Legal News

Lawyers in State Farm Suits Barred for Payments to Witnesses

By Dan Slater

Last June, long before L’Affaire Scruggs was even a glimmer in the public’s eye, the Law Blog noted that a judge recommended that the feds prosecute Scruggs for violating a court order related to the handling of documents in Hurricane Katrina insurance cases. The judge was angry because Scruggs had shared with the Mississippi AG documents he received from two former employees of E.A. Renfroe, an insurance services company hired by State Farm to evaluate Katrina claims.

Now the other plaintiffs lawyers that banned together with Scruggs in the litigation — collectively known as the Katrina Litigation Group — have been barred from representing policyholders in suits against State Farm, and those two former E.A. Renfroe employees, Cori and Kerri Rigsby (they’re sisters) have been disqualified from testifying.

According to this Biloxi Sun Herald story, federal district Judge L.T. Senter Jr. ruled that payments from Scruggs — who pleaded guilty last month to conspiring to bribe a judge — to the Rigsby sisters, who’ve been touted as whistle-blowers in the suits against State Farm, had no legitimate reason, and that the sisters’ consulting work was a “sham.” Scruggs hired the sisters as consultants and agreed to pay them $150,000 apiece after they gave him reams of internal State Farm records that they secretly copied while they were employed by E.A. Renfroe. Here’s an AP report from today.

“The payments Scruggs made to the Rigsby sisters bear no reasonable connection to any work they performed or to any expenses they incurred in testifying,” the judge wrote. “These payments were clearly improper.” Judge Senter said all members of the original Scruggs Katrina Group — including lawyers from four other law firms — are responsible for Scruggs’ breach of ethics because they were aware of the payments to the Rigsby sisters and did nothing to stop them.

Don Barrett, of the Barrett Law Office and the lead attorney for the Katrina Litigation Group, told the Sun Herald: “We’re obviously disappointed. We’ve done a lot of work for a lot of people. Hopefully, we can transfer that information to other lawyers.”

Barrett said KLG has not decided whether to appeal the decision. Senter gave the policyholders 45 days to hire new lawyers or risk having their cases dismissed.

Full post as published by Law Blog - WSJ.com on April 07, 2008 (boomark / email).