Some Mississippi Katrina victims allowed to keep grants after receiving insurance payments

This is a good story by Anita Lee of the Sun Herald about state grants given by Katrina victims to compensate for wind and water damage to their homes.  Some people, after getting their insurance money, are going to have to repay Mississippi for the grants.  Others, however, who received confidential settlements of insurance lawsuits, will get to keep the state money.  This does not sit well with everyone.

 As the story says:

A federal grant modification that created the situation has gone unnoticed by many, but others are angry about the Mississippi Development Authority policy.

"It doesn’t seem right that they don’t ask for repayment," said Gulfport resident Nancy Fish, who had flood and homeowner insurance coverage for the loss of two homes and cars.

Why doesn’t the state ask for the money back? Here’s how Dickie Scruggs and policyholder attorney Jack Denton explained it:

Denton said in many cases, clients needed both the legal settlement and grant money to be made whole, a sentiment Scruggs echoed.

Scruggs added: "The difference between settling a lawsuit and just getting some more money from your insurance company unsolicited – there’s a big difference. You’re suing for all kinds of claims. When a settlement is reached, it’s not broken down as to how much was for structure, breach of contract, bad faith, emotional distress, breach of the duty of good faith and fair dealing, fraud, negligent adjustment of the claim. Every lawsuit we’ve settled has had at least 10 or 11 legal claims.

"Nobody can slice and dice the settlement of a lawsuit in such a way to figure out what is owed. It’s a situation that they didn’t envision when the payment provisions were written."

MDA’s disaster recovery director, Donna Sanford, said the agency is not tracking the lawsuit settlements because they are confidential.

"That was the whole purpose of this modification," she said. "We can’t tell from these closed settlements what structural-damage payments, if any, they’re getting."

A couple points.  First, some folks may indeed need more dough than others to be made whole, especially when they must pay 40 percent of the proceeds of a lawsuit settlement to Scruggs or Denton. Second, just because you throw some RICO claims, or some other claim outside of breach of contract, into a lawsuit does not make the fundamental principle of compensation for the structure different.  That’s lawyer talk, not common sense.  Third, what is with this passive attitude on the part of state officials? They don’t know about the amounts because they are confidential? That’s what I’m going to tell the IRS about money I received this year, you think they will buy it?  

1 Comment

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One Response to Some Mississippi Katrina victims allowed to keep grants after receiving insurance payments

  1. Bob Tyler

    As an attorney on the Mississippi Coast, I am compelled to respond to some of your points. I am, however, too busy litigating against insurers to post an in-depth response.
    First, many attorneys, including myself, are representing homeowners on a 20% contingency fee basis. Although I have not seen any executed agreements between Denton and Scrugg’s clients or settlement disbursements sheets(and I doubt you have either), I am personally aware that SKG solicited clients on the basis of a 20% contingent arrangement since I received,unsolicted, his solicitation letter. My point is that your assertion that lawyers take a large portion(40%) of recoveries is unfounded and unfair and perpetuates the myth that “people” lawyers milk the system at the expense of the client.Your assertion is even more offensive when it is not based on fact.
    Next, I am sure you know that the breach of contract claims include more than “structure” claims ; there are also content and loss of use claims which can be substantial and are not subject to the grant repayment scheme. Common sense did advise the grant program to avoid trying to untangle the bundle
    Having made these comments, I hasten to add that I have enjoyed your posts and find them informative and insightful. I know that many in the legal community here have “favorited” this site