The State of Mississippi has quietly settled its lawsuit against a subsidiary of the insurance giant State Farm, for allegedly minimizing payments to policyholders claiming damages caused by Hurricane Katrina.
By minimizing its Katrina claims payouts, State Farm Fire and Casualty Company left the state government to compensate homeowners, the lawsuit had claimed.
The Sun Herald reported that according to the settlement, the $12 million payment represents “restitution for damage, which was or may have been caused by a violation of law or potential violation of law” on the part of State Farm. The insurer, however, has not admitted any liability in its handling of claims related to Hurricane Katrina.
State Farm had originally paid the settlement in February 2021, but Attorney General Lynn Fitch chose not to disclose details of the agreement. It was only after The Sun Herald recently filed a public records request to secure a copy of the settlement that news of the settlement came to light.
It was noted that the settlement does not appear anywhere on the electronic case file on the lawsuit.
The Associated Press said that the lawsuit was originally filed in 2015 by former Attorney General Jim Hood. Sometime after the lawsuit was filed, State Farm lost a state Supreme Court appeal seeking to have the case dismissed.
This development comes months after State Farm Fire and Casualty agreed in July to pay the federal government $100 million in restitution for its alleged mishandling of Katrina-related flood insurance claims.
It was noted that in the federal case, the jury decided that State Farm defrauded the National Flood Insurance Program (NFIP) by billing it $250,000 for flood damage to a policyholder’s home – despite wind causing said damage, and the NFIP is only allowed to cover for flood damage.
The Sun Herald chose to investigate what became of Mississippi’s lawsuit against the State Farm subsidiary after news of the federal statement broke out.