Jackson Free Press

Insurance Commissioner Mike Chaney is disputing that Attorney General Jim Hood does not deserve credit for the recent State Farm settlement with Mississippi. Hood announced last week that his office had settled a breach of contract suit with the insurance giant, which had agreed to pay at least $74 million more to policyholders who had fallen victim to Hurricane Katrina in August 2005.

"Due to the state's suit against several insurance companies, State Farm has paid an additional $74 million and Nationwide (Mutual Insurance Company) has paid an additional $40 million to coast policyholders," Hood's office said in a statement. "As a result of the settlement, State Farm will send out new notices to the remaining 148 slab and/or pier only policyholders, who have not yet sued, settled or already participated in the reevaluation process."

Chaney says the state's class-action lawsuit, Woullard v. State Farm, had nothing to do with the settlement.

"That's absolutely, unequivocally not true," Chaney said. "That was a re-evaluation that the Department of Insurance made in 2007. It was done ... by the department with George Dale as commissioner. We'd previously mentioned that at the Neshoba County Fair—that $74 million had been repaid by State Farm under the re-evaluation. I just want to make sure that (Hood's) not taking credit for something that he had nothing to do with."

Hood's office claims the re-evaluation would not have moved forward without the threat of lawsuit. He responded to Chaney's assertion by revealing a series of letters between State Farm and the attorney general's office showing routine communication throughout 2007. The letters indicate that the company was laboring to meet Hood's demands detailed in the lawsuit.

One letter from State Farm Executive Vice President and General Counsel Kim Brunner explains that the company has "developed a re-evaluation program that is consistent with the process contemplated by our agreement with you and the Woullard settlement."

Responding to the attorney general's announcement that he was contemplating a suit for breach of contract, the company assured Hood that "the re-evaluation program agreed to with the Mississippi Insurance Department contains all the substantive elements of the Woullard settlement and our agreement with you."

The settlement required State Farm to establish a U.S. District Court-approved re-evaluation procedure to oversee some policyholders' claims and make new offers for no less than 50 percent of the limits for slab or pier-only claims.

Hood announced in early 2007 that State Farm had refused to comply with U.S. District Judge L.T. Senter Jr.'s demand that he first approve the claims and began re-evaluating claims instead under the auspices of then-Commissioner George Dale. Hood complained that the company's deal with Dale didn't allow for arbitration.

Hood said he had launched the June 2007 suit because of the lack of oversight in the Dale partnership, and said he was happier with the agreement after a review of a sampling of the settlements reached through the program. It appeared, he said, that State Farm has complied with making the minimum 50-percent offers.

"Our office estimated that the arbiters would make State Farm pay between the (settlement) minimum of $50 million and $400 million. Nevertheless, the additional $74 million paid by State Farm pursuant to the Mississippi Department of Insurance re-evaluation program apparently meets the minimum payments required under our original state court settlement agreement," Hood said.

State Farm media specialist Jeff McCollum sided with Chaney, claiming arbitration would have continued with or without Hood's June 2007 suit for breach of contract.

"Hood claimed full credit for a process he opposed from day one, which was the foundation for his lawsuit against us," McCollum said. "We were already working toward that anyway when that whole deal got hooked up with Mr. Dale. It still would have gone forward."

Hood disputed McCollum's statement, arguing that insurance companies "aren't in the business of giving away money."

"They wouldn't have given an extra dime to the victims down there if we hadn't sued them," Hood said.

"They never would have even been over there in the re-evaluation program had it not been for our original suit and the settlement agreement."

Update: This story has been corrected; Chaney was incorrectly identified as Secretary of State.

Previous Comments

ID

133106

Comment

"Mississippi Secretary of State Mike Chaney is disputing..." Now THAT is good investigative reporting! I never knew there had been a shuffling within state government. So has da Gubnuh made Hoseman Insurance Commissioner? Is Bryant about to be a Supreme Court Judge? What's Spell's next job title? With a blunder like that right out of the gate, this horse should be shot before the first turn.

Author

Rex

Date

2008-08-15T10:15:52-06:00

ID

133107

Comment

With a blunder like that right out of the gate, this horse should be shot before the first turn. Or simply corrected. Thanks for the help!

Author

Todd Stauffer

Date

2008-08-15T10:21:17-06:00