Louisiana Citizens Property Loses High Court Fight

NEW ORLEANS -- The Louisiana Supreme Court has struck down another attempt by the state's property insurer of last resort to avoid paying more than $100 million for late adjustment of hurricane damage claims in 2005.

Monday's action reversed a state appeals court order that had blocked the banker for Louisiana Citizens Property Insurance Corp. from revealing where it is holding the company's money.

Citizens is pursuing a possible U.S. Supreme Court appeal. The insurer claims that $6 million it put up for an appeal bond should cover a federal appeal. But the state's high court said that money only covered state appeals _ and Citizens has lost that case with no more state appeals remaining.

However, Insurance Commissioner Jim Donelon, who oversees Citizens, said Monday that Citizens still has another state court avenue, though he would not disclose details until the filing is made.

About 18,500 policyholders won $92.8 million in a class-action lawsuit alleging that Citizens did not start to adjust claims for hurricanes Katrina and Rita within the 30 days required by state law. Since the original decision, the bill has grown to about $105 million with judicial interest.

Another group of 6,500 policyholders has claims pending. Attempts to settle the case to cover all of those with claims have failed.

The state appeals court had blocked a key portion of seizing Citizens' money _ forcing Regions Bank to reveal where the company's money is being held and how much of it the bank has in response to queries submitted by plaintiff attorneys.

"I'm assuming now that the bank will have to submit their answers," said Citizens chief executive Richard Robertston. "I don't know when that will be due. We are still looking at whatever options we might have to pursue."

The U.S. Supreme Court already has rejected a temporary stay blocking the seizure of the state-run company's money. The high court does not have to agree to hear a full appeal.

Legislation that would shield Citizens from class-action claims is pending in the Legislature. Donelon said the backers intend to make that shield retroactive and cover the current dispute.

"We're going to proceed with the seizure and set the claims for a hearing in court," said plaintiff attorney Fred Herman.