Katrina Letter

After the Deluge, State Farm Said, Sorry, Read the Fine Print You accuse me of colluding with at­torney Richard Scruggs to extort an in­surance settlement from State Farm in a conspiracy worthy of a John Grisham novel ("Mississippi Justice," Review & Outlook," March 15). I might agree if you meal: "The Rainmaker," a Grisham story about an insurance company that bilks its clients. Year after year. Mississippi property owners paid millions of dollars for homeowners insurance that company agents told them would cover hurri­cane damage. State Farm agents repeat­edly assured many of them, especially those with residences above the hun­dred year flood plain, that they did not need additional flood coverage. Then, after Katrina struck, these good people were told by State Farm adjusters that the fine print of their contracts ex­cluded flood damage and, predictably, that all of their damage was caused by flooding. "Flooding" was claimed to be the cause even though the damage was from wind or wind-driven water enter­ing buildings located where floods never reached. The convenient coincidences don't end there. When insurance company ad­justers examined homes covered by federal flood insurance, they quickly con­cluded that flood damage had occurred­ and the damage usually approximated the amount of the policy limits. But when damage exceeded federal flood insurance coverage or there was no such coverage and homeowners looked to their State Farm policies, these same adjusters were said to be insufficiently qualified to determine how much State Farm should pay for wind damage, usu­ally claiming to be "unable" to tell the difference between wind and flood dam­age. You ignore much relevant informa­tion in arguing that our case against State Farm was premised on their denial of flood claims. For example, one State Farm engineering report found that wind caused damage to a policy ­holder's property, while a second re­port procured by State Farm, written eight days later, attributed the cause to flooding. A fair representation of the case would note that State Farm hid the first report and denied payment of the claim based upon the second report. A fair representation would also note that the first report included a post-note from a State Farm adjuster saying. "Do not pay this bill. Do not talk about this!' I investigated this sort of conduct and presented a case, including informa­tion provided by confidential infor­mants, to a grand jury. Most corporate crime is discovered by insiders who, with their private attorneys, bring evi­dence of the crimes they have discov­ered to law enforcement officials. The use of confidential informants to ex­pose criminal conduct is legal, common­place, and crucial to law enforcement. You claim that my resistance to re­turning certain documents to State Farm and their adjustor was a scheme to deny State Farm access to evidence it needed to defend itself. In fact, both State Farm and E.A. Renfroe always had the documents; we merely had copies provided by the informants. And even though State Farm had the documents all along, the copies would have been turned over to them in the ordinary course of discovery in any civil or crimi­nal proceeding. So why did State Farm sue to recover documents already in their possession? It was nothing more than the company's attempt to obtain grand jury information that otherwise would not have been available at that stage of the proceedings and, more im­portantly, to intimidate the informants. It was no different than any other threat against a state's witness in a crim­inal matter. We defend grand jury wit­nesses, legally and aggressively, against attempts at intimidation whether the threats come from hood­lums with gun or corporations with lawyers. In the face of evidence provided by our informants, as well as other evi­dence, State Farm agreed to settle the case we were bringing against them. As always, it takes two sides to reach a set­tlement. State Farm's interest was in avoiding exposure to uncertain crimi­nal and civil penalties. Our interest was securing fair payment to the policyhold­ers and bringing some stability to the in­surance market in Mississippi. Your statement that "Mr. Hood exerted pres­sure on State Farm to settle not just with the state, but also with Mr. Scruggs ... " is wrong-it was State Farm that insisted that any settlement with the state include the release of claims by Mr. Scruggs's private clients. I am sworn to protect the interests of all Mississippians, whether or not they have private counsel, so I certainly had common cause with Mr. Scruggs. But that interest is a far cry from the cor­rupt collusion you imply. ATTORNEY GENERAL JIM HOOD State of Mississippi Jackson, Miss.