OLEAN -- I don't often agree with former Senate Majority Leader Trent Lott, and in a previous incarnation I've written stories he has protested vigorously. But this time, I think he's onto something. In this column, I will call him justified, righteous and deserving the support of the common folk all across America.
Trent Lott, you see, has risen up against insurance companies in general and State Farm in particular -- business entities that are part of an imperious corporate class the Mississippi Republican once fervently protected at almost any political cost.
Last week, Lott -- whose $400,000 home in Pascagoula, Miss., was wrecked by the ferocious Hurricane Katrina in 2005 -- went public with his anger at such firms. He told The New York Times the big insurers were guilty of "insensitivity and outright meanness" in rejecting the claims of thousands of homeowners along the Gulf Coast in Mississippi, where the monster storm Katrina caused a record $136 billion in damage. Insurance companies so far have covered about $41 billion of that damage to homes and businesses.
They refuse to cough up much more, however, because they claim most of the damage came from flooding, not the wind a hurricane generates. To most American adults with the IQ of a cantaloupe, this seems disingenuous, spurious and just plain stupid.
If even a legal moron like me can come up with the key legal question here -- one being asked these days in myriad courtrooms across the deep South -- that query must be relevant: Would the incredible devastation have occurred without Hurricane Katrina? Noooo, of course not!
Yet the insurance companies, to a firm, argue their policies -- most of which contain language clearly promising to pay for hurricane destruction, a premise upon which the policies were initially sold to unsuspecting property owners -- actually cover only wind damage.
The flooding, the huge insurance firms steadfastly assert, is another matter. In other words, you would need additional flood insurance to collect for Katrina.
Lott -- and thousands of other Mississippi, Louisiana, Texas and Alabama residents who've filed lawsuits against the insurance firms -- reasonably and logically contend it was the Force 4 and 5 winds of Katrina that pushed the gulf and reservoir, lake and river waters across the beaches, levees and protecting barrier islands and over inland areas of each of those states, and thus were the causal agent of the damage, whether it was wind damage or water damage.
So they should receive insurance payouts. A second grader would agree, but not the insurance companies.
Sen. Lott, claiming he is "outraged" over these "abuses" in Katrina's aftermath, also revealed to the Times that he snuck a little-noticed provision into recent congressional legislation, quickly signed into law by President George W. Bush, that orders the Department of Homeland Security to investigate possible fraud by the insurance industry.
Further, Lott has his ample Senate staff working on two other potential Capitol Hill blockbusters:
These last allow the insurance companies to share with each other closely held information on claims costs, with an eye toward setting future rates. If gas and oil executives do this, they go to jail.
Lott, of course, is nothing if not an unabashed cheerleader for big business.
His actions led many political observers to accuse him of rank hypocrisy for many reasons, one of the foremost -- described currently on various Web sites in tones of delicious irony -- being Lott's adamant and fervent campaigning over the years for "tort reform" legislation that would make it more difficult, if not impossible, to sue big corporations for such abuses as the very one Lott is complaining about.
Check out epluribusmedia.org for a list of cited and dated anti-lawyer quotations that Lott now must be chewing over in his mind, and for his prominent placement among "these hypocrites who decry lawsuits and assist tort reform legislation that makes it more difficult to get access to the courthouse when a person is physically disabled, but who go straight to court when they are personally injured."
Point well taken, but Lott is merely demonstrating the venerable and proven Gored Ox Maxim, a relative situational rule that applies to both Congress and modern American jurisprudence. Stated loosely, it is:
One does not give a big fat fig for the problems of the other guy's ox, but one will raise hell itself when one's own ox is gored.
To my mind, all backers of tort reform are hypocritical. The Association of Trial Lawyers of America -- the most visible target of those who would throttle the little guy's ability to sue for damages -- is one of the few entities in this country keeping the politicians and corporate fat cats relatively honest.
The real hypocrisy is demonstrated by the mammoth corporate donations to members of Congress in trying to deny you and me -- under the miserable excuse of injury to profit -- the hard-won access to a competent legal system when we are wronged. Take that away and eventually you'll have another American Revolution on your hands.
The obvious answer is: Don't do the wrong in the first place, and you won't get sued for it.
Besides, Lott was up-front in telling the Times, "I don't profess to be impartial," and during his justifiable rant he made another outstanding promise -- to introduce yet more legislation that would once and for all force insurers to include in their policies a "prominent listing" of what they refuse to cover. Current home insurance policies, he said, contain muddy, incomprehensible and amorphous language resulting in a "bunch of subterfuges" that make it impossible for common folk, and even most lawyers, to understand.
Lott nailed it when he added: "Don't tell me they don't do it on purpose."
Of course they do. Haul out your own dusty policies insuring any aspect of your life. They might as well be written in Urdu.
The insurance companies may have bitten off more than they can chew in this fiasco. Their lame responses to his outburst include observations that he "has a personal dog in the fight," that his actions "have the appearance of an abuse of power," that he "has a duty to be impartial," and that he's wasting the "scarce resources of the Department of Homeland Security."
First of all, Homeland Security does not have "scarce resources," and secondly, some critics believe the vast agency doesn't seem to be using them much anyway, so they might as well start looking into this. The Federal Emergency Management Administration (FEMA) was already subsumed into Homeland Security after screwing up the official government reaction to Katrina, and it makes some sense to locate investigative powers there in the years of Katrina follow-up.
Nor has Lott chosen some ambulance-chasing opportunist as his own attorney.
He picked his own brother-in-law and neighbor, Richard F. Scruggs, whose own home was severely damaged by Katrina and whose own insurance policy payout was then denied. Scruggs is familiar with throwing rocks at giants. He's one of the lawyers who made a fortune by litigating against Big Tobacco. The case law he forged is still underpinning huge payouts to victims of the tobacco industry's misleading advertising. Besides his brother-in-law, Scruggs has scores of other victimized insurance holders as clients.
He'll have plenty to work with. In terms of legality and fairness, the reaction of insurance companies to Katrina seems despicable.
One of the victimized families, the Nguyens of Mississippi, was made famous by CNN four months ago in a TV portrayal of the angst involved in asking for fair treatment. Katrina took their home, too, and State Farm made its usual water-not-wind ruling in accepting cause. Two outside expert reports from engineering firms concluded the damage was caused by the wind and even cited neutral eyewitnesses who saw another house actually lifted off its foundation by the hurricane wind and slammed into the Nguyens' house by it.
State Farm recruited yet another engineering firm, and its report attributed the damage to flooding -- despite the house-lands-on-house reports. The Nguyens allege in their suit that State Farm pressured staff and contractors to conclude the damage was from flooding, not wind. They also allege the huge insurance company destroyed early engineering reports that concluded the damage was caused by wind.
In Gulfport, Miss., one of the worst-hit cities, a State Farm sub-contractor called E-A Renfroe and Company of Birmingham, Ala., employed two sisters, Cori and Kerri Rigsby. The Rigsby sisters were assigned by Renfroe to help adjust Gulfport area claims for State Farm.
Lawyer Scruggs made contact. The sisters decided to cooperate with plaintiffs. They turned over "reams" of internal State Farm documents, not only to Scruggs but to state and federal investigators.
The sisters claim the documents demonstrate State Farm manipulated the reports of engineering firms on storm damage with an end toward denying the policyholder claims. Then the Rigsbys told State Farm what they had done and resigned.
Renfroe, the sub-contractor and the Rigsbys' employer, responded by filing suit against the sisters in Alabama federal court -- an action in which Renfroe contends the sisters not only breached confidentiality agreements with their employer, but also the Alabama Trade Secrets Act.
I guess if I were rigging after-damage reports, I'd try to keep it a "trade secret," too.
Here's something to contemplate. Even after counting the settled policyholder claims from Katrina and the numerous other big hurricanes of 2005, state regulators report the Big Insurance firms made a record $44.8 billion profit in that year -- an increase of almost 19 percent over 2004.
They also, according to regulators in the National Association of Insurance Commissioners, increased their reserve surplus to $427 billion, an increase of 7 percent over 2004.
Meanwhile, much of the cost of Katrina has been dumped upon -- you guessed it -- the American taxpayer. Federal flood insurance pays a maximum of $350,000 per instance -- a $100,000 ceiling on furnishings, clothing and personal items, and $250,000 tops on the home itself. Many residents along the Gulf Coast and Mississippi River, long before Katrina hit, were foresighted enough to have purchased these additional federal policies, which generally were honored immediately.
Several of them believe when State Farm and the other companies noted the flood coverage, they steeled against paying their hurricane claims and went to a pay-wind-only strategy, thus shifting the cost of many to the federal insurance program -- and thus to the taxpayers. Lott says this is one of the things he wants Homeland Security to investigate, to probe whether that was just an "occasional mistake" or systematic.
"I think," Lott told the Times, "it was systematic."
There's a report out on all this depressing business, assembled by the Association of Trial Lawyers of America and the Academy of Florida Trial Lawyers. (Go to www.atla.org if you are interested.) Ed Zebersky, the president of the latter organization, sums it all up nicely:
"While the insurance industry enjoys record profits and CEOs bulging bank accounts, too many residents of the region are left waiting for the settlements they deserve to help them get back on their feet. Whether it be an earthquake, tornado or a hurricane, insurance companies have engaged in tactics over the years to delay or deny the payment of justified and fair claims. That is why we are urging insurance companies to clean up their act and pay fair and just claims once and for all."
I say, go to it, all you snarling tort lawyers. Go to it, Dickie Scruggs. Go to it, Trent Lott, whatever your motives. In Southern parlance, sue them language-twistin' sumbitches.
| Niagara Falls Reporter | www.niagarafallsreporter.com | October 17 2006 |