Insurance Law

Rigbsy 'whistleblower' lawsuit drops three insurers, keeps State Farm

By David Rossmiller

You will recall the False Claims Act lawsuit by the so-called "whistleblower" Rigsby sisters -- the ones who received no-show (or at least "very little show") jobs at $150,000 a year from Dickie Scruggs while being material witnesses in Katrina cases prosecuted by Scruggs, and while being called before a state grand jury as star witnesses.  Why these facts are not endlessly repeated, as they should be, in any press story about the Rigsby sisters, is beyond me. Nothing personal against them, but in contrast to the days when they were feted on such shows as ABC's 20/20, they have lost all cachet and nearly all their credibility.

Ex rel. Rigsby, the False Claims Act lawsuit they filed, under seal, in April 2006 with Scruggs at the helm, is now in the category of Forgotten But Not Gone.  Here's the latest story on this relic, one of the last Katrina dinosaurs still stalking the Earth.  We'll get back to the story, by Anita Lee in the Sun Herald, in a minute.

Some in the U.S. Attorney's Office for the Southern District of Mississippi wanted to tell the judge presiding over the case, Robert Walker, that the government would not intervene in the lawsuit -- the evaluation was that there is no evidence of what the lawsuit alleges, massive insurer ripoffs of the National Flood Insurance Program during Katrina claims adjusting.  Others in the office, however, and I suspect these are the people continuing to play around with the federal grand jury regarding similar allegations, opposed this, and the result was the U.S. Attorney's Office didn't give a clear answer to Walker's directive to say one way or another whether the government would intervene. 

The answer was a half-hearted "not at this time."  The divisions within the U.S. Attorney's Office over this lawsuit reflect a more fundamental and troubling reality: the office has been messing around with a grand jury for, what, two years or more and has brought no charges against any insurer.  Surely by this time, the government has had time to work up a case, if there is one.  Is it that no one has had the guts to tell Trent Lott, Gene Taylor and others that there is no "there" there?  How many millions have been expended on document reviews and the like in this case, and what is there to show for it?  When will the FOIA requests start bringing this to light? 

So back to the Anita Lee story.  The version I have linked to has today's date, but it appears to be the same as the version I saw yesterday. The story says this:

Ocean Springs whistle-blowers are dropping three major insurance companies from a lawsuit filed over Katrina claims handling, choosing to focus on State Farm insurance companies as they press for damages under the federal False Claims Act.

Attorneys for the whistle-blowers, sisters Cori and Kerri Rigsby, expect a federal judge to approve the request that Allstate, Nationwide and USAA be dismissed from the lawsuit.

"We wanted to focus our case and make it as detailed as possible against State Farm," said Anthony DeWitt, a Missouri attorney who specializes in False Claims Act cases. Such cases allow employees who uncover fraud against the government to file lawsuits.

Translation: let's contract the lawsuit to conserve resources -- massive civil lawsuits consume money like you're throwing shovelfuls of dollars into a furnace; our main man, Scruggs, got whistled for an alleged technical foul and is on the bench; the government is treating us like we forgot to put on deodorant; this thing is just sittin' here like a '73 Plymouth on blocks; and you know what? I think we got nothin'.  So before we turn this thing out to pasture, let's go back to the well one more time and see if we can get some juice out of State Farm. What, you got a better plan?

Full post as published by Insurance Coverage Law Blog on March 06, 2008 (boomark / email).