State Farm Targeted Again by Mississippi Attorney General for Possible Katrina Fraud


It may be a new year, but our good neighbors at State Farm Insurance are still relying on the same old tactics and strategies of trying to do all they can to delay or refuse payments to policyholders who try to enter insurance claims for personal injuries. In this case, victims of the greatest natural disaster in United States history are those feeling the brunt of State Farm's miserly business practices.

Mississippi Attorney General Jim Hood has opened up a new criminal investigation against State Farm Insurance that AP news reports indicated is related to State Farm's claim handling process for claims by Hurricane Katrina victims to the National Flood Insurance Program.

This new investigation comes on the heels of a previous investigation that was intended to explore similar crimes, though in keeping with an agreement that the attorney's office made with State Farm, the new investigation has "a new focus and a new genesis."

State Farm is currently suing Hood for violating the agreement to end his criminal investigation, but Hood's attorney counters that his new investigation does not break any part of the agreement. Rather than focusing on probing alleged defrauding of policyholders, Hood's new investigation instead likely focuses on alleged defrauding of the federal government, which subsidized flood policies that insured against rising water.

The investigations of State Farm's "mishandling claims" of clients have largely centered on accusations of overbilling by claimants who lived through the Katrina storms. State Farm agreed to a settlement that paid out to policyholders, and as part of the settlement, Hood's office agreed to stop its criminal investigation. But the new investigation, it argues, is a separate matter.

State Farm's lawsuit claiming that Hood's office is in violation of that settlement agreement may have teeth, given that Hood's intent and approach is identical. Hood may in fact be splitting hairs when it comes to defining the resumed investigation a "new" inquiry. In August of 2007, State Farm was subpoenaed by a grand jury for records on its Katrina claims, a subpoena that the company is fighting through the lawsuit.

The U.S. District judge responsible for hearing the dispute over Hood's new investigation seemed sympathetic to Hood's call for a new investigation, using an allusion to 19th-century American poetry to describe his state of mind.

As the AP reported, Judge David Bramlette saw "light coming through the heat and smoke. As Emily Dickinson may say, a certain slant of light, which is encouraging to the court."

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