Results matching “katrina”

"Judge Rules for Insurers in Katrina" - PointOfLaw Forum

Maybe Dickie Scruggs isn't going to be allowed to destroy the U.S. property and casualty insurance industry after all. U.S. District Judge L.T. Senter yesterday dealt a substantial defeat to Scruggs' pilot case seeking to force insurers to cover Katrina storm surge damage, ruling that the flood exclusion in a Pascagoula couple's Nationwide policy is valid and enforceable, notwithstanding a recalled conversation in which the couple's agent allegedly advised them not to buy separate flood insurance. Scruggs claimed partial victory because Judge Senter ruled ambiguous (and thus to be construed against the insurer) a clause excluding coverage of wind damage if a property subsequently floods. (Laura Hipp and Lora Hines, "Storm surge not covered", Jackson Clarion Ledger, Aug. 16; Joseph B. Treaster, "Judge Rules for Insurers in Katrina", New York Times, Aug. 16; Lattman, Aug. 15).

P.S. Much more at Insurance Coverage Blog here, here and here.

Katrina doctor, nurses indicted - PointOfLaw Forum

Kevin Pho has in-depth coverage of the Louisiana Attorney General's decision to indict ear, nose and throat specialist Dr. Anna Pou and nurses Lori Budo and Cheri Landry on four counts apiece of second-degree murder. See this follow-up and this one, too. And: the New York Times covers the mounting controversy.

Scruggs' first Katrina insurance trial - PointOfLaw Forum

Following an eight-day bench trial, the case is now in the hands of federal judge L. T. Senter Jr. of Gulfport, Miss., who has promised a quick ruling. Although the exclusion of flood damage from homeowners' policies had been shouted from the rooftops for decades, Scruggs has produced witnesses who aver that their Nationwide Insurance agent assured them that floods were covered or that flood coverage was unnecessary; for example, a local chiropractor (whom the New York Times seems to be impressed by) says he remembers the agent saying this in a manner that was admittedly "roundabout" and not "directly", yet still somehow "emphatic". David Rossmiller at Insurance Coverage Blog writes, "I have a hard time believing that any agent along the Mississippi coast would believe or say that, but I suppose anything is possible." (Jul. 10)(more from Rossmiller here and here). Insurance Journal summarizes meteorologists' testimony about whether Katrina's winds would have been enough to destroy the home of Paul and Julie Leonard before storm surge arrived, thus triggering a risk covered by the policy. AP quotes Dickie Scruggs as saying of the case, "If you win it, it's a huge win. If you lose it, you spin it the best way you can."

"9/11 Suit Tests New York Stand on Immunity" - PointOfLaw Forum

Firefighters, police officers, and cleanup workers who worked on rescue and clearing operations at Ground Zero are suing New York City and its subcontractors for health problems allegedly caused by working at the site. 200,000 respirators were distributed at the time, but many workers did not use them. Injured workers are already eligible for workers' compensation and free medical care, but attorneys are hoping for a bigger pot of money from taxpayers. "The city has argued that it will be handicapped in responding to any future disasters if the possibility of negligence lawsuits is left hanging over its head." (Anthony DePalma, NY Times, Jun. 23).

The Specter-Leahy asbestos bill has been amended to also cover 9/11 and Katrina responders.

The ruling, by U.S. District Judge L.T. Senter, Jr. of the Southern District of Mississippi, denied a motion by plaintiffs Elmer and Alexa Buente for partial summary judgment in their suit demanding that Allstate cover storm-surge damage from Katrina. It sounds wholly unremarkable as a matter of insurance-law precedent, but must come as a jolt to those who've been taken in by the (itself somewhat hurricane-like) spin put out in the press by some hyperactive Gulf Coast lawyers, such as Richard Scruggs, who represents the Buentes (Chicago Tribune; Insurance Journal). After the ruling, Mississippi Attorney General and Scruggs ally Jim Hood proceeded to compare insurance companies to "Nazis locking arms, coming at those people down there on the coast", a sentiment which proved a mite controversial (AP/Insurance Journal).

Al Gore's Voodoo Economics - PointOfLaw Forum

Earlier this week I wrote elsewhere about Al Gore's proposal, in the pages of the Wall Street Journal, to change our system of generally accepted accounting principles so that businesses were required to recognize the "negative externalities" they create in the form of pollution and so on.

For many reasons (only the most obvious of which I recounted earlier) it would be both illogical and impracticable to actually implement the change Gore proposed.

But as I wrote then, "Gore is not stupid." So why did he propose such an outrageous change in corporate accounting rules?

Our intrepid upholders of the law - PointOfLaw Forum

A Mississippi Attorney General Jim Hood press release begins:

Attorney General Jim Hood announced today that his office is looking for a few more good insiders to help in the investigation of the insurance industry's fraudulent denial of claims on the Coast. Hood said, "The time is now for insiders to come forward and be a confidential informant and/or witness. If you have information regarding these crimes and do not come forward, you may later become a criminal defendant.�

(h/t C.D.) More on Katrina litigation.

AIR Study on Medical Malpractice - PointOfLaw Forum

Last week Americans for Insurance Reform (AIR) released a "study" claiming the med mal crisis is over. AIR examined the number of rate increase requests for a small number of states with damage cap limitations and a small number of states without damage cap limitations and concluded that tort reform was a waste because neither group of states saw any recent increases in premiums. This conclusion is as faulty as if a physician told a patient to take two aspirins for a headache — which later turned out to be something more serious.

By Gail Heriot

This is an updated version of an article that ran in the San Diego Union-Tribune Aug. 28, 2005. The U.S. Civil Rights Commission has scheduled a Jan. 20 briefing on the proposed "Native Hawaiian Government Reorganization Act", at which Prof. Heriot is scheduled to testify.

America's 50th State has always been known for its friendly and welcoming "Spirit of Aloha." But for the last decade or so, Hawaii has begun to earn a reputation for something else entirely: the nation's most divisive racial politics. And with the proposed "Native Hawaiian Government Reorganization Act" (known as the Akaka bill) currently pending before the U.S. Senate, it may only get worse. The bill was scheduled for Senate vote back in September, but emergency legislation relating to Hurricane Katrina had to be taken up instead. The bill's supporters now expect that it will be taken up sometime in 2006.

Put simply, the Akaka bill will allow the nation�s approximately 400,000 ethnic Hawaiians to organize themselves into one vast Indian tribe—the largest in the nation. A commission appointed by the U.S. Secretary of the Interior and consisting of nine "Native Hawaiian" commissioners with "expertise in the determination of Native Hawaiian ancestry" will sit as judges to ensure that only those who can prove their Native Hawaiian bloodline are permitted to join.

Why would 400,000 American citizens want to retroactively declare themselves an Indian tribe? There's a good chance they don't. The only full-scale poll indicates that ethnic Hawaiians reject the notion of a tribe�48% to 43%�when they are informed that under a tribal government they would not be subject to the same laws, regulations and taxes as the rest of the state. And Hawaiians generally oppose the so-called "reorganization" by an astonishing 2 to 1 ratio. But vocal leaders in the ethnic Hawaiian community, many of whom no doubt fancy that they will be the tribal leaders themselves, consider tribal status a top priority. And politicians are falling in line behind them. Senator Daniel Akaka, for whom the bill is named, claims to have the votes he needs to pass the bill.

To understand why ethnic Hawaiian leaders want tribal status, one must know a bit about Hawaiian racial politics. In an age in which racial entitlements are an unfortunate feature of the political landscape in so many parts of the country, Hawaii is in a league by itself. The State's Office of Hawaiian Affairs administers a huge public trust�worth billions�which in theory benefits all Hawaiians, but for reasons that are both historical and political, actually provides a bonanza of benefits exclusively for ethnic Hawaiians. Among other things, ethnic Hawaiians are eligible for special home loans, business loans, housing and educational programs. On the OHA web site, the caption proudly proclaims its racial goal, "Office of Hawaiian Affairs: For the Betterment of Native Hawaiians."

The problem for supporters of special benefits came in 2000, with the Supreme Court case of Rice v. Cayetano. Unsurprisingly, the Court ruled that the Constitution's Fifteenth Amendment, which prohibits States from discriminating on the basis of race in voting rights, applied to Hawaii just as it does to every other state in the union. Hawaii could not prohibit non-ethnic Hawaiians from voting in state elections for OHA trustees.

That ruling caused an uproar in Hawaii that has not yet subsided. If the Fifteenth Amendment prohibits Hawaii from limiting voting rights to ethnic Hawaiians, the Fourteenth Amendment's Equal Protection Clause and other civil rights laws might prohibit all or part of the OHA's massive system of exclusive benefits. Cases like the Ninth Circuit�s decision last month prohibiting the Kamehameha Schools from operating for the exclusive benefit of ethnic Hawaiians only added to this controversy. The whole racially-exclusive system is in legal jeopardy.

That's where the Indian tribe idea comes in. States cannot discriminate on the basis of race except in extraordinary cases. But Indian tribes can. They are essentially exclusive racial groups and are not directly (or in many respects even indirectly) bound by the U.S. Constitution (or by most civil rights laws). If ethnic Hawaiians can be morphed into an Indian tribe, and the State of Hawaii can then transfer the OHA's functions (and the vast acres of real estate and other property it administers) to the tribe, the racial spoils system can be preserved�or so its advocates hope.

There are many reasons that the Akaka bill is a bad idea�including a strong likelihood that both the bill and the overall plan to transfer the OHA's functions and property to the "tribe" are simply unconstitutional. If the State of Hawaii cannot confer preferential benefits on its citizens based on race, it cannot give away land and property to a newly-minted tribe created for the purpose of conferring benefits based on race. The Constitution's requirements cannot be by-passed that easily.

But perhaps the most important reason to oppose the Akaka bill is the disturbing precedent it sets. The United States has long recognized the sovereign status of Indian tribes. But until now, it has done so only with groups that have a long, continuous history of self-governance. Tribes were treated as semi-autonomous entities, because they were; they had never been brought under the full control of both federal and state authority. Our policy towards them was simply a bow to reality.

By retroactively creating an Indian tribe out of individuals who are already full citizens of both the United States and the State of Hawaii, and who do not have a long and continuous history of separate self-governance, the Akaka bill will be breaking new ground. If ethnic Hawaiians can be an Indian tribe, why not Chicanos in the Southwest? Cajuns in Louisiana? Religious groups�like Orthodox Jews in New York or the Amish in Pennsylvania�may be particularly interested in gaining tribal status, since doing so will arguably allow them to take on governmental authority without being subject to Constitutional prohibitions on the establishment of religion. Who will say no to these (and other) groups?

In August of 2005, Senator Akaka was asked in a National Public Radio interview whether the sovereign status granted in the bill "could eventually go further, perhaps even leading to outright independence." The question might have seemed extraordinary for anyone unfamiliar with how strong the push for Hawaiian independence has become. Back in the 1970s, its supporters were considered kooks and lunatics. But today, although by no means a majority, they are a political force to be reckoned with. It's hard to drive down a Hawaiian road without seeing an upside down Hawaiian flag, the symbol of the movement, flying over someone's home. Even more extraordinary was Akaka's answer: "That could be. That could be. As far as what's going to happen at the other end, I�m leaving it up to my grandchildren and great-grandchildren."

Akaka's fellow Senators should think long and hard about the whether the Akaka bill will, in the long run, lead to greater harmony among Hawaiians and among Americans�or less. Is our "One Nation" indivisible or not?

Gail Heriot is a professor of law at the University of San Diego and blogs at therightcoast.blogspot.com.

"After Katrina, courts flooded by lawsuits" - PointOfLaw Forum

If you've been reading Point of Law and Overlawyered, the January 15 USA Today front-pager on post-Katrina litigation doesn't tell you much you don't already know, and, worse, tells things almost exclusively from the plaintiffs' side without distinguishing between the reasonable and unreasonable lawsuits. But one new entertaining tidbit is how quick the Louisiana Trial Lawyers Association is to abandon typical plaintiffs-bar rhetoric about the critical importance of the jury system when that system is an obstacle to a payday. It remains to be seen whether the post-Katrina demographics of a New Orleans where over half of the population has left (and those who have returned are generally wealthier than those who left) will continue to be such an unfriendly litigation environment for business.

Katrina lawsuits roundup - PointOfLaw Forum

The New Orleans Times-Picayune has comprehensive coverage, with excellent details for a lay newspaper. Most entertaining are the attempts to sue the Army Corps of Engineers—since the 1927 statute that authorized the Corps to build levees specifically exempted them from liability. In another suit, Robert Harvey, a trial lawyer who is the former president of the New Orleans Levee Board, has sued the Levee Board along with several insurance companies, to recover for flood damage to his home.

Trent Lott is Suing State Farm for Katrina Losses - PointOfLaw Forum

Trent Lott is suing State Farm in Federal District Court in Mississippi for his Katrina losses. (Biloxi Sun Herald). He is arguing that wind was the proximate cause of the storm surge and invokes Mississippi�s valued policy provision which may suggest that the insurer must pay even if a contractually excluded event (storm surge) destroyed his house.

Scruggs' Katrina strategy - PointOfLaw Forum

"Sniper-shot" cases rather than pushing lots at once, he tells the Biloxi paper:

His Scruggs Katrina Group, which includes attorneys from six firms, has selected one family to sue each of the major insurance companies in Mississippi. The model family on each lawsuit was selected to be representative of the insurance company's clients.

Each family has agreed not to settle its case unless its insurance company offers similar terms to all policyholders.

More Katrina shopping - PointOfLaw Forum

This time it's law, rather than for venue, being shopped for in the aftermath of the hurricane:

In one of several lawsuits consolidated in federal court in Baton Rouge, La., Mr. Becnel, whose Reserve, La., firm is called The Law Offices of Daniel E. Becnel Jr., charges that Murphy Oil USA Inc. failed to take the necessary precautions to secure a tank that leaked 819,000 gallons of heavy crude oil into a St. Bernard neighborhood. The suit seeks to have the El Dorado, Ark.-based oil company pay the owners of around 2,000 homes the value of their property and punitive damages.

Mr. Becnel said he would assert Arkansas law in the case because that's where decisions regarding the plant's operation were made and it is a state where punitive damages are allowed in such cases, whereas Louisiana is not. (emphasis added)

-- from a news story by Michael Bradford in the November 14 issue of Business Insurance (sub-only). More: NOLA news weblog (New Orleans Times-Picayune), Sept. 28.

Hood: venue's the key to Katrina win - PointOfLaw Forum

You give us the right venue, we'll give you the world:

[Mississippi] State Attorney General Jim Hood testified that he believes his office will be successful in its lawsuit against the national insurance industry -- if the matter is returned to state chancery court, as he also believes will happen. "Then we can get some relief for our homeowners."

-- from a Nov. 2 press release issued by the Mississippi House of Representatives. More here, here, here and here.

Mississippi AG Katrina suit - PointOfLaw Forum

David Stratton comments on the jurisdictional issues in Jim Hood's lawsuit against Mississippi insurers over the flood exclusion clauses in homeowners' policies (Oct. 14 and links therein).

The removal papers and remand motion are on the AEI Liability Project's "Documents in the News" page. The complaint is, of course, attached as an exhibit to the removal papers.

"Davis-Bacon Confidential" - PointOfLaw Forum

Mickey Kaus has more on the sacrifices displaced Louisianans would have to make to keep the unions happy on the "prevailing-wage" law governing federal construction. More on Katrina and Davis-Bacon: Sept. 15, Sept. 21.

Flood Insurance by Fiat? - PointOfLaw Columns

By Walter Olson

Reprinted from the Wall Street Journal, September 24, 2005


Sometimes it takes a good lawyer to get an insurance company to pay up on the promises it made. But if you want insurers to pay billions on promises they never made—risks they were at pains to avoid underwriting, never collected premiums for, and never set aside reserves against—then a pair of very special lawyers, Jim Hood and Dickie Scruggs, are at your service.

In case you're arriving late, insurance pros worldwide stood transfixed last week at the news that Mr. Hood, the elected attorney general of Mississippi, and his ally Mr. Scruggs, the Pascagoula wheeler-dealer known for his role in the $246 billion tobacco litigation, were suing to invalidate—as "unconscionable" and contrary to public policy—the standard flood exclusion in every Magnolia State homeowner's contract. Assuming ordinary readings of policy language, the early estimates have insurers on the hook for a record $40-$60 billion in Katrina payouts. Knock out the flood exclusions and that exposure will increase by many billions more—scores of billions if the principle gets applied in Louisiana.

Wouldn't that bust some otherwise solvent insurers? Sure, but Mr. Scruggs—a key donor to many politicians and judges in his state, as well as brother-in-law of former Sen. Majority Leader Trent Lott—isn't worrying. "I'd rather see an insurance company go broke than the tens of thousands of my friends and neighbors in Mississippi, Alabama, and Louisiana go bankrupt," BestWeek has him saying.

There are some genuine, knotty issues that will arise in resolving Katrina coverage. Ambiguous policy language, unsettled issues of state law, situations in which a structure was damaged first by wind and then by floodwater—all will fuel litigation by policyholders, some of it meritorious. But that's quite a different question from whether clear and long-standing contract language should be tossed in the wastebin.

The flood exclusions, Mr. Hood asserts, were hidden "in the fine print" of coastal residents' policies. If so, it was some of the most publicized fine print in history. "Homeowner's insurance doesn't cover flood damage"—blares the warning on one of the federal government's own consumer-affairs Web sites. In fact, the well-known exclusion dates back decades and has been generally respected by courts.

"Unconscionable"? Contrary to "public policy"? The exclusion prevails in all 50 states, including those states—Mississippi is one—where regulators must okay the offering of new standard policies. Mississippi's insurance authorities, like their counterparts elsewhere, had green-lighted the flood exclusion, amid little controversy.

Then there's the federally sponsored flood insurance program, which exists in large part because storm surge perils in hurricane country are considered too severe to insure commercially at politically palatable rates. For years, insurance agents and the government have urged property owners to buy that added coverage. But why should they bother, if the Hood/Scruggs arguments are to be taken seriously? Can't their ordinary homeowners' policies just be redefined retroactively as covering the risk?

Criticized in the past for his close ties to the state's powerful trial lawyers, Mr. Hood has often been at odds with Republican Gov. Haley Barbour (with whom he is not obliged to coordinate his activities). In a way, Mr. Hood is simply taking to an extreme the failings of that familiar category of public official, the grandstanding state attorney general. Every element is there: the headline-chasing, the demonization of unpopular businesses, the cozy relationship with private attorneys suing those same businesses, the posturing about being on the "people's" side at the expense of any coherent or defensible legal principle.

It's hardly a coincidence that it was Mr. Hood's predecessor, Mike Moore, who, in league with Mr. Scruggs, dreamed up the disgraceful $246 billion state tobacco/Medicaid caper. Back then, some businesspeople seemed to imagine cigarette makers were going to be the first and last targets of the emerging AG/trial-lawyer axis. They weren't.

Insurance spokespeople ordinarily issue muted responses when politicians attack, but not this time. "You cannot have a capitalist economy where contracts are ignored," noted Robert Hartwig of the Insurance Information Institute, who said Mr. Hood's lawsuit is "an affront to the Constitution and sets a horrendous precedent." So, can't State Farm, Allstate and others cite Article I, Section 10 of the U.S. Constitution, which provides that "No state shall. . . pass any. . . law impairing the obligation of contracts"? Unfortunately, the Supreme Court in Blaisdell, a 1934 New Deal case, gave states free rein to nullify contracts so long as "the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end." If you think that guts the originally intended protection, maybe you're part of that "Constitution in exile" movement we keep being warned about.

Should the Hood-Scruggs theory be taken seriously, the bankrupting of some insurers and the diversion of money from insureds in other states will only be the start. The wider problem would be that both reinsurers and primary insurers are likely to head for the hills rather than underwrite future conventional policies in Mississippi, or indeed any jurisdiction judged capable of electing a Hood to high office. At a minimum, they're likely to demand a steep premium to compensate for legal risk.

Alarmist? Mississippi insurance commissioner George Dale is already worried that as panicked insurers pull out of the state, first-time customers—such as construction contractors moving into the area—will be among the earliest casualties: "Contractors got to have insurance; they can't build without insurance."

We've had the natural disaster. Let's hope it's not followed by legal disaster.

Mr. Olson is a senior fellow at the Manhattan Institute and author of The Rule of Lawyers (St. Martin's, 2003).

Set your TiVos; C-SPAN2 will broadcast live the panel that I'm moderating at AEI on the Scruggs and Mississippi AG lawsuits coming out of Katrina, Monday morning at 9:15 am Eastern. There's perhaps $15 billion at stake in the litigation (Sep. 25 and links therein) over the flood exclusion clauses. The speakers will be Robert Klein and Martin Grace of Georgia State University; Adam Scales of Washington and Lee University; and Joanne Doroshow of the Center for Justice & Democracy.

The panel was mentioned by Ron Nessen's Think Tank Town column on washingtonpost.com, which also refers to an Alabama Policy Institute discussion of the litigation. (Gary Palmer, "The Storm After The Storm", Sep. 15).

(Bumped and updated from Sep. 30.)

AEI panel on Katrina insurance lawsuits - PointOfLaw Forum

There's perhaps $15 billion at stake in litigation (Sep. 25 and links therein) over the flood exclusion clauses and their application to damage from Katrina. I'll be moderating a panel discussion Monday morning on the economic and legal issues presented by flood exclusion clauses. The speakers will be Robert Klein and Martin Grace of Georgia State University; Adam Scales of Washington and Lee University; and Joanne Doroshow of the Center for Justice & Democracy. See also Adam Scales, "How Will Homeowners Insurance Litigation After Hurricane Katrina Play Out?", Findlaw, Sep. 19; Kathy Bushouse, "Lawsuits over storm-surge damage put insurance industry on the defensive", Florida Sun-Sentinel, Sep. 27.

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