblower Case

Company employees who have inside knowledge of questionable billing practices to a state or federal government agency can file a confidential legal claim under the False Claims Act. By acting as a “whistleblower” in what is known as a “qui tam” lawsuit, a private party may collect between 10 to 30 percent of the amount recovered, depending on how the case is prosecuted.

ARONOVITZ LAW: Miami Whistleblower / Qui Tam Law Firm

The Miami Qui Tam law firm of ARONOVITZ LAW routinely works with Miami whistleblowers to document Medicare fraud and other forms of fraud against the government. Contact Miami Whistleblower / Qui Tam lawyer Tod Aronovitz to discuss a case.