Road Home suit dismissal sought
Published 12:00 am Saturday, January 31, 2009
NEW ORLEANS (AP) — Lawyers for some of the nation’s largest insurance companies asked a federal judge on Friday to dismiss a lawsuit filed by a former Louisiana attorney general, calling it ‘‘a bald attempt’’ to force insurers to increase payouts for hurricanes Katrina and Rita.
U.S. District Judge Stanwood Duval Jr. heard arguments from lawyers on both sides of the case, but didn’t immediately rule on the companies’ request for him to dismiss the class action suit filed in 2007 by former Attorney General Charles Foti.
Lawyers for Allstate Insurance Co., State Farm Fire and Casualty Co. and other insurers claim the attorney general’s office is trying to take over the rights to more than 155,000 policyholder claims, to recover money the state paid out through the federally funded Road Home homeowner grant program after the 2005 hurricanes.
But the companies say the state already had deducted insurance payments in calculating grant awards.
Insurers’ attorneys called the suit ‘‘a bald attempt by the state to squeeze more money out of the insurance companies’’ after they already have paid out more than $40 billion to Gulf Coast policyholders after Katrina.
‘‘In the history of federal and state disaster relief for catastrophes, there is no known precedent for what the state seeks to do in this case,’’ company lawyers wrote in court papers.
Attorney General James ‘‘Buddy’’ Caldwell inherited the case from Foti, who lost his bid for re-election when he finished third in an October 2007 primary.
Insurers claim Caldwell’s office is trying to act as a ‘‘superpolicyholder’’ over more than 155,000 insurance policies. Caldwell’s office says it only has challenged settlements between insurers and policyholders that appear to be a ‘‘fraudulent effort to defeat the state’s right to share in the recovery of … settlement funds.’’
‘‘This litigation is intended to address this inequality,’’ lawyers for Caldwell’s office wrote. ‘‘Road Home is not and was never intended to benefit the industry as a substitute for insurance coverage.’’
Caldwell’s office is asking Duval to forward claims for about 157,000 grant recipients to state court.
‘‘We’re not looking to get rich off this, to get anything more than we deserve,’’ Caldwell attorney Bryan McMinn told Duval, who didn’t immediately rule on that request.
Duval said he expects the 5th U.S. Circuit Court of Appeals in New Orleans to review his decision, ‘‘however I rule.’’
‘‘It’s a significant decision,’’ he said.