New Orleans whistleblower lawsuit reinstated

Source: NOLA The Times-Picayune

The U.S. Fifth Circuit Court of Appeals reinstated a New Orleans whistleblower lawsuit Wednesday alleging that insurers overbilled the National Flood Insurance Program after Hurricane Katrina, but severed State Farm and Allstate from the proceeding.

The suit, filed under seal in August 2006 by a group of former insurance adjusters known as the Branch Consultants, alleges that insurers overstated damages from flooding and understated damages from wind so that they could shift a greater share of the burden of paying for the storm onto taxpayers. Private insurers are supposed to cover wind damage on homeowners insurance policies, and the federal government covers flood damage through policies in the National Flood Insurance Program.

The Branch suit was dismissed in October 2007 when a judge ruled that the claims of defrauding the federal government were already covered by a rival whistleblower suit in Mississippi known as the Rigsby suit that was filed under seal four months earlier.

The Fifth Circuit's mixed-bag ruling cut the state's two largest insurers from the case because they were specifically named in Rigsby but allows the Branch suit to live another day.

. . .

Patrick Burns, a spokesman for the non-profit group Taxpayers Against Fraud, which supports whistleblower efforts, hailed the ruling because it said that one whistleblower suit cannot be a proxy for all claims on a subject, and recognizes that different claims may be needed to help the government ferret out fraud by different companies.

Read more: http://www.nola.com/business/index.ssf/2009/02/new_orleans_whistleblower_laws.html