Both Allstate Corp. and State Farm Fire and Casualty Co. received good news this week as a federal appeals court upheld the dismissal of the two insurers from a lawsuit charging them with overbilling the U.S. government for flood damage in Louisiana related to the 2005 storm Hurricane Katrina. The ruling, however, by the U.S. Fifth Circuit Court of Appeals in New Orleans, brings back the lawsuit against several other insurance companies and adjusting firms. Those companies include Fidelity National Insurance Co, Fidelity National Property and Casualty Insurance Co and Liberty Mutual Fire Insurance Co, among others.
Claims adjuster Branch Consultants LLC had targeted eight insurers and six adjusters in an August 2006 "whistleblower" lawsuit in Louisiana of violating the federal False Claims Act by treating Katrina wind damage as flood damage. According to Branch Consultants, this action resulted in overcharging the federal government's National Flood Insurance Program.
However, a three-judge appellate panel supported a 2007 ruling by U.S. District Judge Peter Beer that Allstate and State Farm were properly dismissed as a result of being defendants in a similar case filed a year earlier in Mississippi.
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