Suit Against La.’s Last-Resort Plan Becomes Class Action

A lawsuit alleging that Louisiana’s insurance plan of last resort failed to pay homeowner claims following hurricanes Katrina and Rita has been granted class-action status.

State District Judge Henry Sullivan took the action on the suit, which alleges that Louisiana Citizens Fair Plan failed to comply with state law requiring the claims adjustment process to begin within 30 days of a catastrophic loss – and that documented losses be paid within another 30 days.

Plaintiff attorney Madro Bandaries said there are five pending class-action suits and at least 30 individual lawsuits that could be consolidated into the suit. Attorneys have estimated that the suit could cover all 65,000 Citizens policyholders at the time of the two storms.

The case was filed last year, but has been transferred to several judges because one judge had an interim appointment that ended and another recused herself because she held a Citizens policy.

The Citizens plan was established by the Legislature to cover homeowners who could not obtain insurance in the commercial market.

In court, the head of Citizens, Terry Lisotta, has said that claims forms mailed out to its policyholders were returned because the customers have moved. He also has said that policyholders had a difficult time contacting Citizens at first because of a massive telecommunications failure and that other delays in settling claims resulted from a change of administrators.

During a May court hearing, Lisotta said that 92 percent of Citizens’ claims had been paid.

Information from: The Times-Picayune,