State Farm Fire and Casualty Co., the nation’s largest insurance company, has settled out of court with more than a dozen Mississippi policyholders whose lawyers were barred from representing them in lawsuits against the insurer over Hurricane Katrina damage. State Farm initiated or reopened settlement talks with policyholders after a federal judge in April disqualified their lawyers from handling up to 200 suits against the Bloomington, Illinois-based company. At least 13 homeowners were representing themselves, without a lawyer, when they agreed to settle their suits for undisclosed terms.
State Farm made settlement overtures in letters it sent to policyholders whose lawyers were disqualified in April by U.S. District Judge L.T. Senter Jr. in Gulfport, Mississippi. Judge Senter’s ruling cited ethical breaches by Dickie Scruggs, who led a team of lawyers in filing hundreds of cases against State Farm after the August 2005 hurricane. Judge Senter said Scruggs made improper payments to Cori and Kerri Rigsby, sisters who were helping State Farm adjust Katrina claims on the coast. You may recall that the Rigsby sisters copied internal State Farm records and gave them to Scruggs. Scruggs later hired the sisters as consultants.
Scruggs, who has since pleaded guilty to criminal charges, withdrew from representing dozens of State Farm policyholders after he was indicted last year on charges that he tried to bribe a state judge. Judge Senter also barred Scruggs’ former associates from working on the State Farm cases because the judge said they knew about the improper payments to the Rigsby sisters and didn’t try to stop them. The Scruggs story is an incredible example of how greed and stupidity can combine to cause harm to persons who trusted their lawyer to protect their interests. Hopefully, the clients the Scruggs team represented were able to reach satisfactory settlements with State Farm. Hundreds of coastal property owners have sued State Farm for denying their claims after the August 2005 hurricane. Many of the lawsuits challenged the company’s refusal to pay for damage from Katrina’s storm surge. Hopefully, those persons who had the misfortune to hire the Scruggs team to handle their claims received fair settlements from State Farm.
Source: Associated Press
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