Last week, a federal judge threw out a “whistle-blowers” lawsuit that accuses insurance companies of overbilling the National Flood Insurance Program (NFIP) for Hurricane Katrina’s flood damage to Louisiana homes. U.S. District Judge Peter Beer dismissed on procedural grounds the lawsuit accusing Allstate Insurance Co., State Farm Fire and Casualty Co. and other insurers of misrepresenting claims to the National Flood Insurance Program to limit their liability for storm damage after Katrina. But the judge didn’t rule on the merits of the allegations, saying that the line of inquiry could be continued under a different whistleblower suit in Mississippi about the denial of hurricane wind claims.

Insurers have denied inflating flood damage estimates to avoid paying more money on claims for wind damage. State Farm spokesman Phil Supple said Beer's ruling may be a “procedural legal decision, but we believe it to be a correct one.” The whistleblower suit was filed on behalf of a group of claims adjusters. Allan Kanner, attorney for the plaintiffs, said his clients were “disappointed” by the outcome. They have not discussed whether to appeal Beer’s ruling.

Whistle-Blower Lawsuit Tossed Out (Hartford CT Courant 10/18/07)

October 23, 2007