Mississippi AG Hood files suit against State Farm (again)

Ask a question, get an answer.  A few days ago, I asked in this post where Jim Hood’s threatened lawsuit against State Farm was.  Now I have the answer.  Right here in this pdf of the complaint he filed yesterday in Mississippi state court.  (I thank the AG’s office for treating me like real media and sending me a copy of the complaint in response to my request, very kind of you).  As you may be aware, I’m just a wee bit skeptical this lawsuit has much of a future, it’s kind of like the geeky guy with glasses and a pocket protector in a horror movie, you have a gut feeling he’s not going to be left standing when the credits roll. But who knows? I could be wrong.

The lawsuit alleges that State Farm breached an agreement with Hood whereby he dismissed his prior lawsuit against State Farm over Katrina claims handling practices.  This was part of a deal with the Scruggs Katrina Group in which State Farm was to seek certification of a class of some 36,000 policyholders, and settle the class action by setting up a new claims adjudication process that would reexamine the claims of people who had not sued State Farm.  Hood gave his blessing to the agreement, but it went only as far as the bench of Judge L.T. Senter Jr., who said the proposed class action did not meet the requirements of the Federal Rules, and because he had concerns over fairness of the process State Farm was to create. 

Here’s an Associated Press story by Holbrook Mohr about Hood’s press conference yesterday announcing the filing of the lawsuit. Here’s from the story about what Hood had to say: 

During a news conference Monday, Hood said the new lawsuit should help thousands of Gulf Coast policyholders, many of whom he says are still living in government-issued trailers because of State Farm’s refusal to pay claims.

"They ought to be ashamed of treating their policyholders like this," he said.

And here is State Farm’s response:

State Farm spokesman Mike Fernandez said Hood’s lawsuit suggests he is "more interested in making headlines in an election year than in making headway for the people of Mississippi."

"You have to wonder," Fernandez said in a written statement, "what would motivate Attorney General Hood to disrupt an agreement that mirrors the one he was ‘happy to announce’ on Jan. 23 and asked other insurers to emulate as ‘a step to recovery’ two days later?"

The reference to disrupting an agreement is this: after the class action fell apart, State Farm made a deal with Mississippi Insurance Commissioner George Dale to reopen the 36,000 claims, but it lacks the court oversight of the proposed class action.  Like some others, notably the Scruggs Katrina Group, Hood believes the Dale deal is a poor substitute for the original, kind of like the difference between Elvis and an Elvis impersonator.  

Here is an additional story about developments from John O’Brien of Legal Newsline, containing a quote from me.   As I’ve said before, it would appear to me State Farm’s defense will be that its performance of the agreement was made impossible by the ruling of a federal court judge, an excuse that would seem to carry a lot of weight.  


1 Comment

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One Response to Mississippi AG Hood files suit against State Farm (again)

  1. Jamey Ballard

    First let me start by being up front and honest about who I am unlike other individuals who chose to pretend they did not have an agenda or try to push one for other paties. I am a State Farm agent in Mississippi (not on the coast) and a former claim adjuster for State Farm. I know many of your readers have already determined that I am the enemy just by the previous sentence but I would like to give you a different perspective and see if I can add to an already interesting blog.
    In January of 2007 Attorney Jim Hood said that he had great news about the deal that he had reached with State Farm. He said that he hoped other insurance companies would follow their lead and try to help settle claims in south Mississippi so the rebuilding process proceed. He stated that even though the settlement was not perfect the leader in the insurance industry had done the right thing and set the right example. But then after the Judge did not agree to the terms he decided that he was against it the whole time. I am not an attorney nor do I claim to know everything about insurance but I do see a politician who seems to change his mind as the wind changes.
    State Farm reached an agreement with the Mississippi Department of Insurance in March 2007 and the details were released April 12, 2007. In that agreement it stated that State Farm would begin mailing letters to “Slab Only” claims first and then mail the rest of the 30,000 policyholders over the next few weeks. You can imagine why this had to be spelled out if nothing else but to keep everything in order. I bring this up because Mr. Hood stated that one of his reasons for filing his recent lawsuit was that the current agreement was taking too long. My response to him would be that he has not even given it time to work. Now I am not in the chain of command to know exactly how these letters are being mailed or how they are being processed once they are returned but I imagine they are being worked as quickly as possible. Remember that State Farm mailed the letter. Next the policyholder had to receive, complete and return the letter. Then they had to be contacted and visited by a claim adjuster and finally a settlement reached. Even at this early stage State Farm has made offers of over 10 million dollars to help. I would also like to add that many of the reports made it sound as though everyone who had a claim is mad and wants to have their claim reevaluated. I have personally been told by my clients that they have relatives who were satisfied with the way their claim was handled and that they were happy with State Farm.
    Next I would like to address Mr. Hood’s argument that there is no judicial oversight with the MDI agreement. I want to remind readers that if you have received a letter, you can return the letter asking to have your claim reevaluated. If you aren’t satisfied, you still have the right to reject the offer and consider legal action. Policyholders are not being asked to sign away their rights just by having their claim reviewed. This is a completely voluntary agreement.
    I am not sure of Mr. Hood’s motivation with this suit other than to run up legal fees and to keep his name in the paper during this election year. I hope that this situation can be resolved quickly and the process through the MDI can proceed. I truly believe State Farm is trying to resolve these issues and quickly and as fairly as possible and that Mr. Hood is not helping the situation.