Thursday, November 12,, 2009
New Orleans, Louisiana

WHY AREN’T WE THE GREATEST GENERATION?

Ten years ago, Tom Brokaw wrote a book about what he called “the greatest generation.” And now, there is a new best seller out calling America today “the dumbest generation.” And since Louisiana is at the bottom of the barrel on most comparative national lists, you can imagine how folks in the Bayou State are viewed. But with all the tools of modern technology where we live in a digital culture with 24/7 information overload, and opportunities for intellectual development at an all time high, why aren’t we making a run at being ‘the greatest generation?” What conditions existed 70 years ago that set those who fought World War Two apart?

These questions were the focus of discussion last week in New Orleans at the opening of some new spectacular attractions, all part of the National World War II Museum. The world premiere took place for an immersive, 4-D cinematic journey through this war, produced and narrated by actor Tom Hanks. It’s a breathtaking experience and worth a special trip to New Orleans just to view the film.

Battle fields come alive with the viewer as a participant. The movie screen wraps around the theatre so one is immersed in the action. When planes fly over, your seat shakes. When it snows as the Germans invade Russia, snowflakes fall on you from the ceiling. New Orleans historian Dr. Stephen Ambrose, the best known chronicler of World War II who initially conceived of the museum, would have been proud.

Tom Brokaw was in New Orleans for the grand opening and talked about his definition of “the greatest generation” in his bestselling book. “They came of age during the Great Depression and the Second World War and went on to build modern America – men and women whose everyday lives of duty, honor, achievement and courage gave us the world we have today.”

Look, there is no doubt that these men and women of the 1940s were resourceful, hardworking and deeply committed to giving extraordinary service to their country. But do we instill these same values today? Or does today’s generation value lifestyle over success, who get trophies for showing up at soccer games, and who have been rewarded for little while being told they are “special” too much?

In his new book, The Dumbest Generation, Mark Bauerlein has little hope for young people today. Ignorant of politics and government, art and music, prose and poetry, The Dumbest Generation is content to turn up their iPods and tune out the realities of the adult world. It is brash, pampered, dumb—and content to stay that way.

Bauerlein’s theories are being echoed by numerous talk radio shows nationwide. Young people are incorrigible and it’s their way or the highway. They aren’t that well educated, they don’t vote, and they show little respect for values honed by hard work and sacrifice by previous hard working generations. The rest of us are old, redundant, can’t be trusted, and should be retired.

But where is the leadership that was charged with instilling these traditional values? Where is the call for sacrifice, volunteerism and “pitching in” for the higher good? Sacrifice has become quaint in our modern times. Self-sacrifice is so out-of-tune that we’ve turned President Kennedy’s famous line upside down. A politician today saying those famous words could well get ridiculed: “Ask not what your country can do for you; ask what you can do for your country.”

In these times, many Americans consider altruistic self-sacrifice to be something only for suckers and losers. A typical example is that even our “public servants” often leave office much richer than when they took office, or at least go on to a much higher paying job related to government in the private sector. Kennedy’s words too many have been rewritten: “Ask not what you can do for yourselves or your country, but what your country can do for you.” Who can forget President Bush’s admonition after 9/11 that the best way to support our country was to “relax and go shopping.”

In a state like Louisiana that has so far to go just to land in the median of so many national lists, one would think that a major volunteer effort would be both productive and necessary. Yet the state seems to almost go out if its way to build barriers to efforts by many citizens to pitch in. A retired chemist from a Louisiana chemical plant who wants to volunteer to teach chemistry in public schools must spend a year getting a teaching certificate, at his or her own expense. In my own personal experience, I have taught history at both Tulane and LSU, and served for 8 years as Secretary of State that oversees the state’s historical collections. Yet, I’m not qualified to teach eight grade history in Louisiana public schools.

State treasurer John Kennedy recently proposed that every public official in the state spend a little time teaching in local classrooms – a good idea to inspire many young people. When he proposed it to the newly created Commission to Streamline Government in Louisiana, his suggestion was summarily dismissed as unworkable and not practical.

Public officials in Louisiana, from the governor on down, are missing a great opportunity by not calling for more volunteer public service. Teaching in classrooms, giving time to help in hospitals and daycare centers, volunteering so much time each week at the local food bank, a homeless shelter, Red Cross, animal shelters, teaching adult literacy, the list goes on and on.

And do you fly the flag? No, not the LSU or Saints flag, or a flag for each season of the year – The American flag. Do you have one up? I fly mine 7 days a week at both my home and office. Do you? Maybe all this sounds corny, but these listed efforts build the fiber of what makes up a “great generation.” With due respect and admiration to my friend Tom Brokaw, I don’t believe any one generation can take credit for being “the greatest.” Things happen. History is recorded. History gets interpreted. Subsequent generations reinterpret it.

Louisiana and the nation are looking for leaders who will lead in calling for a major volunteer effort from citizens of all ages. Government cannot do it alone. There are many who want to contribute and volunteer. They just need to be told how, where and when. And that’s where real leadership comes in. Inspiring and instilling a sense of commitment to public service.

At the dedication ceremonies in New Orleans last week, one special guest was a highly decorated World War Two veteran named Corporal Carl Grassman. He lives with his wife in Detroit and he works as a Wal-Mart greeter. When told he would be honored at the museum and his travel expenses would be paid, he declined saying his fellow employees needed him too much and he would feel terrible if he left them for this one day to be so commemorated. When the Wal-Mart brass heard this story, they flew Carl and his wife to New Orleans in the Wal-Mart private jet.

There are millions like Corporal Grossman who do their job each day and want to do even more to help their community, their state and their country. They are just waiting for leaders to give them direction and set out a game plan of progress so that they too can lay claim to one of the “greatest generations.”

“The Greatest Generation got to save old tires, dig a Victory Garden and forgo sugar. The Richest Generation is being asked to shop. “
Margaret Carlson

Peace and Justice
Jim Brown

Jim Brown’s weekly column appears in numerous newspapers and websites throughout the south. To read past columns going back to 2002, go to www.jimbrownla.com.

For Immediate Release                            
Pediment Publishing/360.687.6731                                

Kings of Tort available on December 2^nd

The amazing story behind tort magnate Dickie Scruggs’s judicial bribery scandal is presented by Pediment Publishing. Kings of Tort is the authoritative work on documenting this nationally known story and the relatively unknown 25 year history behind it. The book will be made available in retail outlets throughout the country on December 2^nd. More Information including advance ordering of the book is available at www.kingsoftort.com.

Kings of Tort chronicles the sordid tale of judicial bribery and political intrigue in Mississippi, birthplace of the tobacco litigation and long known as one of the most tort-friendly jurisdictions in the nation. It features the story of Dickie Scruggs, who was largely credited with bringing down Big Tobacco in the early 1990s. From his ascent to a net worth of nearly a billion dollars to his seemingly unfathomable downfall stemming from his role in attempting to corrupt two local judges by improperly influencing the outcome of cases, the book documents how those in Scruggs’s own trusted circle of tort barons turned on him and cooperated with federal authorities. It also shows the political influence he wielded with judges, attorneys general, and even his own brother-in-law, former US Senator Trent Lott.

The Dickie Scruggs judicial bribery case has been covered extensively by the Wall Street Journal, The New Yorker, New York Times, LA Times, The Clarion-Ledger, Sun Herald and dozens of other Mississippi and national media outlets. Scruggs’s story during his meteoric rise through the Big Tobacco litigation was documented on PBS Frontline, ABC’s 20/20, and CBS’s 60 Minutes. Eventually, the 60 Minutes story became the subject of a movie, “The Insider,” featuring Al Pacino and Russell Crowe.

The book also chronicles the legal bribery story of Scruggs confidante and tobacco lawsuit partner Paul Minor, son of Mississippi political columnist Bill Minor. He was convicted, along with the two judges he improperly influenced, and is currently serving an 11 year prison sentence. Minor is currently fighting his conviction on appeal from prison through his attorney Abbe Lowell, who defended former President Bill Clinton during his impeachment trial.

Kings of Tort is an engaging read that examines the power of these tort barons and the unmistakable pattern of how corporate defendants were trapped in what Scruggs called “magic jurisdictions” and subject to coordinated political, criminal and civil pressure to produce enormous settlements. It’s a must read for those interested in the legal profession, politics or just a fascinating human story of greed and hubris.

About the Book

Gleaned from published media reports, court documents and interviews from many of the key players, the book was written by Alan Lange and Tom Dawson. Lange is a businessman from Jackson, Mississippi, and runs the widely acclaimed political website YallPolitics, which focuses on politics and law in Mississippi. Dawson, from Oxford, Mississippi, is a former Assistant US Attorney who retired from his position in early January 2009. His highly decorated career as an Assistant US Attorney and Associate Independent Counsel with the Department of Justice spanned over three decades and he served under seven presidents. As lead prosecutor on the Scruggs case, Dawson had a bird’s eye view of the largest judicial bribery scandal in Mississippi history. (Important Note: Dawson has strictly complied with all state and federal ethics rules in participating in this book including federal rule 6(e) of the Federal Rules of Criminal Procedure governing the nondisclosure of matters occurring before a grand jury. He did no writing of the book nor had any agreement to write a book while still an employee of the Dept. of Justice.)

Lange and Dawson have conducted extensive research with over 200 external reference citations to over 100 different sources documenting the story. Lead author Alan Lange stated, “So much of this story has been reported on in bits and pieces in the media. By putting all of the sources in one place for public review along with the narrative, we allow the readers to decide the truth on this complex story for themselves.” The entire reference section in the back of the book has been made available for free at the KingsOfTort.com website. This online reference section is fully linkable and takes readers to all of the court records, media reports and book references that documented the various parts of this amazing story.

Books will be available at local bookstores and retailers throughout the Southeast and available nationally through online booksellers on December 2, 2009.

About the Publisher

Pediment Publishing is based in Battle Ground, Washington and publishes a wide range of books often partnering with newspapers and other media organizations for non fiction, compilation publications of all types. In 2008, Pediment published “Boo: A Life In Baseball Well Lived” documenting the storied career of Mississippi-born, Boston Red Sox great Boo Ferriss. That book was written by Clarion Ledger sports columnist Rick Cleveland with a foreword by best selling author John Grisham. More information about Pediment can be found at www.pediment.com.

Excerpt from Chapter 1

“I’ll take care of it.”
—Dickie Scruggs

There was no jury or judge in sight, but on November 1, 2007 Tim Balducci was preparing to give the closing of his heretofore undistinguished legal career. A few hours before, he had been confronted by the FBI after delivering a $10,000 cash bribe to State Court Judge Henry Lackey. Although Balducci had just turned forty, he could easily be mistaken for someone much younger. With dark hair and glasses, he looked right at home in his red pickup truck that he drove from town to town practicing law across northeast Mississippi. For the last several months the FBI had monitored him via a court ordered wiretap after he made an inappropriate overture to Judge Lackey in March 2007. Life as Tim Balducci had known it had come to an end. Within minutes of being confronted with irrefutable evidence of what he’d done, Balducci had turned. The first domino in Operation Benchmark had fallen. He now had a new client—the United States government. While the investigation was not yet complete, prosecutors already knew from the evidence they had gathered that the man squarely in the gun sights of the ongoing probe was the reputed King of Torts, Richard F. “Dickie” Scruggs.

That same afternoon of November 1, 2007, Balducci paid a visit to the Scruggs Law Firm in Oxford, forty miles from where the FBI intercepted him. Zach Scruggs, the son of tort magnate Dickie Scruggs, and Sidney Backstrom were two young partners in the firm. They both knew about the scheme to improperly influence the judge. Balducci told them of a slight change in plans. Judge Henry Lackey was asking for more money in exchange for compelling a $26.5 million fee dispute with other lawyers to arbitration.

After discussing a few other pending legal matters, a remarkably calm Balducci started honing in on the matter at hand. The transcripts from the wire Balducci was wearing tell the tale.

“The other piece of this puzzle I hadn’t told you yet is uh, get it how you want it because I’ve gotta go back for another bushel of sweet potatoes down there,” Balducci said.

“Down there” was Calhoun City, Mississippi, in Judge Lackey’s courtroom, but he wasn’t talking about groceries. “Sweet potatoes” was code for bribe money.

Balducci went on, “So get it right. Get it how you want it ’cause we’re paying for it to get it done right.”

Balducci had been involved in every level of the scheme to bribe Judge Lackey and he was cooperating fully with government officials. The titillation of such a huge scandal with a cooperating co-conspirator was too much for the media and the public to ignore. The downfall of Dickie Scruggs, a giant in the tort lawsuit industry, was unraveling in slow motion, and he was fighting it all the way. The man who brought down Big Tobacco was about to have two decades of his legal dirty laundry exposed.

Within six months, after much bluster and the best legal defense money could buy, Dickie Scruggs, Sid Backstrom, Tim Balducci, Steve Patterson, and Joey Langston all pleaded guilty for their roles in a judicial bribery scheme. Scruggs’s son, Zach, pleaded guilty to a lesser felony. All were sentenced to prison. The King of Torts had been toppled from his throne.

As much as this seems ripped out of a John Grisham novel, it isn’t. This is a true story of twenty-five years of backwater politics in the Deep South. So many have been stunned by these revelations and want to know whether bribing judges is a recent addition to Scruggs’s way of doing things or just part of the game plan all along. Regardless, the fairy tale story of a boy from Pascagoula, Mississippi, who made a billion dollars learning how to extract mammoth settlements from big corporations had ended, and all the money in the world couldn’t buy his way out.

“This is a public court…It belongs to the citizens. I believe in hearing everything in open court if I can.”

Federal District Judge L.T. Senter, Bossier v State Farm, November 2009

Open court is not a place where Judge Senter presides.  Instead, it is the envelope of the litigation process – the structural architecture holding together our system of  justice for all.

Bossier property post-Katrina

Like the envelope of homes that stood against Katrina’s wind and water, not all damage to our system of justice is visible to the naked eye.

Neither was the damage to the Bossier’s home.  Continuing with the analogy, tort reform and other system changes simply hide the cracks. What is needed is change that strengthens the structural architecture of the envelope, Open court – change that Judge Senter can make:

• Modify the Mediation Order so that the period of mediation immediately follows the filing of a Complaint and Answer.
• Improve the quality and oversight of the mediation process and require plaintiffs to attend a pre-mediation session conducted by the court that fully explains the process.
• Require all motions for a protective order to fully comply with the Rules requiring specificity in the documentation of “good cause” and deny any that do not with prejudice.
• Insist settlement conferences are documented with the technology used for video depositions and privately review the tapes before sealing.
• Limit the power a magistrate has to keep evidence out of court.

As one would expect from a construction-specialized CPA, Sop zeroed in on the foundation of SLABBED…we do not hide the fact we want these cases tried from a larger social good standpoint.

It is from that perspective these past two years that I’ve observed windows and doors to justice closed and locked in Katrina litigation.  There can be no open court when evidence is sealed, protected or otherwise restricted – locked away to the extent there could be no trial.

I took AROD’s Bottom Line on Bossier; i.e., SLABBED did not adequately prepare us, as the opportunity to reflect on what more I could have done than point out each door and window as Judge Walker locked one after the other.  Judy Guice took incredible professional risk by continuing to challenge the Magistrate’s orders to obtain the evidence needed to take the Bossier’s case to trial.

As one of the citizen-owners of the public court, I’ve learned a magistrate’s order stands unless clearly contrary to law – and I ask where is the law that prohibits Judge Walker from allowing State Farm to run out the clock and run up the tab on plaintiffs? Where is the law that permits State Farm to file their trial brief so late in the day that it does not show up on PACER until the day of the trial? Where is the law that restricts sanctions to only those requested by a plaintiff? Where is justice when there is only a law that requires Judge Senter to play the hand his Magistrate deals?

The justice for all that I seek is that required to do justice, love kindness, and walk humbly…Such is not required of me alone – yet, there was no justice, kindness or humility in Judge Walker’s orders nor any excuse for his conduct of the pre-trial discovery in Bossier.

Open the doors and windows that hide the cracks in the envelope.  Give juries the evidence needed to make just decisions. Open court so that open court is a reality and not a lofty ideal.

Nowdoucit

Thanks to all who have visited with us today, even you State Farm folks (you guys know who you are).

I sometimes pinch myself someone as financially sophisticated as Mr CLS posts with us on Yahoo Allstate. Before I get to his post there is one concept that must be understood in reinsurance. Under traditional reinsurance the ceding party (such as State Farm) gets to take a credit on their balance sheets for the risk transferred to the reinsurer for the amount of reinsurance purchased. A problem with Cat Bonds is the lack of specific attachment points in loss payments (unlike traditional reinsurance) means the collection of the cat bond trust proceeds is de-coupled from the amounts actually paid to the insureds for their losses making it possible for an unsavory insurer to both collect for losses via the Cat bonds and stiff their insureds.

So what happens when traditional reinsurance is then backed by Cat bonds for a homeonwers policy which was also bundled and sold via securitization (think life settlements)? Mr CLS asked that exact question this morning and as per usual he followed the money to Bermuda:

Securitization for HURRICANE risks ABOVE the Hurricane Storm Surge water line.

“If I couldn’t differentiate between wind and water, I could NOT pay”, said adjuster Matthew Thiele.

The final version said “When the investigation indicates that the damage was caused by excluded water and the claim investigation does not reveal independent windstorm damage to separate portions of the property, there is NO COVERAGE available under the homeowners policy.

So where is the “Transfer of risk” through securitization?

What was the “credit” taken on liability balance sheets or off balance sheets for this transfer of risk?

Would a balance sheet credit be taken (say in the securitized HO policy of Bossier) for:
a) $2,300 (the initial payment loss)
b) $93,480 (the supplemental payment 4 years later)
c) $650,000.00 (the full policy limits)

S&P rate Alpha Wind 2000-A Ltd’s $90 million

These HURRICANE securities provide $90 million of retrocessional coverage to ARROW RE, a wholly owned Bermuda reinsurance subsidiary of Goldaman, Sachs & Co. Arrow Re has reinsured a $100 million portion of an excess-of-loss treaty covering STATE FARM Group (State Farm) policies, primarily homeowners, in Florida. This securitization represents a 90% cession of that risk to the holders of the securities.

The analysis included estimated losses for buildings, contents, additional living expenses, and an allowance for demand surge, the additional cost of building materials that often follows a hurricane.

Securityholders are subject to payments dependent on the triple-’A’ rating on Swiss Re as guarantor of the total return swap counterparty (and, thus, asset guarantor), the unrated Arrow Re as the weak link in a chain of agreements leading back to State Farm, and the outcome of the peril modeling.

Alpha Wind has put the security proceeds into a collateral account with Bank of Bermuda Ltd as indenture trustee and invested in HIGH-QUALITY ASSETS whose final maturities may not exceed 15 years.

The collateral account supports State Farm’s reinsurance (through Arrow Re) of certain insured hurricane losses in Florida.

Under the retrocessional agreement, Alpha Wind is bound to follow the fortunes of Arrow Re with respect to its payments to State Farm under the reinsurance contract.

In today’s new fangled securitized world the ramifications of this scenerio are important. Under traditional Re the answer to the question is  straightforward, not so much (and by huge degrees) with Cat Bonds. I suspect most state DOI’s do not have the expertise to understand these concepts much less regulate them.

sop

h/t  Cominglatersoon for suggesting Tuesday’s song

Minute Entry for proceedings held before District Judge L. T. Senter, Jr: Jury Trial held on 11/10/2009: PHASE I COMPLETED, JURY VERDICT returned in favor of Plaintiff; Court ruled State Farm had no arguable reason for delinquency, therefore, PHASE II of JURY TRIAL TO BEGIN 11/12/09, at 1:00 P.M.; COUNSEL to reconvene in Chambers, 11/12/09, at 10:00 A.M.

I’ve been Sop’s blog partner almost two years now; and, Bossier v State Farm is one of the few cases the first case I’ve covered that has come close to trial.  In fact, the only trial other than Bossier that I recall at the moment is Lisanby v USAA.

The jury’s decision is sealed; but the minute entry tells us a jury of peers heard the evidence and decided in Bossier’s favor and Judge Senter’s ruling - no arguable reason for delinquency – set the stage for Phase II.

Congratulations to the Bossiers and to their attorney and tireless advocate, Judy Guice!

UPDATE: The Sun Herald story leaves me wondering what the Court “sealed” and “redacted” – and if State Farm inaccurately portrayed the Bossier property as an oceanfront home to the jury or State Farm representative Bob Lapinski made the error in his statement:

After deliberating for 80 minutes Tuesday, a jury said Reginald Bossier isn’t entitled to any additional money for damage to his Biloxi home during Hurricane Katrina, but State Farm does owe him $52,300 for damage to its contents…

“The jury found that the home was destroyed by water, not wind,” State Farm representative Bob Lapinski said after the ruling. “State Farm showed the 8-foot storm surge had a devastating effect on the Bossier one-story, oceanfront home.”

Lapinski said State Farm paid for minor damage to shingles and siding caused by the wind. He said the company gave Bossier the benefit of the doubt for damage to the outbuilding. “That could have possibly occurred because of wind.”

Credit the Sun Herald for pointing out the Bossier’s property was definitely not “oceanfront property”.

The Texas Windstorm Insurance Association used prices lower than market rates to estimate materials and repair costs, unfairly limited costs on roof repairs and discouraged reopening closed claims, a League City home-owner alleges in a lawsuit that includes internal TWIA e-mails and documents.

“The game is rigged from the beginning,” said Steve Mostyn, the homeowner’s attorney who obtained hundreds of documents through the discovery process. “All the parts are designed for one purpose, which was to save money and underpay these claims every way they can, not by accident nor incompetence but a systematic effort.”

Rigged from the beginning – surely not!  ( h/t observant reader and the Houston Chronicle Lawsuit says windstorm insurer rigged process)

The lawsuit alleges the insurer told adjusters to base claims estimates on an internally developed price guide — with prices lower than market — instead of pricing software commonly used by the industry.

One adjusting firm reported the market rate for roof repairs was $230 to $255 per 100 square feet, but TWIA’s price was $182, the lawsuit claims. In internal documents filed with the lawsuit, the association portrays its prices as just a guideline.

The game, as Mostyn called it,  sounds familiar, does it not?  There’s more:

… when USAA, a private insurer that also handled some claims for TWIA, used prices from industry software, a TWIA manager worried that USAA was paying more on losses than other adjusters.

“This could create a problem at TWIA in the long run if it is discovered that USAA was allowed to do something different than the other” adjusting firms, Reggie Warren, vice president of claims, wrote in an e-mail to USAA.

In the same e-mail, he grants USAA permission to use the software, but suggests the association should rethink its contract with the company. A spokesman for USAA declined to comment.

…and more:

One e-mail may bolster separate litigation in which TWIA is accused of denying some policyholders payment for what’s known as “overhead and profit.” TWIA knew insurance regulators required insurers to pay overhead and profit when estimating claims for damage that would likely require the use of a general contractor — even if homeowners oversee the work themselves, according to one e-mail.

“… (We) need to add OH & P to arrive at the appropriate repair/replacement cost, regardless if a contractor is involved,” Warren wrote in June 2008.

Despite knowing this, TWIA denied the overhead and profit payments on Ike claims involving roofs, fences, floors and some other trades, the lawsuit alleges.

Oliver said TWIA paid when the services of a general contractor were “reasonably necessary.”

…and more:

TWIA went to great lengths to limits costs, especially on roof claims, according to the lawsuit. When one adjuster sought permission to replace a damaged roof on a Port Isabel home because the original shingles had been recalled, Warren suggested pulling shingles from a neighboring roof that was being replaced.

“I am not ready to lay over and play dead yet,” he wrote. “Check around the neighborhood for a possible solution. … Sometimes we allow for a small slope with a laminated shingle and then salvage the shingles that are torn off it to make repairs on the other slopes.”

Whether such a practice is prohibited depends on insurance policy language, said Birny Birnbaum, head of the Austin-based Center for Economic Justice, a consumer advocacy group.

“But it’s penny wise and pound foolish because if you put older shingles on, they’re much more likely to get damaged,” he said. TWIA has also long said it would not pay for lifted shingles.

At one point, manager Bill Knarr instructed adjusters to pay to reseal lifted shingles only as a last resort.

“These instructions are the last resort when no one will take no for an answer,” he wrote in an e-mail to an adjuster. The e-mail suggests unfair discrimination, Birnbaum said. “Sounds like if you’re a reasonable consumer, you get screwed,” he said. “If you’re abrasive you get something out of it. That’s the way insurance companies want to treat insureds, and then they complain about fraud.”

and, then, there was the worst:

By November, TWIA was getting hit with requests from policyholders asking for their homes to be reinspected. If an adjuster finds more damage upon additional visits, they submit what’s known as supplements to the claims.

In an e-mail to an adjusting firm in November, Warren noted that many of the adjusters it used were inexperienced and “not getting the job done.” If adjusters had done a better job the first time they visited a site, there would be fewer files to reopen, he noted.

Despite acknowledging TWIA could face many reopened claims because of adjuster mistakes, the insurer made it hard for homeowners to get their claims reexamined, according to the lawsuit. Warren told adjusters in a memo that homeowners had to have credible evidence to force the reopening of a claim.

An estimate from a public adjuster — independent adjusters hired by homeowners — was not enough, according to the memo.

To make matters worse, in late 2008 TWIA restructured how it paid adjusters for re-inspections, effectively discouraging them from looking for more damage, according to the lawsuit. After Dec. 1, adjusting firms earned $105 plus time and expenses if they denied a claim, according to the litigation.

If they found more damage, they risked not getting paid at all if TWIA determined an adjuster erred during the first inspection, according to the lawsuit. The lawsuit doesn’t state how much in damages or penalties the homeowner is seeking.

Check out the story on the Chronicle (linked above) for the response from folks in Texas, including TWIA.

PS: Before Sup (my favorite insurance guy) says this lawsuit is just more proof the government can’t operate insurance programs, let me point out the program is not with the government but with the insurance industry model.  Someone better check Mississippi’s windpool a little closer and, by all means, make it operate with the transparency required of publicly funded programs.

In a written statement Monday, State Farm said “… based on the testimony of both parties, it is clear that Mr. Bossier and State Farm have different views regarding whether it was wind or storm surge that destroyed Mr. Bossier’s home.

Different views, indeed. Why else would there be a trial? It was their differing views of an expert qualified to determine cause of loss, however, that were at issue when the trial resumed yesterday.

Last week ended with Bossier’s question on the table; i.e., were State Farm’s expert witnesses, Forrest Masters, Ph.D. and Robert H. Weisberg, Ph.D., qualified to give an opinion on the cause of Bossier’s loss? State Farm answered by filing a Bench Memorandum stating the Company’s position:

Plaintiff had ample opportunity in which to file timely Daubert motions with respect to Drs. Masters and Weisberg. However, Plaintiff failed to do so…Plaintiff’s reliance on Rule 4.05, a Mississippi regulatory rule, to support his Daubert challenge is misplaced. The Federal Rules of Evidence do not require a license for expert testimony to be admissible…Plaintiff incorrectly interprets Rule 4.05 to mean that no one from another state is allowed to offer testimony on engineering matters unless they obtain a
limited licensure, an interpretation that would effectively mean that only licensed engineers can testify as to engineering matters.

Bossier’s counsel filed a response claiming, Defendant misperceives Plaintiff’s objection to the testimonies of Dr. Masters and Dr. Weisberg:

Plaintiff’s objection based on Mississippi statutory law is not a challenge to said testimonies under Daubert or Fed. R. Evid. 702. Instead,to the extent said witnesses intend to provide forensic engineering testimony, testimony relating to the cause of failure of Mr. Bossier’s home, or a critique of the testimony of Mr. Ted Biddy, said witnesses are not competent to do so.

In this regard, Rule 601, Fed. R. Evid., provides as follows:

Every person is competent to be a witness except as otherwise provided in these rules. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the competency of a witness shall be determined in accordance with State law.

When court resumed yesterday, Judge Senter ruled on the matter. Mary Perez has the story for the Sun Herald.

U.S. District Court Sr. Judge L.T. Senter Jr…allowed Robert H. Weisberg, an oceanography professor at the University of South Florida, to testify about the strength of the wind, water currents, waves and storm surge. But Senter ruled, “He may not give an engineering opinion on this case.”

Judge Senter’s ruling is very narrow and Bossier’s counsel, Judy Guice, was correct in saying State Farm’s perception of Bossier’s objection was inaccurate. Judge Senter did not disqualify either of State Farm’s expert witnesses. He simply followed State law that prohibits anyone other than an engineer licensed by the State of Mississippi from determining what caused a structural failure:

In order to safeguard life, health, and property, and to promote the public welfare, any person or firm in either public or private capacity practicing or offering to practice engineering shall hereafter be required to submit evidence that the person or firm is qualified so to practice engineering and shall be licensed as hereinafter provided; and it shall be unlawful for any person or firm to practice or to offer to practice in this state, engineering, as defined in the provisions of Sections 73-13-1 through 73-13-45.

Some may argue, as State Farm did,  that Bossier’s position:

would bar the giving of testimony by Professors of Engineering, who are nationally recognized as experts in their fields, but who are not licensed practicing engineers and therefore arguably ineligible for a Mississippi limited licensure, would surely “unreasonably burden” the courts.

However, at that point, State Farm applies Federal Rules of Evidence to higher education, inaccurately assuming an equality of quality that simply does not exist.  Aside from the adage those who can do and those who can’t teach, approval from the US Department of Education has more to do with qualifying student’s for federal financial assistance than quality of education.

All that aside, Bossier makes an excellent point in his Response:

There is nothing unreasonably burdensome about the application of the State law by this Court. There are multiple individuals who could have been hired by State Farm to provide opinion testimony relating to the failure of Mr. Bossier’s home yet it failed to do so.

State Farm’s counsel in Bossier, Coast attorney John Banahan, also represented the Company in McIntosh and is well aware of the Mississippi law requiring a licensed engineer to determine cause of loss.  In light of the deposition testimony of former Forensic’s engineer Brian Ford, one can only wonder why State Farm selected no qualified engineer as an expert witness in Bossier.  On one hand it appears there might be no professional engineer willing to back up the claims Weisberg, an oceanographer, made in court yesterday?

Using more than a dozen charts, Weisberg showed the storm surge in the area near Bossier’s home was between 18.6 and 20.6 feet. Katrina wasn’t a tsunami, he said. “It rose very fast but it was not a wall of water,”

Weisberg said the wind peaked around 10:30 a.m. on Aug. 29, 2005 and the surge around 11 or 11:15 a.m. Different wind models indicate that could have occurred up to an hour earlier, he said.

He used a composite of evidence from FEMA, NOAA and other agencies to compile his report on Katrina’s impact.

On cross-examination, Weisberg said information was computer simulation, similar to what is used to forecast weather, and not based on eyewitness accounts.

On the other hand, it sounds as if Weisberg was quoting  the gospel of composite multi-source data  from the bible of Haag Engineering, Tim Marshall chapter one and two – data that doesn’t hold water as the saying goes.

Then again, State Farm’s attempt to use unqualified experts to determine Bossier’s cause of loss may be yet another reason to ask, Bossier v State Farm – collateral damage or just really bad bad faith claims handling?

The water is up but relatively calm.

TWIA (Texas Windstorm Insurance Association) appears to be convinced ignorance can be a defense; but, what they’ve done to policyholders slabbed by Hurricane Ike is indefensible. Chip Merlin reported on the 11.2% hoax in a recent post, Slabbers Finally Learn How They All Have Exactly 11.2% Damage:

The Bolivar Peninsula TWIA policyholders have had the most frustrating insurance claim experience of any group in recent memory. While we have been having success with other Hurricane Ike claims, the Slabbers claims resolutions have proven difficult. They have not just back and taken this abuse either as I noted in Texas Windstorm “Slabbers” and Policyholders March on Austin.

One even made a joke about how, according to TWIA, they each have exactly 11.2% of building value damage, reflected in The Parable of Hurricane Ike Insurance Claims…

…from what we have reviewed regarding the accuracy and low-balling of the TWIA estimates of partial damage, the entire population will have to be revised

As a result of Javier Delagado following up on evidence produced in an administrative trial, Slabbers finally have the answer of how TWIA performed the calculations that everybody has exactly the same damage. The person making the calculation for TWIA was University of Texas Professor William Spelman. The TWIA attorneys introduced his testimony via a previous administrative hearing to avoid expense—so much for the ability to confront and cross examine a witness. The TWIA pleading was very telling:

Dr. William Spelman provided sworn testimony in a previous contested case hearing involving a “slab” claim (see SOAH docket No. 454-09-3158.E). He has not been retained by T.W.I.A. to specifically evaluate any particular claim, but rather he was reetained to perform a statistical analysis from which all slab claims were evaluated by T.W.I.A. His sworn testimony offered in the previous contested case hearing explained the process by which he performed his statistical analysis, and another witness explained how that statistical analysis was applied to the particular slab claim.

Spelman’s transcript revealed that he has no insurance claim experience. Instead, his education is political science, economics, and public policy. He is not a contractor, estimator, meteorologist, or engineer. He teaches applied math and statistics at the University of Texas-Austin School of Public Affairs.

The “Reader’s Digest” version of what he did to calculate how each of the Bolivar Slabbers would be entitled to 11.2% was to perform a statistical regression analysis where three main variables were considered to provide a statistical expectancy that 95% of all residential Slabbers would fully be indemnified for wind only damage if TWIA paid 11.2% of the insured value of the structure. He was provided information and variables from 387 TWIA estimated claims of partial damage. After consultation with TWIA retained engineers, he considered 18 different variables from those claims, but found that only three of them had a significant impact upon the wind damage. Those three variables were:

1. Whether the building use was residential or commercial.
2. Whether the building was constructed before 2004.
3. Whether the roof was placed on the structure before 1989.

He determined a “loss ratio” which he defined as the Actual Cash Value payment by TWIA on the partial damage buildings divided by the Insured Value. The average residential payment loss ratio was 9.8%. But, if TWIA paid 11.2%, he calculated that 95% of all Slabbers would statistically have their full indemnity on an actual cash value basis.

There is much to criticize with this work. Indeed, from what we have reviewed regarding the accuracy and low-balling of the TWIA estimates of partial damage, the entire population will have to be revised. We will provide more on the extent TWIA underpays wind damage claims on partial losses.

Still, I felt that Slabbers are entitled to know the person and how the amount was arrived at. Here is the pleading and testimony for everybody’s review.

The folks at TWIA have certainly made a mess in Texas!

Anyone else remember the McDonalds Hot Coffee case?

Marbury v. Madison, Brown v. Board of Education, Roe v. Wade? Ask anyone in the U.S. or abroad and they will likely tell you about a woman who spilled coffee on herself and collected millions of dollars. The McDonald’s coffee case became the poster child for frivolous lawsuits in America. Jerry Seinfeld did an entire episode where Kramer sued Java World after spilling a café latté on himself while trying to get a seat in a movie theater. Jay Leno, David Letterman and other comedians have made the case the punch line for jokes; there are even the “Stella Awards” (for Stella Liebeck), given each year to the most outrageous and frivolous lawsuits. But if this case was so ridiculous, why did a jury award $2.9 million dollars to this 79 year old after a seven-day trial in 1994? Did McDonald’s not have good lawyers? And how did this case gain such notoriety and remain in the minds of so many people after so many years?

The McDonald’s coffee case has been routinely cited by the media as an example of how citizens have taken advantage of the legal system. In this documentary, you will learn what really happened to Stella, meet her grandson, who was driving the car, and hear from her doctor, the lawyers, McDonald’s quality assurance manager, and the jurors. Was the media’s portrayal of this case fair or was there an agenda by tort-reform groups to create a public perception that lawsuits were out of control. How did it become the poster child for tort reform, what is tort reform and how does it affect everyday Americans?

Before I head out to the Bay and daddy duty today I wanted to share a few stories that attracted my interest, some of which we’ve previously blogged on.

Nowdy wondered a few times this football season why I didn’t blog on St Stanislaus QB Dylan Favre as I had several posts on him during the 2008 football season. The reasons were many such as not having a life the past 8 weeks due to having a 2 sports son (pee wee football/soccer) and it seemingly raining every Friday night down here for the past 6 weeks. (I guess I truly am a fair weather fan when it comes to football at my Alma Mater) That said I did manage to take in a few games one of which was the clash involving my second favorite High School Football team, the Forrest County AHS Aggies (Congrats to the Aggies on beating West Lauderdale) and last night’s SSC playoff win over Quitman. Watching Dylan Farve play over the past few years has been a real treat. Though he lacks the height to be on the major college A recruiting list someone in college football will end up with a great QB.

Last night the Dylan and the Rocks converted a 3rd and 17 with a pass that would be the envy of half the QB’s in the NFL – a throw on a rope that hit the receiver in the hands in stride. I’ll let Al Jones at The Sun Herald take it from there:

Along the way, St. Stanislaus improved to 10-1 for the first 10-win season in school history, and Dylan Favre continued his onslaught on Mississippi high school passing records with three-single season records.

Favre set records for single season offense yards (4,903 yards), single season touchdowns (47) and touchdowns responsible for (58).

The Rocks now travel to Columbia next week in the second round.

“It was a good win,’’ SSC coach Forrest Williams said. “Now, onto the second round.’’

St. Stanislaus took the opening kickoff and drove 89 yards in 11 plays to take a 7-0 lead on a 10-yard scoring pass from Favre to Joe Klein at the 8:37 mark of the first.

The drive saw Favre convert a third-and-17 from the Rocks 27 with a completion to Boomer Scarborough to the Panthers 38.

I’m in Columbia a good bit professionally so I’ll recommend 2 local restaurants that are very good for those that will be in town early enough to dine before the game.

Fran Ginn’s Backdoor Cafe is located in Columbia’s picturesque downtown area. Since I am a foodie of the highest order and degree I’ll add IMO there is no place in Mississippi with better restaurants per capita than the Bay-Waveland area. The Backdoor could easily compete with the best of the restaurants in the Bay. Fran is especially well known for her homemade desserts, especially the Carmel cake.

Ronnie Lott’s Jacks Family Restaurant on the bypass (the google website URL is incorrect) is a great place to find some stick-to-your-ribs country cooking. It is a favorite of the local blue-collar crowd and for good reason as the food is very good. The parking lot is small but don’t let a filled lot scare you off as the place seats well over 100. There is parking across the street at the donut shop if the main lot is full (which it normally is everyday the place is open).

Next up is the National WWII Museum in New Orleans, specifically the dedication of the new building which is part of a major expansion there. The dedication attracted an all-star crowd including vets such as Bert Stolier, Mickey Rooney and George McGovern and celebrities such as Tom Hanks. We’ll be coming to visit the new attractions very soon. John Pope reports for the Times Picayune:

The 70,000-square-foot structure dedicated Friday cost $60 million. It has a restaurant — the American Sector, the latest culinary outpost of chef John Besh — as well as the Stage Door Canteen, which is designed to evoke, through period costumes and music and live performances, the clubs on the East and West coasts where GIs could rub elbows with celebrities before shipping out.

Also in the as-yet-unnamed building is the Solomon Victory Theater, a 250-seat house showing “Beyond All Boundaries,” a 35-minute movie that uses a host of special effects, including lights, fog, simulated snow and cca rumbling floor, to give viewers a taste of what soldiers felt during the war.

Hanks, a longtime museum supporter who is the film’s executive producer and narrator, said at a pre-ceremony news conference that the movie shows history “in a brand new way” and gives visitors “a tactile appreciation of the war.”

The movie will revitalize the museum, Stolier said. “People will want to come back. (The moviemakers) have done a great job.”

But because the presentation is so effective in showing what combatants endured, “you’ll walk out of that room determined to work even harder for peace,” said McGovern, an opponent of the war in Vietnam who was the Democratic Party’s presidential candidate in 1972. “You’ll never be able to glorify what those men and women went through.”

I’ve never understood the glorifying of plagiarist Stephen Ambrose. I’ve known about Ambrose since I was in my late teens as I personally knew another history professor at UNO. His major academic talent in those days was self promotion which his later life proved he was very good at doing. None of his collegues respected him back in the day, so his ”borrowing” of other’s materials without attribution did not surprise me when the news broke.

Next up is Dollar Bill Jefferson and the stiff price he may pay for his crimes. The US Attorney plans to recommend 27-33 years at the Grey Bar Hotel for Dollar Bill next Friday. Jonathan Tilove at the Times Picayune has the details:

Jefferson, 62, will be sentenced by federal Judge T.S. Ellis III on Nov. 13.

The prosecution’s sentencing memorandum suggests that Jefferson, who served 18 years in Congress, may have hidden resources and “poses a significant risk of flight,” and ought to be immediately remanded to the custody of the U.S. Marshals Service after sentencing at the Alexandria, Va., courthouse.

If Ellis follows the U.S. attorney’s office recommendations, Jefferson would face by far the longest prison term ever imposed for congressional corruption, dwarfing the sentences meted out in such famous scandals as Abscam, Koreagate and Wedetch.

Next up is Judge Joan Benge and the in-depth report from the Times Picayune on her ouster from the bench. I thought some of the commentary on the story was very good though I remain undecided if the punishment truly fit the act:

Benge, a Kenner resident, was snagged by the FBI in 2001 during its investigation, known as Operation Wrinkled Robe, of corruption at the Jefferson Parish Courthouse. Then-Judge Ronald Bodenheimer, Benge’s colleague in the Jefferson Parish district attorney’s office before they were elected to the bench, was a target of that investigation.

FBI agents secretly recorded telephone conversations between Bodenheimer and Phillip Demma, then a reserve deputy who had a personal injury lawsuit pending in Benge’s court.

The lawsuit stemmed from a minor wreck between Demma and another motorist in Metairie in 1998 in which Demma claimed he cracked a tooth. Through wiretaps, the FBI caught Demma urging Bodenheimer to sway Benge’s ruling in his favor. Demma wanted Benge to award him $20,000.

Both sides in the case agreed the other motorist was at fault, and Benge had only to decide whether the wreck caused Demma’s cracked tooth and, if so, an award amount.

After the Nov. 29, 2001, trial, the FBI recorded a conversation in which Benge called Bodenheimer to discuss an array of judicial matters that included the Demma case. Were it not for Demma’s attorney, John Venezia, Benge told Bodenheimer she would give Demma nothing, according to the conversation transcripts.

Yet, a week later, Benge awarded Demma $4,275. Weeks later, at a Christmas party, Benge told Venezia that she awarded Demma money only because of him. The Judiciary Commission suggested Benge was repaying Venezia for his monetary support in her judicial campaign months earlier.

Bodenheimer, whom Benge considered her judicial mentor, later pleaded guilty to federal charges unrelated to the Demma case and received a 46-month prison sentence. Demma also pleaded guilty to federal charges, including to conspiring with Bodenheimer to fix the case.

Benge was never charged with a crime, but the FBI and federal prosecutors provided the Judiciary Commission last year with information gathered during the Wrinkled Robe investigation for review of possible ethics violations. The commission initially opened a file on Benge after reading accounts of Demma’s guilty plea in The Times-Picayune in April 2003.

While the attorney who prosecuted the case recommended Benge be suspended without pay for six months, the commission said she should be removed from the bench.

Finally from the mean streets of blogging I offer this. You gotta give Alan props for leaving the comments up and for highlighting the Main Street Justice piece. Outing a blogger is a big no no here at Slabbed however and is something we’ll never do.

Finally from the even a broke clock is right twice a day file I offer this. The Fort Hood tragedy was horrific beyond description. Even worse IMHO is stereotyping an entire religion based on the actions of one of its very troubled adherents. Mankind is unfortunately most capable of very dark deeds whether it be companies like State Farm, Nationwide, Farm Bureau,  Allstate, USAA etc hosing homeless policyholders, or European Christians gassing millions of Jews and other undesirables in the 1940s. The ignorance on display in some of the comments to the post represents a classic case study in cognitive bias also known as burying your head in the sand. To the extent weaker minds have fallen for the meme on Muslims and violence means to me Osama Bin Laden and his ilk are actually winning the war from a propaganda standpoint. Simply put, fostering a wider conflict where it does not in reality exist serves the purposes of our enemies.

On tap for tomorrow, AIG’s financial woes continue to worsen and a few insurance Commishs clearly see it. Of course we’ve been all over it for months.  Happy Saturday to the Slabbed nation.

sop

As I alluded yesterday we heard the rumor about the delay and Anita Lee made it official. Today she gives us some added color to the cause:

The fifth day of trial in a Hurricane Katrina wind vs. water case was cancelled Friday because Judge L.T. Senter Jr. was sick.

The jury trial in Bossier v. State Farm is expected to resume Monday morning in U.S. District Court.

Reginald “Ed” Bossier contends that wind effectively destroyed his one-story home before the tide from the Back Bay surged through.

The story also contained an interesting tidbit we’ve been all over since it happened in the very late belated payment to the Bossiers for their outbuilding. Again this is manifest bad faith and illustrates State Farm’s deny first and delay payment approach to their claims handling:

He also has received $77,000 for an outbuilding, but that payment came four years after Katrina as the case headed to trial. A neighbor said the outbuilding was gone when he looked out after cowering in his hall for two minutes while a tornado roared outside.

Readers wanting to know more about how Bossier developed can click here or click the tag Bossier v State Farm at the bottom of the post. The discovery abuses State Farm was able to perpetrate with the help of former insurance defense lawyer turned US Magistrate Robert Walker are truly amazing.

sop

We covered Judge Benge’s legal troubles back in July in a post I think was one of Nowdy’s finest efforts. By all accounts Judge Benge is a decent jurist whose initial inexpereince on the bench lead her to make a terrible error in judgement. WWL radio New Orleans has the breaking story:

The Louisiana Supreme Court has removed a Jefferson Parish judge from her position with the 24th District.

The high court ruled today that Judge Joan Benge conspired to fix a personal injury case for a plaintiff who had ties to disgraced former Judge Ronald Bodenheimer.

Legal experts say the ruling by the court could also mean that Benge could lose her license to practice law altogether.

In 2001, a newly-elected Judge Benge was ensnared by an FBI “Wrinkled Robe” investigation of corruption in the Gretna courthouse.

While tapping the phones of veteran Judge Ronald Bodenheimer, federal investigators also recorded Benge discussing a personal injury case, which had come before her bench, with Bodenheimer.

According to the Judical Commission report, Benge appeared to give in to pressure from Bodenheimer to find in favor of the plaintiff, even though Benge several times reffered to it as a “zero” case, meaning that she thought that the plaintiff was entitled to no recovery for alleged damages.

In her response to the judicial commission, Benge said, “this conduct occured in ‘01. I’m a different judge today. This is ‘09. This was a 20 minute conversation when I was young.”