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Exclusive: Whistleblowers Say State Farm Cheated Katrina Victims
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ShareAugust 28, 2006 10:25 AM
State Farm Insurance supervisors systematically demanded that Hurricane Katrina damage reports be buried or replaced or changed so that the company would not have to pay policyholders' claims in Mississippi, two State Farm insiders tell ABC News.
Kerri and Cori Rigsby, independent adjusters who had worked for State Farm exclusively for eight years, say they have turned over thousands of internal company documents and their own detailed statement to the FBI and Mississippi state investigators.
In an exclusive interview with ABC news, that was broadcast on 20/20 and World News, the Rigsby sisters say they saw "widespread" fraud at the State Farm offices in Biloxi and Gulfport, Miss.
"Katrina was devastating, but so was State Farm," says Cori Rigsby.
At one point, they say State Farm brought in a special shredding truck they believe was used to destroy key documents. State Farm says shredding is standard to protect policyholders' privacy.
The sisters say they saw supervisors go to great lengths to pressure outside engineers to prepare reports concluding that damage was caused by water, not covered under State Farm policies, rather than by wind.
They say reports that concluded that damage was caused by wind, for which State Farm would have to pay, were hidden in a special file and new reports were ordered.
Cori Rigsby says she recalls a senior coordinator ordering that an engineering company be told to alter the findings in its report so that State Farm would not have to pay. "Tell them if they don't change their report, we're not paying their invoice," she remembers the supervisor saying.
A lawyer for State Farm, Wayne Drinkwater, told ABC News he was unfamiliar with the Rigsby sisters but denied State Farm cheated policyholders or pressured outside engineers to reach particular conclusions in their damage reports.
"We, of course, have not been cheating," Drinkwater said.
The allegations, if proven, would support the suspicions of thousands of homeowners along the Mississippi Gulf Coast who have been unable to collect enough insurance money to rebuild their homes.
Many have filed lawsuits against State Farm and other insurance companies alleging the companies of wrongly denying or low-balling their claims. The Rigsby sisters' allegations are now a key part of suits filed against State Farm by well-known Mississippi lawyer Dickie Scruggs, famous for taking on the tobacco companies.
See Photos of Katrina, One Year Later - the National Disgrace That Is Still Going On.
August 28, 2006 in Hurricane Katrina | Permalink | User Comments (944)
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The insurance companies are all crooks. Just ask any Florida resident.
Posted by: George f | Aug 25, 2006 12:09:46 PM
Sing it with me:
"And like a good neighbor, State Farm is there!"
Posted by: Won't you be my Neighbor? | Aug 25, 2006 12:09:49 PM
Insurance companies are a rip off. Pay pay pay and get nothing. State Farm should hold its managers and supervisors accountable if this really did go down like the whistleblowers say. Those managers are no better than crack heads begging for your change at the gas station. Just looking for a hand out and reason why its not their fault.
Posted by: Robert | Aug 25, 2006 12:13:29 PM
You can't blame anyone else for anything except President George W. Bush! How dare you, the Democrats must take over the House & Senate and win the White House.
Remember, George W. Bush is to blame for every single thing wrong with America. Right?
Posted by: Patsy | Aug 25, 2006 12:13:49 PM
Well like a good neigbor state farm is there???? I think I'd rather have a crack house as a neighbor rather than State Farm
Posted by: gary | Aug 25, 2006 12:14:05 PM
This doesn't surprise me at all. I work at an insurance company and if it is not the company its their agents comitting fraud against the company for their own gain.
Posted by: JoJo | Aug 25, 2006 12:15:57 PM
After suffering through State Farm's brand of paying off claims after a natural disaster I believe every single word these women are saying. We in Cheyenne, Wyoming were hit by an extremely damaging and freaky flood on August 1, 1985. My husband and I were paid about $1200.00 for some window damage done by hail but we ultimately wound up losing our home and having to claim bankruptcy due to the damage done to our house that State Farm claimed they did not cover. These insurance companies want higher and higher fees to "cover" (and I use that term loosely) and they want their payments "right now" too. However, when it comes to ponying up to the bar and paying their part when something happens, they squirrel out of it like the huge, money-hungry, power-driven mega-monsters that they are. The insurance situation in this country is a disgrace and desperately needs to be over-hauled as well as investigated thoroughly!
Debbie Walter-Holdridge
Posted by: Debbie Holdridge | Aug 25, 2006 12:17:22 PM
The Gulf Coast wasn't the only area. My home was damaged by Wilma to the tune of $106,000. State Farm first offered just over $20,000. The finally sent us just over $70,000. Still a far cry from the real damage and it has been a constant fight to get paid. Now we are fighting for payment of our hotel bills while the house is repaired.
State Farm should be held to account and their Executives should be investigated just like Enron.
Herschel Kilgore
Posted by: Herschel Kilgore | Aug 25, 2006 12:17:32 PM
I wouldn't be surprised of the fraud allegations against State Farm..Anything to save a buck..
Posted by: Robert Vysther | Aug 25, 2006 12:18:37 PM
Extremists take lives. State Farm takes livelihoods. Both sound like terrorism to me.
Posted by: vEE | Aug 25, 2006 12:19:24 PM
This is just another case of corporate corruption to the fullest. Insurance companies are so tight that they squeak when they talk. What I dont understand is that it we, the general public, pay millions every year to these insurance companies, but when it comes time for them to pay back its like trying to pull teeth from a crocodile. This smells very similar to the Red Cross scandal following the tragedy of 9/11. I hope the evidence that the FBI has wi;; work to the residents benefit. PAY UP STATE FARM....
Posted by: Eli Hardy | Aug 25, 2006 12:23:34 PM
I wonder how many folks are really going to be shocked by this? Hold on for hope though, I'm sure our great G.W.B. will bail them out.
Posted by: dreek | Aug 25, 2006 12:25:01 PM
Evil comes in all forms. Shame on State Farm. I was there are a volunteer recovery working for several months. Those people need help on a basic level. How dare State Farm refuse to stand up.
Posted by: Lara Hermes | Aug 25, 2006 12:27:03 PM
"Like a good neighboor, State Farm is there.."
Remember those? What "good neighboor" decides not only to not help, but to destroy that which could be used to help those in such a predicament?
State Farm should be ashamed of themselves; and what's more, should be foreced to pay out the nose for this indecency. If this leads to insolvency, so be it--that's what price you pay for being in the insurance biz...and for breaking the law.
Posted by: Phil | Aug 25, 2006 12:29:20 PM
"See Photos of Katrina, One Year Later - the National Disgrace That Is Still Going On."
I would say a state of Louisiana disgrace. Nagin and company botched the whole thing and now he has the nerve to criticize New York for not fixing their "hole in the ground"???
What an ass.
Posted by: Jeff | Aug 25, 2006 12:31:30 PM
"and like a good neighbor State Farm is there" - doesn't sound like it....just another example of the little guy getting screwed!
Posted by: Dave | Aug 25, 2006 12:31:33 PM
This really is disgraceful. I have State Farm, but not for long.
Posted by: Jeffery Carr | Aug 25, 2006 12:32:22 PM
Wow! I'm not sure if my insurance is State Farm or not, I better check and if it is, cancel it and go with someone else.
Posted by: Duane | Aug 25, 2006 12:33:46 PM
When they send out the lawyer to speak for the company you can pretty much assume they are guilty. I used to wonder why that was... until someone told me it OK for lawyers to lie but not a companies executives.
Posted by: Ray Malone | Aug 25, 2006 12:33:47 PM
Wow, what one P&C insurance agency does, others are likely to follow.
Posted by: Kirk Preston | Aug 25, 2006 12:33:58 PM
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