E-mails, reports offered as evidence State Farm pressured engineers to change Katrina conclusions

I’m not sure why this story from the Clarion-Ledger of Jackson, Mississippi is coming out now, after this topic has been talked up for the past 18 months.  The story discusses some e-mails between folks at an engineering firm employed by State Farm to examine and analyze Katrina damage in Mississippi.  In one of them, a guy with the firm questions the ethics of State Farm if the insurer was pressuring them to change engineers’ reports. Here’s a pdf of the e-mails, followed by the original report and a second amended report.  The reports have been known about for some time, and are mentioned prominently in the complaint in McIntosh v. State Farm, which was filed last year.  Here’s a pdf of the McIntosh complaint. Perhaps the e-mails were produced recently in discovery, but the pdf of them doesn’t show a Bates stamp — the number code put on most records produced in discovery to help identify individual documents.  

One of the things that strikes me about these e-mails is the man complaining about State Farm’s ethics, Randy Down, did not read a prior e-mail from his boss very well. The first e-mail mentioned a claims supervisor with State Farm, identified her as Lecky, Ms. King and she, and Down’s e-mail starts off wondering whether Lecky is a man or a woman.  I hope that’s not indicative of the care that went into the firm’s engineer reports.  Here’s a second, similar story from Mike Kunzelman of the Associated Press, in which Down said he didn’t have any first-hand knowledge of what he was talking about, and in any event wasn’t involved in working on Katrina claims.  The AP story quotes Zach Scruggs, and the e-mails would appear to have been produced in the McIntosh case, where the Scruggses are the plaintiffs’ lawyers. So I’m not sure why the story in the Jackson newspaper quotes a Florida lawyer unconnected with the McIntosh case instead of Zach Scruggs. Perhaps he wasn’t available.

You know, I read the reports and I recommend you read them too. I don’t see a particular problem with ordering the second report, when the first one attributed all damage to the McIntosh home to wind. It was obvious — because the home was still standing and there were water marks on the walls — that flood waters had caused much of the damage.  Seems like a bit of an oversight not to mention the flood damage as a cause in the first report, kind of like wondering if Ms. King is a man or a woman. The conclusion of the second report was that both wind and water caused the damage, not that only flooding caused damage, so it doesn’t appear to me the second report is all that problematic. The McIntosh complaint says that State Farm paid the McIntoshes about $36,000 for wind damage to the home.

UPDATE: I fixed a couple typos in this post, that’s what happens when you blog with a 3-year-old on your lap eating cereal.


Filed under First Party Insurance

9 Responses to E-mails, reports offered as evidence State Farm pressured engineers to change Katrina conclusions

  1. Layne

    Very interesting reading. Thanks for posting this.
    It would seem to me that an engineering report that in this case ignores flood as a cause when there is a water-line at 5 1/2 feet above the 1st floor level, is as much in error (if not more) than an insurer ignoring evidence of wind damage in a “slab” case. In either case, all evidence of cause of loss should be investigated/evaluated. At least in the slab case the insurer has the argument that nothing was left behind in order to make the determination. Here there is pretty credible evidence of a flood, if not invincible evidence, and it was completely left out of the report.
    How do you draw the line between an insurer trying to make sure a report is correct, vs. “coercing” an engineer in order to receive a favorable report?

  2. Layne, I think your question is rhetorical, but it makes a point: with the scope of this disaster, a lot of people had to be plugged into the mix in a hurry. Talk about the government’s response in New Orleans, how about trying to adjust damage to tens of thousands of properties? You just have to believe that there are issues with finding enough competent and qualified people to do everything that needs to be done. I would much more suspect mistakes and lacked of qualified personnel, plus the inherent tendency for chaos to assert itself, as an explanation for discrepancies than I would a conspiracy or bad faith plot.

  3. Those State Farm emails

    A plaintiffs’ lawyer recycles some old State Farm emails and calls them a smoking gun, and the Associated Press and Clarion-Ledger repeats his story uncritically. David Rossmiller posts the emails and lets you know what the plaintiffs’ lawyers (and the…

  4. Joe Bingham

    Does the jury get to read these emails, or just hear accounts from lawyers? No reasonable person could read those emails and think they weren’t favorable to SF.

  5. I would think these reports would be allowed as evidence at trial, perhaps both on the question of what caused the damage and whether the insurance company proceeded in good faith or bad faith. The e-mails I don’t see as probative of the facts. The guy who wrote the first e-mail wasn’t involved in the decision to do a second report and so can’t testify from personal knowledge, which is a requirement. His e-mail is an out of court statement, which if it used to prove the truth of what he asserts, is hearsay. A statement by a party opponent gets by the hearsay rule, but without writing an evidentiary treatise on this question, I don’t think his e-mail comes in. It’s just an opinion, a guy without personal knowledge ranting about State Farm, it’s obvious he barely read his boss’ prior e-mail. I don’t think his live testimony would be allowed either. I have to say, if this stuff is the best evidence out there of this massive collusion, I’m not impressed.

  6. Brian

    The McIntosh home is not on the Gulf. It is on a river north of Biloxi Bay and would not have been subject to significant wave force needed to knock down the first floor wall.
    The first report substantiates the eyewitness report that the house was slammed by wind-driven debris from neighboring houses. The second report ridiculously relies on the theories of the yardman who is cleaning up the property.
    Both reports agree that the roof and second floor damage were due to roof, windows, and door failures due to wind, wind-driven debris, and rainfall.
    The photos in the first report clearly show that the second story floor/first story roof fell in on the first floor.
    Flooding occured after that and sloshed the debris around. That is what the first (honest) engineer saw. The second engineer wrote the report State Farm demanded, even to the point of using the exact terminology that SF requested.

  7. Layne

    Are you arguing then that there was not damage due to flood?
    Just trying to make sure I understand your thoughts on this.

  8. I’m not sure why the yardman’s information is ridiculous. I’ve met some pretty shrewd yardmen in my time.

  9. Brian

    First off, this is not just about the McIntosh case. The emails show that the whole system is rigged.
    State Farm fired the firm for finding wind damage on two properties. State Farm has previously demanded that the firm not estimate that x percent of the damage was due to wind and x percent was due to flooding. SF wanted the firm to say only what was the “predominant” cause of the damage. That is why that word is all over the second report. In this case, the first engineer identified the “predominant” cause as wind, wind-driven debris, and rainwater. So SF got what they asked for, so they had to ask again much more forcefully.