Insurance Coverage Blog

Despite the fact that anti-concurrent cause language has been around for quite a few years, if you go looking for the Anti-Concurrent Philosophy Library, you won't find it -- you'd be lucky to find enough to make up a slim book, much less a library or even a shelf in a library.  In other words, as with many insurance coverage issues, there is a great deal of room for scholarly examination.  You might have noticed the same thing I have -- when you research just about any tough question, it's not hard to find stuff that appears to be about the subject, but when you drill down into it, most of what you find is surface area with no core underneath.  The emphasis in the mass of legal literature on discovering what courts do -- the search for rules -- is often a chimera because, and I say this without rancor, courts often don't know why they do what they do.  They have to do something so they do it.

Anti-concurrent cause theory is just one example of how a lack of philosophical inquiry and lack of curiosity as to "why" can harm the debate.  If you recall, during Hurricane Katrina litigation, anti-concurrent cause became politicized in large part because there was a very imperfect understanding of what anti-concurrent language was, what it does or why it exists.  That lack of understanding continues today: witness this editorial from Wednesday's USA Today.  While I generally agree with the main thrust of the editorial -- that proposals to "fix" the National Flood Insurance Program by increasing moral hazard and expanding the size of the program are utter folly -- I'm suspicious of the depth of understanding of the writers based on these sentences about seven-eights of the way through the article:

Backers of the wind-damage proposal do have one thing right.  Private insurers should not be able to lull people into believing they are covered for hurricanes and then try to dump all the claims on the government.  That's what some insurers did in 2005. 

Such bait-and-switch tactics could be handled with smarter regulation. Or, better yet, by the government getting out of the flood insurance business and leaving the issuance of policies to the private sector. 

Huh? Where are these guys getting their information, from the Third Book of Scruggs, Chapter 7, Verse 36?  If you're going to go with the faux populism, at least try to use a line that hasn't been totally discredited.  Bait and switch?  This issue has been tried in court, and found wanting -- the "bait and switch" argument is as mythological as that photo of Sarah Palin with a dead Bigfoot she  shot.  These folks are behind the times -- they probably walk into a drugstore and wonder why there are no bottles of laudanum on the shelf, they're probably sitting around in rocking chairs emitting some Grandpa Simpson-like rant about why the milk wagon is always late, they're probably trying to figure out how to play CD's on their Victrolas.  

Which brings me to the question in the headline on this post.  You may recall some time ago I wrote this post about an anti-concurrent cause case in the Colorado Court of Appeals that had cited my work and theory on anti-concurrent cause -- Colorado Intergovernmental Risk Sharing Agency v. Northfield.  (I see the link to the case has gone bad in the post, here's another better link.) A roof on a building collapsed.  At trial, a jury said the damage was 90 percent attributable to the weight of snow on the roof, and 10 percent to rot caused by humidity from a swimming pool.  Damage caused by snow is a covered cause, rot is uncovered.  Therefore, potentially, this is a classic case for consideration of an anti-concurrent cause clause -- if the two causes resulted in the very same damage and that damage would not have happened but for the combination of the two forces.  Remember, I said potentially.

The Court of Appeals looked at the damage as being one loss, caused by a concurrent of the two forces.  Since one was uncovered, the anti-concurrent cause language made the entire loss uncovered, the court said.  However, the losing party in the appeal, CISRA, filed a petition for rehearing before the full Court of Appeals (a unanimous three-judge panel decided the case earlier).  It's been a number of weeks since the petition, and the court has yet to accept or reject the petition, but the fact that it has not rejected it yet might be a favorable sign for CISRA that the justices are seriously considering taking another look at the case. 

The petition for rehearing, which you can see here, comes up with a good argument -- did the weight of the snow (a covered cause) actually combine with the rot (an uncovered cause) to result in the loss, or were they two separate forces causing separate damage?   This is the very question I asked regarding Katrina damage, and the answer I came up with, which is now pretty well accepted, was that uncovered flood and covered wind had not acted concurrently in Katrina damage and therefore anti-concurrent language was not implicated at all.  This petition for rehearing is pretty shrewd in driving for the same point -- it says that the jury verdict and the evidence at trial were only that two independent causes resulted in different property damage.  I call this shrewd, because if you are going to fight anti-concurrent cause, you don't win by weighing yourself down with bogus arguments about "bait-and-switch" and such amateur theatrics.  That's like going into combat carrying an 80-pound cast iron kettle in your arms instead of a battle-ax.   Taking on anti-concurrent language as ambiguous or the like is, in my view, often not the best course. Instead, working within the framework I have explained is the best way to have a sophisticated, informed debate, and this petition does so.

Essentially, the petition considers the concept of "loss,"  which in the analysis I advocate, is the first step.  If you can find two losses, you can find a way to argue that anti-concurrent cause does not apply.  If you can find only one loss, it's much harder, because then you have to try to peg the covered cause with 100 percent of the loss, and that is a harder row to hoe -- many anti-concurrent cause clauses explicitly say any combination of covered and uncovered causes (theoretically 99 percent versus 1 percent) results in non-coverage.  So again, it's vital to find different losses caused by separate forces acting independently and not concurrently. 

Does this petition for rehearing do a good job of that?  I think yes.  The facts of this case are more involved than I gathered upon just a reading of the Court of Appeals decision.  Whether this will convince the Court of Appeals to rehear the case or not, or to reverse it upon rehearing, I don't know.  It is a very sophisticated argument, though.  One component of the argument, it seems to me, is somewhat different than just looking for two separate causes of loss, it ventures into uncharted territory -- if a covered cause was sufficient in and of itself to cause the damage, can it truly be said the two causes contributed to the loss.  To use an extreme example, does it matter if a garage was weakened by rot if it is blown into toothpicks by a falling meteorite? Could the rot be said to be a concurrent cause of the loss in any meaningful sense?  I think if we ask for a show of hands or commission a Gallup poll, most people will say no.  So my question is this: if the weight of the snow on the roof would have caused its collapse regardless of the presence of rot, is the rot a concurrent cause?  Just asking.  Seems to me if the Court of Appeals takes up that issue, there is some new ground to be broken. 

Posted By David Rossmiller In First Party Insurance
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Here are some additional thoughts I promised about the end of the McIntosh case.

-- You may remember my post from last week about the plaintiffs' dismissal of extra-contractual claims, or in other words, bad faith and punitive claims against State Farm.   Well, the entire case is over now.  The insurer announced in a press release Monday that the contract claims were settled for $250,000, and you can look at Judge Senter's order of dismissal and see that each side bears its own attorney fees.  However, seeing as how the McIntoshes got the full federal flood payment for their home, $250,000 seems like somewhat more of a sum than you would suspect would be directly linked to covered wind damage to the house, especially as the plaintiffs admitted in their motion to dismiss the bad faith claims that "State Farm properly tendered payment to Plaintiffs for wind damage covered under their homeowners insurance policy prior to the time that the dwelling was inspected by an engineer."

The way these things often work, the settlement includes some consideration that the plaintiff's lawyer has to eat, and that gets built into the settlement if it isn't otherwise explicitly paid.  I don't know what arrangement the Merlin Law Group had with the McIntoshes -- almost certainly it was a contingency fee case, and contingency fees typically run from around 30 percent to as high as 40 percent. Incidentally, I see nothing on the Merlin Law Group blog about the case.  It's also not unheard of for an insurer to up the amount just a little, giving all possible benefits of the doubt and then some to the plaintiffs, to get something to go away if the insurer gets something it wants out of the deal.  And in this instance, what State Farm gets is the chance to say that the signature Katrina case against it brought by Dickie "I'll Fly Away" Scruggs was bunk of immense, Scruggsian proportions.   

-- Just think again for a moment what the plaintiffs' motion said: "no credible evidence that State Farm engaged in bad faith with respect to the adjustment of Plaintiffs' claims under their homeowners policy."  I mean, that's a heck of a thing to say, isn't it?  That is what is supposed to happen when a lawyer realizes claims are unsupportable -- dismiss them -- but in the real world it happens all the time that lawyers hang onto dubious and even obviously bogus claims until you pry them from their cold, dead hands.  When such claims are dismissed in a settlement, the settlement is almost always a confidential complete release with both sides saying no one makes any admissions about nothin'.  So to see that in writing was startling to me, and could only happen where a) a plaintiff's lawyer had no stake whatsoever in defending the conduct of his predecessor, b) his clients would benefit by distancing themselves from that conduct and c) the claims truly were unfounded and the lawyer would face ethical problems by saying otherwise (if "c" were not true, the lawyer would just be supplying ammunition against himself and other clients in other lawsuits, which itself would give rise to ethical problems). 

-- Let's talk about the State Farm press release for a bit.  The tone of it, to me, is remarkably restrained, considering they could have climbed on top of Scruggs' burial mound and crowed and crowed about this.  Go back and read it again -- it works better to undersell it, don't you think? 

-- I was interviewed last week by Chad Hemenway of A.M. Best about the insurance landscape after Katrina.  Chad, by the way, is one of my favorite interviewers -- great sense of humor and, of course, dude knows insurance. One of the things I told him (I think I did, I tended to ramble on somewhat in the interview) was what I've said before, the State Farm merger of Katrina legal and public relations strategy was the most sophisticated I have ever seen or heard about from a corporation.  And I say this as both a lawyer who knows a few things about insurance and as a former journalist (and current interested observer of press and public relations matters).  No matter what you think of State Farm. I think it's beyond dispute that, beginning about early 2007, they could not have handled the Katrina controversy any better, from their perspective, than they did.   

Let's just take a look in the rear-view mirror at some of what happened.

• Scruggs and the Scruggs Katrina Group disqualified from Katrina cases.
• The Rigsby Sisters barred from testifying and driven off into the wilderness in disgrace for the "sham consultancy" with the SKG.
• A successful federal court lawsuit against Jim Hood, the Mississippi Attorney General, that forced him to back off further criminal investigations of the insurer.  
• Hood's later dismissal of the civil suit he filed against State Farm for allegedly breaching an agreement with Hood to institute a claims procedure re-evaluating thousands of Mississippi Katrina claims (the agreement fell apart when Judge Senter refused to approve parts of the deal, and State Farm later reached a similar agreement with then-Mississippi Insurance Commissioner George Dale). 
• The Trailer Lawyers were run off Ex rel. Rigsby, the ever-shrinking False Claims Act case.
• Federal prosecutors have apparently ceased their investigation of alleged insurer fraud, which had been pursued for years with an Inspector Javert-like tenacity.  Someone remind me -- how many millions of taxpayer money was spent on that investigation?  

You can probably supply some additional bullet points, but you get the idea.  Some of this, you might say, was luck -- like the conspiracy to bribe Judge Lackey totally discrediting Scruggs and anyone connected with him, and forcing a new look at the "whistleblower" Rigsby sisters and the entirety of the Katrina Follies.  I wouldn't use the word "luck," however.  Chance always plays a part in human designs, but you always have a choice about what to make of the chance.  Also, was it really luck that Scruggs Scruggsed himself, or given the way he'd comported himself since the beginning of Katrina litigation, was it more likely than not that the Scruggs Katrina Group would fall into infighting, leading to The Great Unraveling? 

-- You know, I mentioned last week I heard some journalist is going to write the definitive Scruggs story, and I wish him all the best.  If asked, I'll provide whatever help I can, including possible book titles such as The Rise and Fall and Kersplat of Dickie Scruggs.  

-- How long till that Mississippi Insurance Department market conduct survey comes out on State Farm?  You can tell what it's going to say, if you've been paying close attention to the smoke signals.  It will cite instances where State Farm made mistakes in adjusting, but will find no evidence of malicious intent or a company-wide plan to underpay.  However, it will cast shadows on Scruggs, Hood and the Rigsby sisters, among others. 

-- One thing I hope someone writes about is the mindless tribalism that rode the Scruggs Express down the tracks.  You could paint some other names on the side of that train -- such as Hood, Lott, Taylor.  How stupid do those Congressional hearings look now?  I said as much at the time.  Emotions are hard to contain during times of actual or perceived crisis, I know.  But I also know what Thucydides said about the Peloponnesean War: war is a harsh teacher that lowers the character of men to the level of their fear.  And believe me, it's not just war -- you can see the same thing in the political rantings going on right now.  Things haven't changed much since the time of Thucydides, which is why he called his history a gift for the ages -- because the things that were are the things that will be, as long as human beings are the way they are.   And they ain't never gonna change.  If they were, they'd have done it by now.

-- Hard to believe, I know, but there is still a lot to tell about this Katrina saga.  We'll talk more about this soon.      

Posted By David Rossmiller In First Party Insurance
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Holy Cow! The McIntosh case, which I have referred to as the Verdun of insurance litigation, has been dismissed by the plaintiffs' own motion.  Given this litigation had long been the scene of intense trench warfare, consuming attorney fee dollars like five NFL offensive linemen chowing down on popcorn shrimp at an all-you-can-eat  buffet, it is surprising to see this turn of events.

If you remember, Thomas and Pamela McIntosh v. State Farm is the granddaddy of Katrina litigation, or perhaps more accurately, the Mother of All (Insurance) Battles.   This is the case where Kerri Rigsby of Rigsby sisters "whistleblower" fame approved the flood payment to the McIntoshes, and where, strangely enough, the original engineering report on the damage to the home said the damage was from wind, not flood.  Alexis "Lecky" King, a State Farm catastrophe team leader, found fault with the report and asked the engineers to re-evaluate.  The second report noted the presence of both wind and water damage.  Before we move on with the recap, remember that the first report was done by a man named Brian Ford, because his name will come up again. Ford did not work on the second report. 

Now, the McIntosh claims file was among those taken by the Rigsby sisters and fed to Dickie Scruggs for use in lawsuits he was bringing and planned to bring against State Farm.  This is the case that really started all the public uproar about changed engineering reports, insurer fraud, etc. etc.  Keep in mind that Kerri Rigsby and her sister, Cori, who like Kerri was another claims adjuster working with State Farm, both quit and went directly to work for Scruggs in what federal judge L.T. Senter called a "sham" consultant arrangement -- but not before they had performed a massive "data dump," where they and some friends spent the weekend copying State Farm claims files to give to Scruggs and his good friend, Mississippi AG Jim Hood.  (Don't forget Hood once called Scruggs his "confidential informant" and helped him play keep away with the documents the Rigsby sisters took. Jeez, talk about backing the wrong horse -- if you go to the track with Jim, use him as a reverse barometer.)

You may also remember that the Scruggs Katrina Group, besides "employing" the "whistleblower" Rigsby sisters, also discussed hiring Brian Ford as a consultant.  Ford wanted a similar deal to those of the Rigsby sisters, somewhere in the neighborhood of 10-Large per month.  Entrepreneurism at work, you say?  Maybe.  But of course, payments by a party to material witnesses they would be calling to support their case is frowned upon, and in the end, that led Judge Senter to disqualify the Rigsby sisters as witnesses and to disqualify the Scruggs Katrina Group itself as counsel for the McIntoshes. 

Their present counsel, the Merlin Law Group, went a different direction with this than Scruggs did.  Here's a copy of the motion, and here's part of what the motion says:   

After engaging in extensive discovery, the Plaintiffs have determined the following:

(a) the McIntosh dwelling was damaged as a result of Hurricane Katrina;

(b) the majority of the damage to the McIntosh dwelling was caused by flooding;

(c) the McIntosh dwelling sustained flood damage of at least $250,000 to the structure and $100,000 to its contents;

(d) State Farm promptly and properly paid Plaintiffs the full policy limits of their flood insurance policy; and

(e) State Farm promptly tendered payment to Plaintiffs for wind damage covered under their homeowners insurance policy prior to the time that the dwelling was inspected by an engineer.

This has got to the most surprising development since those German and English soldiers met on that World War I battlefield for a soccer game during a Christmas truce.

The motion, which was granted yesterday by Judge Senter, dismissed with prejudice all the punitive claims.  That left only the contract claims, and my understanding is that those were settled. 

I'll discuss this more later. 

Posted By David Rossmiller In Bad Faith , Duty to Indemnify , First Party Insurance , Industry Developments
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The smart new fashion statement for this fall, besides Sarah Palin eyeglasses and Obama flag lapel pins, is of course the Free Dickie T-shirt, as seen below. 

I got this T-shirt from Alan Lange of the blog Y'all Politics.  Not sure what Alan's price points are, but he can tell you if you're interested.  I know I'll wear mine proudly as I join the next omnibus protest march in Portland, or on visiting day in Ashland, Kentucky.

Interestingly, I heard the other day -- indirectly, from his researcher -- about a journalist writing what is supposed to be the definitive book on Dickie Scruggs.  I think I remember which paper he works for, but maybe he's trying to stay below the radar for now, so I won't say.  My suggestion for a title? Sweet Potatoes, Lies and Videotape.  Exit question: where is P.L. Blake?  Might make for a nice interview for the book if someone knows where he is -- I'm sure he'll be glad to sit down with the writer for a good chin-wag.  As someone once said to me, if you want to find Blake, you'll have to put the corn on the ground.

More blogging to come this morning about the McIntosh case.  It appears I'll be able to get back to somewhat of a normal blogging routine -- knock on wood. 

Posted By David Rossmiller In Miscellaneous
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Q: How do you know you've hit rock bottom? 

A:  When even a politician doesn't want your money.  

This story says Delaware Sen. Joe Biden is donating some Scruggs campaign cash to charity, possibly to start offloading links to disreputable figures.  A sign that he's going to be looking to take up residence at the Naval Observatory come next year?  It's actually not just Dickie Dough, but money from the whole Scruggs Gang. 

You might remember this post I did last December on some of Scruggs' political outreach efforts -- the post quotes some news stories and mentions P.L. Blake's "relationship" with Biden.  Doesn't mean much by itself, I suppose, when you are a Senator everyone claims to have a relationship with you.  Heck, even I got yelled at by John McCain back in my reporter days, maybe that means I had a relationship with McCain. But hey, come to think of it, who hasn't been yelled at by McCain -- if you've spent any time at all around him, he's yelled at you.  Maybe there's more to the P.L. Blake-Biden thing,  maybe there's not.  Maybe Blake got $50 million to clip newspaper articles, maybe he didn't.  Just sayin'. 

I wonder, will Jim Hood follow Biden's lead and give back all those campaign contributions he got from Scruggs last year? 

Posted By David Rossmiller In Industry Developments
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I know a lot of people are disappointed I haven't been able to devote my usual time to this blog.  The workload I've had the last few months has been not only heavy -- that's normal for me -- but full of a vast number of motion practice deadlines.  As those of you connected with the law know, filing and responding to motions is time consuming and exacting work, and I've had more than my fair share to deal with recently. 

I keep thinking tomorrow or the next week will be that mythical Shangri-La where some time frees up for blogging, but so far time remains tight.  If I can't do a good job blogging, it's better not to do it at all -- which explains the infrequency of my posts.  Many days, I've been too busy to respond to e-mails, so if you've sent me one and I haven't answered yet, I hope you understand.  So, with that said, on the road to Shangri-La, I'll try to regroup next week, catch up on some of what I've missed, and re-evaluate where to go from here. 

Posted By David Rossmiller In First Party Insurance
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UPDATE:  As a number of people have pointed out, this post is in error.  Zach Scruggs' sentence actually began on August 15.  Sorry for the error, that's what you get for trying to blog from a cyber cafe in 20 minutes while the clock is burning minutes faster than a lawyer burns through a retainer. 

---------------------------------  

This Sun Herald story by Anita Lee is a little old, but I'm just now getting back to some things I wanted to blog about before but didn't have the time for.  It says Zach Scruggs' prison sentence begins August 25 -- it had been scheduled to begin today -- and he will serve his time in a minimum-security federal prison in Fort Smith, Arkansas, the same place where Sid Backstrom will serve out his sentence.  

Just out of curiousity, I did some quick research on the Ashland, Kentucky prison where Dickie Scruggs is located.  Here is a link to a Bureau of Prisons website that talks about the difference between various prisons and their levels of security. Not tremendously informative, but since Ashland is a low-security facility, it indicates prisoners there are housed in dormitory-like settings.  I lived in a dormitory in college, where I was in a room with a roommate and there were communal showers and toilets, and I'm not sure whether this is what is meant by a dormitory, or if it is some barracks-like setting right out of Cool Hand Luke.  I also found this post on a website that discusses prison rules -- the most interesting thing about the site was that the post is by a state corrections officer whose fiance is a prisoner in a federal facility (hey, stick with what you know, I always says) --  but there is a little additional information about what conditions are like at the Ashland facility.

Posted By David Rossmiller In Industry Developments
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This story by Patsy Brumfield of the Daily Journal says Dickie Scruggs has won a legal victory of sorts: the Mississippi Supreme Court has stayed proceedings in the Lafayette County lawsuit Jones v. Scruggs, and agreed to decide whether the case should be sent to arbitration. 

If you recall, this lawsuit was the origin of the "earwigging" of Judge Lackey that landed Scruggs, his son and Sid Backstrom in the pokey.  Earlier this year, the new judge presiding over the case, Judge Coleman, refused to send the case to arbitration and was considering whether and how much money sanctions should be assessed against Scruggs for unfairly tampering with the legal process.  Having the state Supreme Court agree to take up the matter is a victory of a sort, I guess, but is kind of like standing in the charred, smoking remains of your burned-up house and finding that the box with your award ribbons from sixth grade music camp made it unharmed. 

Posted By David Rossmiller In Industry Developments
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I'm posting today from the Oregon Coast Cyber Cafe in Manzanita, Oregon, which, when I looked it up on my PDA, sounded like a cool place to have some vastly overpriced decaf coffee and listen to some piped in tunes while blogging.  No offense, but it turns out to be a tiny little house behind a local grocery store converted into an office-like setting with some VFW-hall-like tables and some computers, and where you pay big ransom money for wireless time.  To which I say . . .  OK, deal! Because it's not easy to find a place to blog in these small Oregon towns.  I've been camping with my family this week, which is one reason posting has been light, and this will have to do.  The local library has wireless, but it doesn't open until noon, and also doesn't allow power cords for your laptop, and I had an unfortunate battery shutdown yesterday.  So this is where it happens today.  If the blogging is no good, blame it on having to rush before my minutes are used up.

Posted By David Rossmiller In Industry Developments
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It's hard to tell when Jim Hood comes out of nowhere with some bizarre escapade like last week's press conference whether such an event is an objective in itself or merely an attempt to deflect attention from something else that will come up later.

If you recall, last week Hood said he is:

• responsible for the additional State Farm Katrina settlements because he sued State Farm several months after they announced a deal with Mississippi Insurance Commissioner George Dale to reopen thousands of claims files;
• the strongest man in the South, and he would prove it by walking right through a brick wall in front of reporters' eyes, except there was no brick wall around; and
• probably the reincarnation of the Pharaoh Thutmose III of Egypt, circa 1500 B.C, or possibly P.T. Barnum, or both.  

Just kidding about the last two, but he actually did say the first one.  It's a hard one to figure, saying something so utterly refutable -- it is just natural Hoodism/Hoodzpah/Hoodwinking? Or is Jim trying to get out in front of some other news, you know, build up some positive press before something else heads south in the South?   

Posted By David Rossmiller In Industry Developments
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Another wonderful day in Jim's neighborHood. Mississippi AG Jim Hood announced a settlement of the breach of contract lawsuit he filed in June 2007 against State Farm.  Insurance Commissioner Mike Chaney took issue with Hood's chest thumping, according to this story in the Sun Herald.

Insurance Commissioner Mike Chaney, who was on the Coast to speak to two different groups Wednesday, said after hearing about Hood's remarks: "I think he's crazy to call a press conference on a lawsuit claiming credit for something he didn't do."

Hood claimed credit for State Farm paying an additional $74 million of Katrina settlement money.  State Farm paid this money, following the collapse of a deal between State Farm and Dickie Scruggs, with Hood's approval, to certify and then settle a class action involving some 36,000 Mississippi homeowners.  The class action settlement was rejected by U.S. District Court Judge L.T. Senter, Jr., who was concerned, among other things, about procedural unfairness of the process set up under the agreement to settle claims, and about what exactly Scruggs would do to earn some $15 million due him under the settlement.  This failed class action was a backdrop to a settlement at about the same time of some 640 Katrina cases by Scruggs and State Farm (this settlement money, of course, is what led to the dispute within the Scruggs Katrina Group over allocation of the dough, leading to ejection of attorney John Jones from the group and a lawsuit by Jones, leading to Scruggs trying to grease with wheels of the lawsuit by bribing the judge over a procedural matter of sending the case to arbitration).

If you need or want a refresher on the Hood lawsuit, I wrote about it back in 2007, including in this post. Hood's lawsuit alleged State Farm breached its agreement to make additional payments to Mississippi homeowners, which as you can see, was part of the class action proposal.  Earth to Hood: one problem with this theory --(1)  when a federal judge steps on your agreement, you are relieved from performance of it, and (2) State Farm had already agreed, in a deal with then-Insurance Commissioner George Dale, to reopen the claims, which resulted in payments that probably were about equivalent to what they would have paid under the class action process, minus the dough to Scruggs. (The failure of Scruggs to get the money turned out to be an incredibly lucky thing for him. Hey, what's an extra $15 million to a guy who's already loaded, anyway? Besides, if Scruggs had gotten this money, it was just another opportunity for another dispute with his partners, another lawsuit and more earwigging temptations) 

Here's a post I wrote about the deal between State Farm and Dale.  You may want to note the date of it -- March 20, 2007.  Then you may want to note the date of Hood's lawsuit -- June 2007.  Then you may want to note that, in his press conference yesterday announcing the settlement of his lawsuit, Hood claimed credit for the results created by Dale.  Then you may want to note that Hood, in a second press conference yesterday, claimed credit for the following: 

• Brett Favre coming out of retirement.
• The peanut butter and jelly sandwich. 
• Invention of the word "Hi."  
• Nice weather.
• Affordable, but elegant silverware.
• Long pants.
• Smiling.
• Good health, for those who have it. (He blamed State Farm for those who are in bad health, and said he is considering suing the company over this and opening a grand jury investigation, possibly involving the Rigsby sisters as star witnesses).

 As the Sun Herald story noted, State Farm, like Chaney, wasn't buying Hood's line:

He [Hood] credited the lawsuit with forcing State Farm to pay policyholders an additional $74 million. However, Hood filed the lawsuit in June 2007, after State Farm had begun the re-evaluation process under the Mississippi Insurance Department's supervision. Hood's lawsuit accused the company of violating an agreement with his office that called for federal court supervision of the re-evaluation.

"We find it perplexing Attorney General Hood would claim full credit for a process he opposed from day one and was the foundation for his lawsuit against us, which he now has settled," State Farm spokesman Fraser Engerman said Wednesday. "Nonetheless, we are pleased the attorney general understands State Farm has met its obligations under the agreement made with his office in January 2007.

Yes, ladies and gentlemen, just another example of Jim's incredible Hoodzpah.  If I was George Dale, I'd be pretty ticked off. The earliest Hood started talking about his lawsuit was somewhere around May 2007, as you can see from this post I wrote from that time.  

Here, by the way, is a press release from Hood's office, which has a link in it so you can listen to the press conference, if you care to.  

Now look at this press release from Dale last December. In it, he says the figure for all settlement money because of his agreements with State Farm and Nationwide to re-evaluate claim totaled $110 million -- Nationwide paid out an additional $40 million, in addition to the State Farm dough. 

Oh, I almost forgot.  At that second press conference yesterday, Hood also claimed credit for the following: 

• The Nationwide payments of $40 million (even though he didn't sue Nationwide for breach of contract, he is sure they were scared into paying by the example he set with State Farm).
• Tax rebates.
• Friendly dogs and soft kitty cats.
• When the sun shines and the fish bite.

Now that Hood has emerged from the phone booth wearing a cape with a big S emblazoned on his chest, let's take a look at some other statements by Hood on this matter, some that were made under oath.

For example, here is some of his testimony from a hearing in Natchez earlier this year, which came as part of the lawsuit by State Farm against Hood -- yes, that's right, remember that State Farm successfully sued Hood to enjoin him from further criminal investigation of the insurer, which is kind of like an elk taking away a hunter's 30.06 and chasing him off with a spray of bullets. 

Q. Would it surprise you if State Farm has spent in excess of $70 million on reevaluated Hurricane Katrina claims on the coast? 
A. Probably, in that I don't know what State Farm's included  in that 70 million. It could be legal fees, all that type thing. They have had statistical -- we take questions about their statistics frequently when they name how many policyholders settled and so forth.

Check it out. It's on pages 73 and 74 of the transcript of that proceeding, and you can find the transcript as the top link in this post I wrote in February 2008. (I link to the post rather than just the transcript because I want you to read the first paragraph of the post, it's one I thought was pretty funny). 

Do you see what Hood said? He didn't know the first thing about the process, how much was paid, who was getting paid, and so forth. He even doubted State Farm had paid $70 million!  But when it comes time to settle the lawsuit, he covers his tail by claiming credit for the results he testified he didn't know a thing about.  If you read the seven or eight pages before the ones I cited, you will see I am correct.  Another amazing display of Hoodzpah.

Oh, and I almost forgot to mention it, but at that second press conference yesterday, Hood also claimed credit for:

• Making chocolate taste good.
• Straight teeth and good dental hygiene on the part of most Americans.
• Several sonnets and plays mistakenly attributed to Shakespeare.
• Throwing the winning touchdown pass for the New York Giants in the Super Bowl.
• Catching the winning touchdown pass for the New York Giants in the Super Bowl.
• Inventing the Super Bowl.
• Inventing the New York Giants.
• Inventing the National Football League.
• Inventing football.

Posted By David Rossmiller In Industry Developments
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I know I haven't been blogging enough where these two things happen in one day:

a.  My wife tells me I haven't been blogging enough; and 

b.  Dr. Ed Duett, of Mississippi State, tells me folks in Mississippi are complaining that I haven't been blogging enough. 

Ed is in Portland for some kind of academic risk management conference, and I had lunch with him Monday.  Good to see him again (I spoke at the Mississippi State Insurance Day in April).   So, workload permitting, I'm trying to catch up.  So here goes.

I got a chuckle out of the headline and lede of this Associated Press story: "Anti-tobacco lawyer Dickie Scruggs has reported to a federal prison in eastern Kentucky." 

Anti-tobacco lawyer?  Is that an apt description?  If anything, I think Scruggs would be described as pro-tobacco -- after all, without it, he wouldn't be pulling in his $50 million a year, or whatever his take is.  If those tobacco companies weren't around, Scruggs would be just another con trying to get large by lifting weights, instead of being the richest guy in the cell block.  Maybe "pro-money lawyer Dickie Scruggs" would have been more accurate, or more accurate yet, "pro-Dickie Scruggs lawyer Dickie Scruggs."  

No word yet on whether he has hatched any escape plans.  

Posted By David Rossmiller In Industry Developments
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Thanks to one of my loyal readers who often points out anti-concurrent cause cases for passing along the Colorado Court of Appeals July 24 decision in Colorado Intergovernmental Risk Sharing Agency v. Northfield Ins. Co.

This opinion is right on the money in its analysis of how anti-concurrent cause language works.  In the case, a roof on a building containing a pool collapsed from the weight of snow, but the timbers supporting the roof were rotted from humidity and chemicals from the pool (this kind of rotting due to pools happens more often than you would think).  The way the case came to trial was this: CIRSA (I hate acronyms as much as the next English major/former journalist, but in this case the name is a real mouthful, so I'll compromise my standards a bit) had the primary level of insurance, and Northfield had the second layer.  CIRSA paid out on the loss, and Northfield declined to pay CIRSA for any of the money CIRSA had paid, citing an anti-concurrent cause provision in the Northfield policy.  The anti-concurrent cause language was the standard Insurance Services Office clause:

We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

The trial court correctly said Northfield didn't have to pay for any of the loss that was due to excluded rot, but incorrectly allowed the jury to apportion the damages between covered snow weight and uncovered rot.  Question: what do you think the jury's apportionment was?  C'mon, just take a guess, knowing how juries love to stick it to insurance companies, even when the plaintiff is a government agency.  That's right: 90 percent due to snow.

On appeal, the Colorado Court of Appeals got it right.  This case presents a classic example of a true concurrent cause: the loss was caused by a combination of factors that arose independently, but the loss would not have occurred but for the combination of the two.  That is the best, shortest definition I have come up with of what a concurrent cause is.  The key, once again, and I've said this as often as I can because I've come to see that it is counterintuitive to most people, is to look first to what the loss is and define the loss.  Unlike in Hurricane Katrina cases, the damage to items of property was not due to discreet and separate causes -- for example, first covered wind causes some damage to an item of property, and then uncovered flood causes some more.  That is not an example of concurrent cause, because a given item of property acted upon by each force was damaged by each force separately and in its own way.  The "loss" in Katrina cases was not the total damage to the house, but rather loss to specific items of property -- a house consists of many items of property. 

In the CIRSA case, however, the "loss" was to the whole -- apparently there were no items of property where you could segregate out damage from covered snow from the involvement of rot in helping the snow cause damage.  To put it another way: under normal circumstances where there was no uncovered rot, the roof would have held up the snow without collapsing.  In Katrina cases, the wind damage was not dependent on the existence of flood, so the "loss" in those cases cannot be caused by concurrent forces. 

Also, thanks to the Colorado Court of Appeals for favorably citing my work on anti-concurrent cause: the particular article they cited was Katrina in the Fifth Dimension, which appeared earlier this year in New Appleman on Insurance: Critical Issues, and which examined the U.S. Fifth Circuit's Katrina decisions.  I think it's the third case -- that I'm aware of -- that has cited to my analytical methodology, the first state court case and the first non-Katrina case.  I hope my methodology continues to catch on, because it truly is easier to use and brings more predictable results than any other.  In reality, there really aren't any competing methods of analysis, other analysis is more like what happens when you stub your toe -- hopping around, shouting and hoping the pain will just go away. 

So the analysis and the result of this case are correct: in this instance, unlike a lot of things people have come to think of as concurrently caused, the loss actually was due to concurrent forces, and therefore none of the loss was covered by the Northfield policy.  Now some people will see this as crazy and unjust no matter what I say, and I will only point out that I am describing what I see in how anti-concurrent language works, without regard to which side is going to win in any given case.  As it turns out, the prior two cases that cited my anti-concurrent methodology found for the policyholder.  Whether anti-concurrent language exists or not is of no particular concern to me, but since it does exist, I'd like courts' analyses of it to be as focused, sharp and correct as possible, that's all. In other words: I'm just sayin'.   

Posted By David Rossmiller In First Party Insurance
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Only about 35 emails today from people wondering why I'm not blogging on the Scruggs news -- I'd love to, but I have doing deadline stuff for paying clients the past two days. Maybe later tonight I can get at some of the back log. You don't know how much you miss blogging till you don't have the time to do it anymore.  Like the song says . . . .  

Posted By David Rossmiller In Industry Developments
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I grew up in a tough school with a lot of colorful characters who used a lot of colorful language, and consequently I have a wide repertoire of colorful expressions for a variety of situations in life, such as when stuff surprises or amazes me.  For public consumption, though, I censor most of these and translate them into one of several stock phrases, such as Holy Cow!  So in reading some depositions attached to the latest State Farm filings in Ex rel. Rigsby, the False Claims Act case where the Trailer Lawyers got kicked out, I had cause several times to say Holy Cow! 

Now, I have seen for some time that the Rigsby Sisters' story line that had been sold originally -- "Hero Sisters Aid Crusading Lawyer Scruggs In Stopping Insurance Company Fraud" -- was going to undergo a substantial makeover.  This really didn't require any great prescience, and the same observation could have been made by anyone who was paying a moderate degree of attention.  Obviously, Dickie Scruggs has totally discredited himself, so the demand for the original story line is somewhere up there with the demand for salmonella-laced tomatoes and new chapters of the Milli Vanilli fan club.  I mean, if someone was pitching this story to those two con men in The Producers today -- the ones looking for the worst play possible to stage, one that was sure to bomb -- they would pick the original Rigsby-Scruggs story over "Springtime for Hitler." 

So let's face it, we all knew a change had to come.  The only question is how big the change would be.  Well, the results from the precincts are beginning to come in, and it looks like the whole darn Rigsby story might come unglued like a letter held over a steaming tea kettle.   

OK, but we don't want to rush through all the details at once here.  First, we may want to acknowledge that there were some ridiculous elements to the story from the beginning, stuff that just never did add up.  I mean, it's a little like the song "Hang Fire," by the Rolling Stones -- I laugh every single time I think about this song, where the counterculture icon, party master Mick Jagger is berating his fellow Englishmen for being lazy slobs who won't work for a living.  (Although if you have ever seen Jagger in concert, you have to admit he is one hard working son of a gun -- thus, the source of his irritation). Here's one thing that stands out from this new brief, which talks about the Rigsbys' conversations with two fellow workers at the E.A. Renfroe Co., Dana Lee and Tammy Hardison. 

Sometime in March 2006, the Rigsbys told Ms. Lee that they were going to work for Dickie Scruggs by providing him with documents about his clients. (Lee Dp. at 59-60.) They tried to convince Ms. Lee and Ms. Hardison to assist them, saying: “You’ll be heroes. We are going to get a book deal. We’re going to make a movie. . . . We’re going to be famous.” (Lee Dp. at 63.)

When I'm reading this, I'm saying Holy Cow! to myself: Book deal? A movie? And I'm thinking: this is starting to read like a sequel to The Secret Life of Walter Mitty.    

Now there is so much good stuff here we could easily get ahead of ourselves, so we have to slow down a bit and talk just a little about what this brief is about.  It's part of the continuing fight over whether the Provost Umphrey firm can take the place of the disqualified Trailer Lawyers.  We all know, of course, that for sheer hilarity no one can take the place of the Trailer Lawyers, so on that ground they are a poor substitute.  I will grant you that there is a certain Dickensian cast to the firm name -- Provost Umphrey.  Sounds a bit like one of the great Dickens character names, like Uriah Heep (David Copperfield),  Uncle Pumblechook (Great Expectations) , Mr. McChoakumchild (Hard Times) or Paul Sweedlepipe (Martin Chuzzlewit).  But until I see evidence they've been in a trailer, I'm indifferent to whether they get to step into the case or not.  Here's a copy of the brief, by the way.

And the brief also contains this gem:

In fact, Ms. Lee and Ms. Hardison testified that they were at Cori Rigsby’s house in December 2005 and observed the Rigsbys watching the movie “The Insider,” a film based
upon Scruggs’ exploits in the tobacco litigation. While watching “The Insider,” the Rigsbys
were discussing who was going to play each of them in their future movie. (Lee Dp. at 71-72; Hardison Dp. at 40-41.)

A couple things about this passage are striking.  First, the name "The Insider" takes on new meaning with Dickie Scruggs soon to go inside a federal prison. Second, December 2005 is before the Rigsbys acknowledge hooking up with Scruggs -- but about the same time he went to then-Insurance Commissioner George Dale with a demand for Dale to support him in his quest to become a Katrina Czar overseeing a half-a-billion dollar fund he proposed to wring out of State Farm through the use of State Farm "insiders."  Third, if this is true -- and I have no idea whether it is or not, I merely note the implications of the new testimony -- it means the Rigsbys' testimony about the timeline of their involvement with Scruggs is inaccurate. Fourth, what actresses did they want to play them?  We don't learn this essential fact. UPDATE: A reader points out below in the comments that, in one of the depositions, Kerri Rigsby wanted Sandra Bullock to portray her in the movie.  Bullock is a fine actress, although I'm not sure she's demonstrated the range to depict the Machievellianism suggested by the depositions.  I mean, Kerri comes across in these depos as a cross between Ma Barker and Lucrezia Borgia.   I make no representation as to the accuracy of this testimony, I merely comment as to its appearance. 

Another interesting passage suggests Cori Rigsby had to be talked into participation in The Katrina Follies by her sister, Kerri, and mother, Pat Lobrano: 

Indeed, it now appears that Cori Rigsby was initially a reluctant participant. (Lee Dp. at 59-60; Hardison Dp. at 36-37.) The fact that she had to be convinced by her sister and mother to join forces with Scruggs evidences her awareness that what she was being asked to do was improper. [This next part originally was in a footnote to the preceding paragraph]. In contrast, Kerri and her mother appear to have immediately enjoyed the “cloak and dagger” aspect of Scruggs’ underhanded methods. (Hardison Dp. at 43-44.) For example, Ms. Lee and Ms. Hardison saw Kerri Rigsby again in May, 2006, when they traveled to Pensacola for Memorial Day weekend. (Lee Dp. at 77-78.) Ms. Rigsby told Ms. Lee that she could only stay for a couple of hours because she had received a call from Scruggs and had to take her computer to a hacker for Dickie. (Lee Dp. at 79; Hardison Dp. at 46-47.)

Everyone has been pretty patient so far, so let's get to the depositions.  Here is the deposition of Dana Lee, the one talked about in the brief. Some interesting things you will want to check out in it.  One is the supposed "shopping trip" the Rigsbys took to Texas in late 2005, which I heard about some time ago and wrote about back in April, and which some believe was merely a cover story for meeting Scruggs there (in support of this theory, you might note that Scruggs has demonstrated a fondness for out-of-jurisdiction meetings with witnesses and "insiders" over the years).  

Also, Lee testifies to Kerri Rigsby's supposed efforts to influence the adjusting of her mother's Katrina claim. And she talks about the supposed meeting Scruggs had with a State Farm "insider" in Bloomington, which he bragged about in a news story, and which turns out to be so much Scruggsian hot air -- he hired a guy to meet him at the airport and hand him an empty envelope to make it look like he was getting some top secret documents.  I guess he had no qualms about staging this phony baloney stunt and then claiming it as real to the media, but then again, that's not so hard to believe about a guy who would bribe a judge.   

Here is the deposition of Tammy Hardison.  This has a lot of the same information as the Lee deposition, but the testimony manages to portray Kerri Rigsby in an even poorer light, heavy on ruthless, two-faced conniving qualities but light on horsepower between the ears.  Here's an example:

Q. Tell me about that. 
A. Kerri came over to my camper and asked me if I would look through my files and -- any of my claimants and look and see if I saw anything that maybe looked kind of strange or something that maybe Dickie might want to, you know, have their name. And I told her no. 
Q. Okay. And did you ask her at any time why she was doing it? 
A. Well, yes. I was very upset that she was doing it. And she said, well, we'll never get caught. We'll never, you know, be found out. 

Kerri Rigsby thought she would never be found out? Holy Cow!  Did someone tell her that, or did she come up with that idea all on her own? Because, you know, that is simply absurd, on the one hand talking about being big movie star heroes, and on the other hand, no one will ever know.  Kind of like thinking no one will ever know if you go to work wearing pants made out of aluminum beer cans.  

Just so it's easier for you to compare what Lee and Hardison testified to what Kerri said to what Kerri said she said during her own deposition on April 30 and May 1, 2007, here is a copy of that Kerri Rigsby deposition. 

The import of all of this? The Ride of the Rigsbys is definitely over, finished, bye-bye, ancient history, kaput, ausgespielt. If I was in their shoes, I'd still be thinking about who would play me in the movie, but this time I'd be worried.

Posted By David Rossmiller In Industry Developments
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During the time in recent weeks I was preoccupied with other matters and couldn't spend much if any time blogging, it crossed my mind that perhaps when I was able to come back to blogging, I would find that the Trailer Lawyers -- Trailer Chip and Trailer Tony, Trailer Todd and Trailer Mary -- had found a way to get back into the Katrina spotlight.  Sadly, it appears they have not.  Which can mean only one thing: it's time for a mournful limerick. 

There once was a lawyer with a trailer,

Had a client named Rigsby, wouldn't fail her.

But he got kicked off the case,

He's gone with no trace.

Maybe he went to see Scruggs' jailer.

Posted By David Rossmiller In Industry Developments
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Couldn't really think of a clever headline for this post, sorry. In working my way through the backlog after returning to active blog duty, I was interested in this post at the Merlin Law Blog, a tribute to Judge Senter, of Hurricane Katrina fame.  I certainly agree that Judge Senter has done a remarkable job.  He's moved through an incredible docket load, and has shown he has a mind that is adaptable and open to new information, something that cannot be said about every federal judge. He's shown firmness without being imperious -- most federal district court judges aren't, but a significant portion of them are, like all other judges, I guess.

I don't know Judge Senter except what I've read in his opinions and what people tell me about him, but one thing I can say, having followed his opinions and actions for a couple years, it has given me a new appreciation for how difficult it can be to be a judge -- he's handled some really tough issues, some really contentious, nasty lawsuits. His writing style is one of his best attributes -- short, simple and direct, no hiding the ball. I'm basically a guy who grew up on a farm in North Dakota, a state devoted to a radical form of egalitarianism, and consequently one thing that is revolting to me is pomposity and self-importance, in legal writing or otherwise.  None of that in Judge Senter's opinions, thankfully.  I haven't agreed with every decision, but at least his opinions are open and accessible enough that I can work my way through them and pinpoint what I disagree with and why.

Posted By David Rossmiller In Industry Developments
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