Insurance Claims And Issues

Mississippi Claims Handling After the Complaint is Filed

     Reviewing cases decided under Mississippi substantive law quickly reveals some simple truths.  Claims handling that occurs after a Complaint claiming Coverage is filed, can subject the Insurance Company to liability.  This holding was announced by the Mississippi Supreme court so "long ago" that its decision is not available on its web site:  Gregory v. Continental Insurance Co., 575 So. 2d 534 (Miss. 1990).  That case involved a Claim for business loss Damages allegedly caused by Hurricane Elena on September 2, 1985.  All Courts in Mississippi from the Trial Court to the Supreme Court exonerated the Defendant in that case against any claim that it mishandled the Policyholders' Claim before suit was filed.  However, it was a different story after suit was filed, according to the Mississippi Supreme Court's holding:

An insurance carrier's duty to promptly pay a legitimate claim does not end because a lawsuit has been filed against it for nonpayment.  Put more bluntly, if you owe a debt the duty to pay does not end when you are sued for nonpayment of it.

Id. at 541.

     Among other things in the present age post-Katrina and post-Rita (among other posts-), a Federal Court in Mississippi holds that this means that Policyholders "are entitled to take discovery concerning the handling of their claim, both before and after the filing of the complaint."  Odom_v. Armed Forces Insurance (S.D. Miss. Case No. 1.05CV669, Opinion Filed Aug. 31, 2006).pdf at page 4 of 5 in the Official Report linked here.  An Order of Dismissal was entered in this case on December 21, 2006, according to the Court's online docket, following the parties' announced settlement of all claims.  The linked opinion including the page with the above quotation is also available by subscription as 2006 WL 2541599 at *3.

     Further, even after the Policyholders file their Complaint for Coverage, the same Federal Court in Mississippi holds that there is a continuing duty of Good Faith and Fair Dealing which includes acting reasonably "in investigating and paying legitimate claims".  That continuing duty "requires an insurer to take into consideration any new information that comes to it through its own investigation of a claim whether or not a suit has been filed."  Broussard_v. State Farm Fire & Casualty Co. (S.D. Miss. Case No. 1.06CV6, Opinion Filed Jan. 17, 2007).pdf at page 4 of 4 pages of this linked Official Opinion; the opinion is also available by subscription and this particular quotation can be found as 2007 WL 113942 at *3.  The Court's online docket shows that the Broussard case went forward after this decision was issued, and that a Notice of Appeal was thereafter filed.  An appeal is apparently pending in this case at this time.

Please Read The Disclaimer.

Allstate Settles Many Hurricane Katrina CatClaims

     Allstate Corporation is a defendant in many Hurricane Katrina Insurance Coverage cases pending in Louisiana and Mississippi courts.  In one such case, a jury in Federal Court in Louisiana awarded covered damages, mental anguish damages, and penalties.  The plaintiff-policyholder is Mr. Robert Weiss, and he was awarded $561,600.00 for covered Property Damage, and Allstate was assessed damages for Mr. Weiss's mental anguish plus penalties in the additional amount of $2,250,000.00 according to an excellent news report by Erik Holm, "Allstate to End Appeal of $2.81 Million Katrina Verdict, Settle", published Friday, June 22, 2007 at Bloomberg.com.

     The Federal Jury's verdicts were apparently reduced to Judgment and the Judgment was appealed by Allstate, which reached an otherwise undisclosed settlement of the appeal from Louisiana Federal Court.  See the June 22, 2007 article, above.

     That caused dominoes to fall and logs to unjam, apparently.    Allstate has now entered into a reported global settlement of Hurricane Katrina Catastrophe Claims that were filed in Mississippi Federal Court.   The terms are similarly undisclosed.  See for example Natalie Chandler, "Allstate, Policyholders Settle Katrina Claims" (Clarion Ledger, Jackson, Mississippi, Monday, June 25, 2007).

    Previous global settlement efforts in Mississippi involving State Farm, and a resulting lawsuit against State Farm for allegedly backing out of the particular global settlement deal, are posted here for example on June 11, 2007 and on March 20, 2007.

     More is to come, undoubtedly.

                                             Please read the Disclaimer.

Suit for Alleged Breach of (First) Settlement Agreement.

     It appears that a settlement of many filed and potential CatClaims resulting from Hurricane Katrina in Mississippi has blown up.  There was once a settlement agreement, among many policyholders and State Farm.  The proposed settlement agreement was subject to Federal Court approval.  The Federal Judge found wrong in the proposed settlement and refused to approve it.   State Farm then reportedly reached a settlement agreement of many of the same claims with the Mississippi Insurance Commissioner's Office.  This lengthy previous history was summarized in "Update to the Update:  New Settlement in Mississippi," posted here on March 20, 2007.

     It is now reported that through its Attorney General, the State of Mississippi filed suit on Monday, June 11, 2007 in Mississippi State Court.  The Complaint alleges that State Farm breached the (first) settlement agreement and thus breached a contract, claiming compensatory and punitive damages. As of the night of June 11, 2007, there is a temporary silence on the subject on the web sites of both the Mississippi Attorney General and the Mississippi Insurance Commissioner.

     Here is a link to State Farm's Press Release of June 11, 2007,which State Farm entitled "Mississippi Attorney General's Lawsuit Threatens to Disrupt Hurricane Katrina Settlement Process with MIssissippi Insurance Department". 

     There will be more to come on the settlement (or not) of Hurricane Katrina CatClaims in Mississippi, and elsewhere, there can be no doubt.
                                                Please Read The Disclaimer.

Postscript to Secrecy Postings of May 23 and May 24, 2007.

     A new column published on Sunday, June 10, 2007 adds a postscript to the issues addressed in two recent posts here.  One post raised secrecy issues that will almost certainly be soon addressed concerning "Settlement of Bad Faith Claims .... When is That Settlement Confidential and Protected, And When is it Concealment and Void? " on May 23, 2007, and the second post visited the "World Trade Center Insurance Claims Settlement: Revisiting Confidentiality vs. Concealment " on May 24, 2007.

     Now, see also this column, "America's Secret Obsession", published in the Washington Post on Sunday, June 10, 2007.  It takes a look at how many sealed court cases can involve excessive secrecy that puts the public at risk, among many other areas of potentially excessive secrecy that may increase threat levels.

                                                         Please Read The Disclaimer.