“Whistleblowers” barred from testifying as witnesses in State Farm Insurance Hurricane Katrina case

Back in August 2006, I reported on Kerri Rigsby and Cori Rigsby, sisters who worked as independent adjusters for State Farm. The sisters were deemed “whistleblowers,” for their allegations of corruption at State Farm Insurance.

The sisters came forward, claiming that there was fraud in the Biloxi and Gulfport field offices related to the processing of Hurricane Katrina claims. They said that supervisors were pressuring adjusters and consultants to attribute hurricane damage to water, rather than wind, so that claims would not have to be paid. Under the State Farm policies, water damage is not covered, but wind damage is.

Richard “Dickie” Scruggs called Kerri and Cori Rigsby as whistleblowers in the case, but he offered each of them $150,000 for their testimony and reams of documents they secretly copied for him. Scruggs just pleaded guilty to conspiring to bribe a judge, so this could be a pattern of behavior on his part. (He withdrew from the Katrina cases after he was indicted on the bribery charges late last year.)

Kerri and Cori Rigsby have been barred from testifying against State Farm in policyholder lawsuits over the Hurricane Katrina claims. And the documents they gave to Scruggs can’t be used either.

Other claims of ethical violations are still pending against Katrina Litigation Group, the lawyers who are now handling the Katrina cases against State Farm. They took over after Scruggs Katrina Group withdrew. But a judge has now decided that any lawyers affiliated with Scruggs Katrina Group, and now a part of Katrina Litigation Group, can’t participate in the cases.

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