Insurer's Records Demanded
as posted at www.sunherald.com
March 29, 2006
by ANITA LEE
GULFPORT - State Farm Fire & Casualty Co. is "twisting the arms" of engineering firms to produce reports that will allow the company to deny Hurricane Katrina claims, a special assistant attorney general said in Circuit Court Tuesday.
Tim Howard, special assistant to Mississippi Attorney General Jim Hood, said confidential informants have been cooperating with a grand jury investigation into fraudulent insurance practices.
Grand jury proceedings are secret, but Howard revealed the information during a hearing before Judge Steve Simpson to consider State Farm's request for more time to produce company records the grand jury has subpoenaed.
"We would like to get the engineering reports forthwith," Howard said.
State Farm attorney Bob Galloway of Gulfport responded, "State Farm wants to give the attorney general every document that's not subject to privilege that they want."
Hood's office is seeking engineering reports prepared for State Farm by its own employees and outside companies, along with e-mails and other electronic records. Howard said investigators are particularly interested in claims for which the company ordered two engineering reports.
State Farm wants to produce the records over a period of no more than 90 days, beginning April 6, but the Attorney General's Office wanted all the records by March 23.
Simpson said he would consider the request before ruling on State Farm's motion.
State Farm also wanted assurances that the records would not get into the hands of attorneys in Hood's office who are working on a civil case against State Farm or be shared with other attorneys pursuing lawsuits against the company for denying coverage to policyholders.
"We're not trying to funnel records into a civil case," Howard told Simpson. "This is a matter for criminal review of the fraudulent denial of claims."
Simpson wanted to know why State Farm needed so long to produce records the company estimates will include 100,000 pages in 35 banker's boxes.
State Farm attorney Scott Welch of Jackson said company employees are working around the clock to comply with the subpoena, but must follow a 14-step process before records are ready for release.
At the beginning of the hearing, Welch asked Simpson to close the courtroom due to the secrecy of grand jury proceedings. "I think it's not a matter of public interest of public knowledge at this stage," Welch said.
Simpson refused, saying State Farm attorneys had failed to file a motion requesting a closed hearing 24 hours in advance, which would have given the public time to respond.
"This is not a grand jury proceeding," Simpson said. "This is a motion on the nature and substance of the pleading."
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
•••••••••••••••••••••