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HomeNewsState Farm subsidiary to pay $100 million for false Katrina claims

State Farm subsidiary to pay $100 million for false Katrina claims

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News Tech: GULFPORT, Miss. (AP) — State Farm Fire and Casualty Co., a subsidiary of State Farm Insurance, has agreed to pay the federal government $100 million in restitution over its alleged mishandling of flood insurance claims after Hurricane Katrina.

State Farm also agreed to dismiss counterclaims it filed against the whistleblowers. The company had alleged that the whistleblowers breached their employment agreements and violated other laws by taking company documents while working as independent adjusters. The settlement was reached on July 20 and reported Wednesday by the Sun Herald.

The settlement marks the conclusion of legal proceedings that began more than 16 years ago when two whistleblowers filed a lawsuit against the Illinois-based insurance company.

Cori and Kerri Rigsby, sisters and former adjusters based in south Mississippi, sued the company for fraud after they said they witnessed the company shifting state claims to federal flood insurance that should have been paid by private wind insurance.

State Farm will pay the $100 million in restitution to the federal government, not individual policyholders

State Farm and the Rigsbys said in a statement that “the parties are pleased to bring an end to this 16-year litigation,” the newspaper reported.

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