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Hundreds of State Farm Katrina Lawsuits Settled; Racketeering Suit Dismissed
(BestWire Services Via Acquire Media NewsEdge) Hundreds of cases in Mississippi accusing State Farm of wrongdoing, including racketeering, in the aftermath of Hurricane Katrina have ended with a settlement, while the once-prominent attorney who had originally filed the lawsuits against State Farm is being sued by another attorney on allegations of racketeering.
Richard "Dickie" Scruggs, now in federal prison serving a five-year term for his role in the attempted bribery of a Mississippi circuit court judge, originally brought hundreds of lawsuits against State Farm, alleging that the insurer conspired to reduce insurance payouts following the storm.
About 225 cases were assigned to Texas law firm Provost Umphrey, at the recommendation of the former Scruggs Katrina Group, once Scruggs was disbarred and disqualified from the cases.
On the same day as the settlements, Scruggs was sued by attorney Robert Wilson. According to court documents, the lawsuit alleges Scruggs, his brother-in-law, former Sen. Trent Lott, and others defrauded Wilson, preventing him from collecting millions in attorneys' fees related to settlements in tobacco cases. Lott is not named as a defendant in the lawsuit.
Wilson previously sued Scruggs over the money. Circuit Court Judge Bobby DeLaughter presided over the case in Mississippi. The lawsuit alleges Scruggs and other attorneys conspired to bribe DeLaughter in return for a judgment in their favor. "DeLaughter and a former United States Senator joined the conspiracy and agreed to aid and abet Scruggs," court documents say. Testimony by Scruggs' former attorney, Timothy Balducci, given at other court hearings in other cases, revealed DeLaughter was allegedly offered a federal judgeship. DeLaughter ruled in Scruggs' favor.
DeLaughter, since suspended while an investigation continues, has denied he took a bribe. Lott has also denied any allegations against him.
The Katrina lawsuits have now all been settled, according to State Farm and Provost Umphrey, including one high-profile lawsuit -- known as the Glenda Shows case, after its lead plaintiff -- which had pinned charges on the State Farm under the Racketeer Influenced and Corrupt Organizations Act. To announce the suit in June 2007, Scruggs held a press conference at Shows' destroyed home.
State Farm spokesman Jeff McCollum said the company "does not engage in the sort of activity alleged in this litigation." Scruggs made "unsupported RICO claims to great fanfare in June 2007," he said. "Since then, numerous legal, political, media and P.R. tactics used by Scruggs have been exposed as distortions."
"A combination of factors came together to allow the successful resolution of these claims, including the compensation amount, the exhaustion of the clients with the legal pursuit of their claims, unfavorable legal rulings over the last year and a half and a fresh perspective afforded by new counsel," said a statement from Provost Umphrey.
McCollum said neither side is able to discuss the settlements at the requests of the plaintiffs in the cases. Shows dropped the RICO claim before the settlements were announced. "The underlying contract claims are in the process of being settled," McCollum said.
(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)
Copyright ? 2009 A.M. Best Company, Inc.
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