State Farm Insurance company loses Katrina fraud verdict from Supreme Court
Two whistleblowers have had their victory upheld by the top court in the United States.
This week, the Supreme Court upheld a ruling against State Farm Insurance firm. The insurer has been found guilty of defrauding the U.S. government following Hurricane Katrina. The top court upheld a jury verdict that said the insurance company fraudulently assessed damage from the 2005 storm.
The Supreme Court’s ruling was a unanimous 8-0 to uphold the verdict from the lower court.
The State Farm insurance company challenged the decision of a lower court. That ruling was made in 2015 to uphold the original lawsuit verdict from 2006. This ruling was in favor of Cori and Kerri Rigsby, sisters who alleged that the insurer acted fraudulently under the False Claims Act. That Act allows individuals to sue on behalf of the American government over allegations that the government has been the victim of fraud.
The lawsuit filed by the Rigsby sisters accused State Farm of inappropriately attempting to have the government pay for the costs of the damage to a home in Biloxi, Mississippi following Hurricane Katrina. The lawsuit stated that the homeowners insurance company did this in order to avoid paying for the costs itself.
The State Farm insurance company claimed the lawsuit should be voided as the Rigsbys’s lawyer violated a court order.
The home insurance company said that the sisters’ lawyer was court ordered to keep the case’s details under seal. However, it stated that the lawyer violated that court order. Therefore, it said the case should be voided. The lawyer at the time, Dickie Scruggs, shared information about the lawsuit with the media.
When a lawsuit is filed under the False Claims Act, they are required to be kept under private seal for 60 days. Scruggs was also convicted of conspiring to bribe a judge in 2008 for a different case and received a five year prison sentence.
The Supreme Court concluded that Scruggs’s actions in sharing the lawsuit details with the media did not justify throwing out the 2013 jury verdict against State Farm Insurance. The reason was that none of the media that received that information shared any of it publicly.