Judge Orders 83 Katrina Claims Cases, Including Sen. Lott's, to Mediation

By Garry Mitchell
January 11, 2007

A federal judge on Wednesday ordered into mediation dozens of lawsuits policyholders filed against insurance companies after Hurricane Katrina.

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Several of the cases sent to mediation, which accuse the insurance companies of denying their claims, are involved in recent settlement talks between State Farm Fire & Casualty Co., Mississippi Attorney General Jim Hood and policyholders' lawyers.

The 83 lawsuits ordered into mediation include ones filed on behalf of U.S. Senator Trent Lott and Representative Gene Taylor, whose Gulf region homes were destroyed by the 2005 hurricane. Each sued State Farm for denying their claims.

Of 55 Katrina cases that have been heard by a mediator, 28 have resulted in settlements, according to the office of U.S. District Judge L.T. Senter Jr.

People with direct knowledge of the settlement talks told The Associated Press this week that State Farm, Mississippi's largest home insurer, is considering paying hundreds of millions of dollars to settle more than 600 lawsuits and resolve thousands of other disputed claims.

A mass settlement would be the first of its kind to follow the wave of litigation spawned by Katrina.

Hundreds of Mississippi homeowners have sued State Farm and other insurers for refusing to cover billions of dollars in damage from Katrina's storm surge.

Insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm's rising water.

State Farm, Hood and plaintiffs' lawyers are nearing an agreement that calls for the insurer to pay at least $50 million — but possibly hundreds of millions more — to about 35,000 policyholders who have not sued the company for denying their claim, people with knowledge of the talks said.

A settlement would not involve claims filed by State Farm policyholders in other states.

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Associated Press writer Michael Kunzelman contributed to this report.