GULFPORT — The Merlin Law Group, which has only
one policyholder lawsuit still open against State Farm Fire and
Casualty Co., announced Thursday a settlement has been reached with the
company in 22 cases.
“Obviously, we are pleased to settle
without costly and lengthy litigation,” said State Farm spokesman
Fraser Engerman, who declined to comment further because terms of the
settlement are confidential.
Policyholders’ attorney
William F. “Chip” Merlin said documents State Farm has been forced to
produce in previous cases put clients in a good negotiating position.
Of the 22 cases settled, he said 18 belonged to policyholders who have
signed on since September when Merlin and State Farm settled 103 cases.
Merlin
said the documents and testimony from State Farm officials indicate the
company decided against paying claims in areas hit by storm surge,
relying on policy language to deny those claims without thorough
investigations. In cases in which wind and water combine to cause a
loss, the 5th U.S. Circuit Court of Appeals has ruled policy language
precludes coverage.
However, Merlin said that does not
relieve insurance companies of their duty under Mississippi law to
fully investigate the cause of a loss and pay for wind damage covered
under an all-perils policy.
State Farm maintains the company investigated each policyholder’s claim and covered independent wind damage.
Merlin
said he could not discuss State Farm information the company was forced
to turn over in pretrial proceedings because federal Magistrate Judge
Robert H. Walker issued protective orders that seal certain insurance
records from public view, including company e-mails about a “wind-water
protocol” used internally to adjust claims.
State Farm argues such records are “trade secrets.” The protocol itself, however, has been made a public record.
“The
reason we are filing these documents under seal is that they contain
information about our business practices that would be valuable to our
competitors,” Engerman said.
Merlin thinks the insurance records should be available to all policyholders.
“Personally,
I can’t think of any social purpose that helps us, as a society, by
having these protective orders,” he said. “I believe in insurance, but
I don’t believe how they go about claims practices should be treated
like a top-secret recipe you have for Coca-Cola or how they make
Kentucky Fried Chicken.”
He said attorneys for
policyholders are even more cautious because Richard “Dickie” Scruggs,
a policyholders’ attorney, is facing criminal-contempt charges in North
Alabama. Judge William M. Acker Jr. ordered the prosecution because
Scruggs turned over State Farm records to Attorney General Jim Hood
after the judge had said the insurance records should be returned to
their rightful owner, an independent adjusting firm in Alabama that
supplied adjusters to State Farm after Hurricane Katrina.
At a glance
Below is the status of Hurricane Katrina lawsuits filed against insurance companies in U.S. District Court in Gulfport.
2005 cases: 31 filed, all closed; Broussard v. State Farm on appeal to 5th U.S. Circuit with arguments completed, decision pending.
2006 cases: 48 cases open; 628 closed.
2007 cases:
338 cases open 180 filed against State Farm by the Hurricane Katrina
Litigation Group, formerly the Scruggs Katrina Group); 205 cases closed.
Upcoming trial: Case of Huynh v. State Farm slated for Jan. 14.
SOUTHERN DISTRICT
MISSISSIPPI