Lawyers for Citizens’ Customers Reject Settlement

A nearly $103 million offer by Louisiana’s property insurer of last resort to settle claims disputes was rejected on Feb. 24 by lawyers representing the policyholders, who objected to several pieces of the proposal, including a cap on attorneys’ fees.

Louisiana Citizens Property Insurance Corp. provides insurance coverage to homeowners and businesses unable to obtain insurance from private companies.

One of the plaintiffs’ attorneys, Wiley Beevers, called the offer proposed by Citizens’ board “fatally flawed” and said parts of it could be attacked as being unethical and contrary to law.

At issue is Citizens’ slow handling of claims after hurricanes Katrina and Rita. State courts have ruled Citizens failed to begin adjusting claims within the 30 days required by law. A class-action judgment against the company has grown to nearly $104 million, and a second set of policyholders has outstanding claims.

Beevers said plaintiffs’ lawyers are willing to continue negotiations with Citizens to reach a possible agreement.

“We accept at face value that they have made, at least, in some respects, a meaningful and good faith gesture to get the deal done,” he said. “There is no doubt that we see common ground in the proposal, but there are serious impediments that need to be addressed meaningfully, in private negotiation and with dispatch.”

Citizens’ board has made several settlement offers. The proposal approved Feb. 22 by the board would have paid $92.8 million for the class-action judgment for 18,500 policyholders and $10 million to about 6,500 Citizens customers who have pending claims. The plaintiffs’ lawyers fees would have been capped at $25 million.

Beevers said court costs and sheriff’s fees shouldn’t be included in the settlement offer, calling it unfair to take that out of money to be paid to policyholders. Also, he said linking an attorney’s fee to the proposal was unacceptable, calling it unethical because the fees are to be determined by a judge.

“Most importantly, we have a judgment and we can proceed to execute on that judgment without regard to whether the court ultimately awards $1 or $25 million or more as a fee,” Beevers said. “We believe that the linkage is made for other than business considerations and is a political ploy.”

Insurance Commissioner Jim Donelon, who oversees Citizens, had predicted plaintiffs’ attorneys would refuse the latest offer because of the limits it would include on the payments to lawyers.

An earlier, $80 million settlement offer was also rejected.