State Farm called Katrina a "Water Storm"
Sun Herald (Biloxi, MS)
May 22, 2009
May 22--GULFPORT -- State Farm failed to thoroughly investigate policyholders' property damage in areas subjected to Katrina's storm surge, a former claims manager testified Thursday, training adjusters to see the 2005 hurricane as a "water storm."
Kerri Rigsby, a team manager on State Farm claims after Katrina, said the company told her storm surge preceded Katrina's winds.
"State Farm indicated there was no question, if (a house) was a total loss, it was caused by flood," Rigsby said. She later added, "I believe that we owe the policyholder a thorough investigation. I don't believe we did a thorough investigation down here to determine how much was wind and how much was water."
Adjusters handled wind claims for State Farm, but also flood claims covered under National Flood Insurance policies.
Rigsby and her sister, former adjuster Cori Rigsby, have accused State Farm of conspiring with two vendors to minimize what the company owed for wind damage by overcharging the federal government for water damage. State Farm and the vendors, Haag Engineering and Forensic Analysis Engineering Corp., have denied any wrongdoing.
Judge L.T. Senter Jr. is presiding over a hearing that began Wednesday, and continues this morning, to determine whether the whistle-blower case should move forward or be dismissed.
The Rigsby sisters worked for independent adjusting firm E.A. Renfroe. Kerri Rigsby, who spent the morning and part of the afternoon on the stand, began work at Renfroe in 1998 and was detailed to State Farm after catastrophes.
Rigsby said she was dispatched to Katrina around the second or third week in September and attended a meeting where State Farm talked to adjusters about claims handling.
"We were told this was a water storm," Rigsby testified.
She said State Farm told adjusters to "hit policy limits" on flood claims and tell policyholders an engineer would be sent out to determine whether State Farm owed money for wind damage.
Kerri Rigsby repeated previous allegations that State Farm claims manager Alexis "Lecky" King ordered reports changed if they failed to conclude that water was the cause of a policyholder's damage. When too many reports reflected wind damage, Rigsby said, State Farm cancelled further reports en masse, even those for property that had already been inspected.
Senter heard evidence about one case, that of State Farm policyholders Thomas and Pamela McIntosh, whose home was on the Tchoutacabouffa River in Biloxi. The judge had previously ruled that McIntosh was the only State Farm claim where the Rigsbys might possess direct and independent knowledge of alleged fraud against the government, a requirement for a whistle-blower lawsuit.
State Farm argues that the Rigsbys have no such knowledge. Insurance company attorneys sought to press home the point in questioning Kerri Rigsby. She conceded that she does not know even today whether the McIntoshes were owed policy limits of $250,000, the amount they were paid, for flood damage.
"We did not thoroughly investigate that claim," she said. "We did not have any scientific data. We went on the word of two State Farm managers that it was all water."
In previous pre-trial testimony, Rigsby had said adjusters studied a Haag survey of Katrina's damage that concluded tidal surge preceded the strongest wind. But Haag produced evidence Thursday showing the survey was released after the McIntosh property had been inspected. Rigsby acknowledged she could have been mistaken about the timing.
A Forensic engineer subsequently visited the property, noted 5 feet of floodwater, then concluded that wind caused most of the damage. State Farm's King fired the engineer and ordered a second Forensic report that blamed water. The second engineer testified damage at the McIntosh home was consistent with flooding, but also said he had been told no analysis of wind pressure would be needed.
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