Insurance Law

Amazingly, Hood claims credit for State Farm payments, announces settlement of lawsuit

By David Rossmiller

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.

Full post as published by Insurance Coverage Law Blog on August 07, 2008 (boomark / email).