State Farm will donate $100 million to feed the cost of Hurricane Katrina insurance

State Farm Fire and Casualty Co. has agreed to pay the federal government $100 million for its potential role in settling flood insurance claims after Hurricane Katrina, settling a lawsuit that two whistleblowers filed against the company more than 16 years ago.

Parts of the deal became private in a whistle-blower lawsuit filed in 2006 by former reformers and sisters. Cori and Kerri Rigsby, who was living in Ocean Springs at the time. State Farm also agreed to deny the documents it provided to the sisters, saying they violated their employment contracts and violated other laws by obtaining company documents while working as freelancers.

The charges were dismissed with prejudice, meaning they cannot be refiled, by US District Court Judge Sul Ozerden in Gulfport.

State Farm and the Rigsbys released a statement accepting the settlement, saying, “The parties are pleased to settle this 16-year-old lawsuit.”

The Rigsbys had previously confirmed that State Farm had defrauded National Flood Insurance by billing them for the flooding of their Biloxi home that was listed as a hurricane. State Farm’s policy is supposed to cover wind damage. Insurance companies update their wind damage and flood claims coverage through the NFIP.

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Former insurance adjuster Cori Rigsby, right, and Kerri Rigsby, Cori’s sister. AMANDA McCOY

After the jury’s 2013 verdict, Ozerden ordered State Farm to pay $750,000, triple the amount State Farm falsely claimed was awarded to the flood program, and $2.9 million in attorney’s fees and expenses to the Rigsbys.

Winning one fraud case opened the door for the Rigsbys to see thousands of other victims of State Farm fraud after Hurricane Katrina. The settlement means that State Farm will reimburse the federal government, not policyholders, for any debt the insurer would have incurred in handling other flood insurance claims.

Federal whistleblower law entitles the Rigsbys to 25% to 30% of the money they paid because they had independent knowledge of State Farm’s actions and pursued the case without federal government intervention. If the federal government had decided to intervene in the case, the Rigsbys’ recovery would have been only 15% to 25% of the cost of the case.

The payout goes to the federal government, not law enforcement, because the potential fraud was against the National Insurance Program.

The Rigsbys were represented by August Matteis of Weisbrod Matteis & Copley, based in Washington, and Maison Heidelberg of Heidelberg Patterson Welch Wright in Jackson.

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Steve Loper of Pascagoula is one of the lawmakers who planted signs after Hurricane Katrina to protest their support by insurers who denied claims for wind damage, keeping the storm affected by federal policies that caused the damage. John Fitzhugh File

Cars float on rainwater from Hurricane Katrina about 30 minutes before the water reached its peak in Biloxi on Aug. 29, 2005. In the background, Fred and Caroline Dunaway’s home on Kensington Drive is seen. Courtesy of Fred Dunaway

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Hurricane Katrina in 2005 washed casino boats ashore and closed every casino across South Mississippi. The company will celebrate 25 years on Aug. 1, 2017. Sun Herald File THE SUN HERALD

This article was originally published August 24, 2022 11:50 AM.

Mississippi native Anita Lee graduated with a journalism degree from the University of Southern Mississippi and previously worked for the Jackson Daily News and Virginian-Pilot, joining the Sun Herald in 1987. She specializes in public affairs, public corruption, transparency and the courts. He has won state, regional and national journalism awards, most notably the 2006 Pulitzer Prize in Public Service for his work on Hurricane Katrina.
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