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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 (945)
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Why am I NOT surprised? Doesn't it make perfect sense? Insurance companies seem to exist for profit not thier customers.
Posted by: Talon.. | Aug 25, 2006 12:34:04 PM
Those insurance companies know what they are doing, they know they are stealing money from the american people and they deserve whatever finanicial losses from lawsuits that are coming to them.
Posted by: Captain Conservative | Aug 25, 2006 12:38:12 PM
So not surprised.
Posted by: vicky romens | Aug 25, 2006 12:38:59 PM
This is nice. Corporate America sticking it to the little guys once again. Why pay taxes...why pay insurance? It's obvious your paying for the protection of the rich and their assets at the expense of your safety and property. Thanks FEMA, thanks to our administration and now thank you State Farm for taking advantage of our working class and poor who work and pay for your protections.
Posted by: Chris Hartwig | Aug 25, 2006 12:39:47 PM
Oh that's classic, Mr. Drinkwater ...
"We, of course, have not been cheating."
I can only imagine how smug he sounded actually saying that!
(Now might be a good time to get your cash out of those whole life policies from State Farm.)
Posted by: Will R | Aug 25, 2006 12:40:37 PM
The operative phrase is their involvement with the well-known trial lawyer.
Until the facts come out, assign zero creditiblity based on the above. Most likely part of a shakedown strategy.
Posted by: jack hays | Aug 25, 2006 12:42:30 PM
It sounds like something a big corporation would do to keep money in there own pockets. The poor people they have hurt in the process. All because of there GREED. I'm sure glad I don't have State Farm insurance and this confirms it! Hurray for the girls to come forward in this matter. Why didn't they do it sooner?
Posted by: Deb S. | Aug 25, 2006 12:42:37 PM
Remembers me Bally Total Fitness and their SCAMS. Exactly the same.
Posted by: CEGP | Aug 25, 2006 12:43:01 PM
Wow Great idea jeffery, imagine all the people? We were cancelled after 911 in the dc area after paying them since 1979 with 2 water damage small claims. If we all switched.......
makes yo go hmmmmmm.....
Posted by: rick Slick | Aug 25, 2006 12:44:33 PM
Maybe it's time for mortgage companies to pick up the ball and pressure insurance companies to "honestly" insure their customers. Or better yet, just drop the insurance requirements. Fewer policy holders means more competition. Competition breeds better service!
Posted by: sue watkins | Aug 25, 2006 12:44:35 PM
All my relatives in N.O. have SF and got checks when the fled to Los Angeles the following day. They all have positive things to say about how State Farm folks that weren't even their agent helped them.
Posted by: Other side | Aug 25, 2006 12:46:11 PM
I am an agent and State Farm is a competitor, so I don't mind them getting bad publicity. However, news shows like 20/20 are notorious for biased coverage of stories such as this to get good ratings. Most insurance companies are happy to pay what the contract requires. However, flood is excluded. The homeowners should have bought flood insurance.
Posted by: Bill | Aug 25, 2006 12:46:53 PM
STATE FARM OR ANY OTHER INSURANCE COMPANY IS JUST ANOTHER TERM FOR LIGALIZE GASTERS.....
Posted by: MARIA MENDEZ | Aug 25, 2006 12:47:38 PM
Hats off to the sisters for keeping their integrity intact. Its a shame that insurance companies think they can get away with things like this - we need more people who are not afraid to tell the truth and expose frauds - no matter how big a company they are.
Posted by: basketmom | Aug 25, 2006 12:47:54 PM
thank god there's no fraud happening the other way! we all know that all homeowner claims are accurate and in no way rounded up.
Posted by: mike | Aug 25, 2006 12:48:23 PM
I have worked in the insurance industry for over 30 years. The adjusters are at the mercy of either doing what they are told or giving up their jobs. These two sisters gave it up for what is right. Their bosses if guilty need to go to jail. People who buy insurance, pay their premiums, have to be treated honestly, fairly, and with respect. They deserve nothing less. State Farm if guilty needs everyone involved fined, dismissed, jailed all the way to the top. No excuses.
Posted by: John Hunsucker | Aug 25, 2006 12:48:24 PM
Wow, I'm surprised to see so many people taking the side of the two women.
Hello - your homeowners specifically does not cover "flood", especially in flood zones (i.e. Mississippi).
So, if you present a claim for something that isnt covered, why is it considered "fraud" when the insurance company doesn't pay?
If there's no siginificant wind damage, and the house is flooded, guess what - it was likely caused by a non-covered flood.
Posted by: Doug | Aug 25, 2006 12:48:24 PM
When all else fails, blame Bush, how crazy is that. So much hate to this fine President, and his true beliefs, and will do what is right, not pandering to the poor slo s who just hate him. What is this world coming to.
Posted by: Corona Steve | Aug 25, 2006 12:48:42 PM
Yep. Don't ya know insurance companies is legalized racketerring and extortion. Come on. Every state has laws that say you should pay insurance. That is absurd. If they would do it right and put your money into an a ccount that grows money then there would be no need for insriance companies. It is an unregulated industry that needs serious regualting.
And the dude that said George Bush is to blame is a moron. Really the president is just a figure head. All action regarding goverment regulation is mostly done at the local and state levels. Blame your governors and state representatives. They are the real culprits.
Posted by: Leon | Aug 25, 2006 12:50:08 PM
Then you add in last week's federal court decision in a Mississippi court ruling for the insurance industry and you have one big case of piling on the storm victims. Ouch...
Posted by: rich | Aug 25, 2006 12:50:28 PM
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