AG files suit against State Farm alleging post-Katrina scheme

AG files suit against State Farm alleging post-Katrina scheme
Galloway pled guilty to one count of Possession with Intent to Distribute Methamphetamine on Feb. 6, 2018. (Photo source: WLOX)

SOUTH MISSISSIPPI (WLOX) - The Mississippi Attorney General is taking State Farm Fire and Casualty Company to court. Jim Hood filed suit in the Hinds County Circuit Court Tuesday, seeking to recover funds the state lost because of an alleged scheme by the company following Hurricane Katrina.

The suit alleges State Farm mischaracterized wind damages, which its policies covered, as flood damages, which its policies did not cover, after the storm.

That forced the state-run Homeowner Assistance Program to give hundreds of millions of dollars to thousands of homeowners whose insurance did not fully cover damages sustained in the storm. Hood says that money could have been used for other recovery efforts.

“The Mississippi Homeowner Assistance Program was set up to pay homeowners for Hurricane Katrina damage that was not covered by insurance," Hood said in a press release. "State Farm took advantage of our program by causing HAP to pay for wind losses that State Farm should have covered under its homeowner policies. Remarkably, State Farm and other insurers walked away from Hurricane Katrina and experienced record profits in the years following, while Mississippi continues to suffer."

Hood says State Farm used engineering firms to change their reports to say flood damage, not wind damage, caused much of the destruction during Katrina.

“We are still reviewing the lawsuit filed earlier today, which was not expected considering what we have done in resolving claims as a result of Hurricane Katrina,” said State Farm Public Affairs Director Phil Supple.

In 2013, a federal jury unanimously found State Farm had defrauded the United States government when it forced an engineering firm to change its reports in this manner.

Hood said any money recovered in the suit will be returned to the state.

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