Miss.: Scruggs Files Racketeering Charges against State Farm

June 20, 2007

The Scruggs Katrina Group filed federal charges against State Farm, E.A. Renfroe Company, and Forensic Analysis and Engineering Company on behalf of 21 Mississippi policyholders whose homes were destroyed in Hurricane Katrina.

The suit was filed June 20 in the US District Court for the Southern District of Mississippi under the federal Racketeer Influenced Corrupt Organization Act or 'RICO.'

Don Barrett, an attorney with the Scruggs Group said the law firm has proof that State Farm and its partners conspired to cheat policyholders out of millions of dollars in payments.

"They willfully caused victims of Hurricane Katrina extreme emotional and financial distress in their calculated strategy to falsify and conceal evidence, intimidate anyone who got in their way, and used their privileged position to pressure policyholders into accepting pitiful payments both before and during the mediation process," Barrett said.

According to Barrett the lawsuit is the result of a nearly two-year investigation that "uncovered evidence including e-mails, altered engineering reports, confessions, and other smoking guns" that tell the story of what State Farm and corrupt companions have done to the families of the Mississippi Gulf Coast after Hurricane Katrina.

State Farm National Spokesman Jonathan Freed maintains that the Scruggs Katrina Group has found another way to say the same things they have been saying for the past two years. He fired back.

"This is (Dickie) Scruggs using one of the oldest tricks in the book: if attacked, deflect," Freed said. "Clearly he's stung by US District Court Judge Acker's criminal contempt charge and surprised by the evidence that could disqualify him from other cases and now is trying to deflect it all."

In a press release issued Wednesday after a press conference in Pascagoula, Miss., Barrett announced a 'laundry list' of "actions taken by State Farm and conspirators" that led to the suit, including:

• threatening experts who disagreed with their desired result
• concealing information that would work in the policyholder's favor
• destroying or falsifying reports
• placing pressure on engineers to use scientifically inaccurate and deceptive language
• firing engineers who refused to be corrupted
• inventing a new policy to exclude all hurricane damage
• using their strength and size to intimidate policyholders in the mediation process

"Most disturbingly, the court submission tells of the cold and calculated way that State Farm orchestrated a coordinated strategy to accomplish their objectives," Barrett said. "Even before Hurricane Katrina hit, State Farm began holding strategy "meetings of the minds" at corporate headquarters to devise ways to avoid paying claims. A few days following the hurricane, a claims "council" continued to meet to develop a strategy for maximizing payment of national flood policy claims."

Barrett added that State Farm and Renfroe employees later met to participate in "mock mediations" during which they practiced scripted dialogue designed to demoralize policyholders. The investigation has shown that there are potentially hundreds or more policyholders who have been victims of the corrupt enterprise, he said.

"It also reveals not just how State Farm treated the 21 clients initiating this lawsuit, but how State Farm treated all their policyholders who lost their homes," Barrett said. "This consolidated lawsuit is the first of its kind on the Mississippi Coast."

Freed said State Farm has committed a minimum of $50 million to resolve up to 35,000 Katrina cases "previously settled that we agreed to revisit to ensure that policyholders received everything they were entitled to." He said to date 35,000 letters were mailed to policyholders and $17.2 million has been either paid or offered.35,000 were cases

"The Scruggs Law Firms' current effort is a regurgitation of every wild charge he (Dickie Scruggs) and his firms have made to date," Freed said. "Clearly his PR machine is working overtime. The timing of this is very transparent."

Former Mississippi Attorney General Mike Moore weighed in saying, "Thousands of State Farm policyholders looked forward with great hope and expectation to the day when the supposedly independent adjuster and objective engineer would inspect their property and make a fair and honest assessment of their loss. Little did these victims know that the deck was stacked against them; there would be no fair dealing. The fix was on and State Farm had already pre-written the reports to deny the claims."

Sources: Scruggs Katrina Group
State Farm Insurance