Appeals Court Denies State Farm’s Rehearing Request in Katrina Fraud Case

A federal appeals court has decided that a jury’s ruling to uphold an insurance fraud decision will stand, allowing whistleblowers who sued State Farm Fire and Casualty Co. to seek more evidence of fraud after 2005’s Hurricane Katrina.

The Sun Herald reports that the 5th U.S. Circuit Court of Appeals denied State Farm’s request for a rehearing before the full court.

A three-judge panel of the U.S. 5th Circuit Court of Appeals upheld a jury’s finding that State Farm defrauded the NFIP through a false claim that Katrina’s storm surge destroyed a North Biloxi, Miss., home. The jury concluded State Farm should have covered the loss because it was caused by wind. Instead, the jury found, State Farm submitted a false claim to the NFIP, saying storm surge ruined the house.

The panel’s ruling included a directive that presiding Judge Sul Ozerden allow the whistleblowers, sisters Cori and Kerri Rigsby, to examine other State Farm Katrina claims for fraud. Ozerden had limited the case to one claim, that of Thomas and Pamela McIntosh of North Biloxi, because the Rigsbys had direct knowledge of how it was handled.

The Rigsbys, who worked as independent adjusters for State Farm after Katrina, say State Farm’s fraud was more widespread. State Farm has denied any wrongdoing.