‘It’s not right’: LA woman seeks class action over delayed hurricane insurance payouts

Judith Gail Mudd was recovering from the last in a series of surgeries when Hurricane Laura struck her hometown of Lake Charles as one of the strongest hurricanes ever to make landfall in the United States. Together with her son, the then 74-year-old evacuated, and it wouldn't be until months later that she was able to return to her home, which had sustained severe damage.

More than three years later, Mudd is still waiting for the insurance money she needs to fix it.

Like many other storm survivors across the state, Mudd's case was taken over by the Louisiana Insurance Guaranty Association after her insurance provider, along with eight other companies, failed in the two years following the destructive 2020 and 2021 hurricane seasons.

"I filed all my claims and did everything I was supposed to do," Mudd said, frustrated. "It's not right."

The Lake Charles-based Cox Law Firm has now asked the federal court to allow a class action on behalf of Mudd and others like her, who have been waiting for LIGA to pay out their 2020 claims since their insurance companies went bankrupt in the two years that followed.

"They really got victimized three times," said Tom Filo, an attorney and senior partner with the firm. After suffering damage from the storm, survivors like Mudd were dealt a second blow when their insurance companies declared insolvency, causing an automatic delay in the process of getting their payout. Since then, the firm said, they have been ignored by LIGA, while the cost of repairing damage continues to rise.

"They don't do anything," Filo said of the non-profit that is supposed to catch those dropped by insolvent insurers and make them whole. Forcing every one of the roughly 100 LIGA cases the firm is handling to trial would be an insurmountable task, he noted. "We could be here 10 years from now and people would not get paid anything on their claim."

LIGA has 20 days to respond to the request for a class action, which was filed on Wednesday.

While bad faith statutes mean that homeowners can win multiples of the original damages, as well as attorney's fees, from private insurance companies in court, state law shelters LIGA from those penalties for late payment. This makes cases like Mudd's particularly unpopular with attorneys, with some refusing to take such cases and even dropping clients after their claim is transferred to the state guarantor, Filo said, making it even more difficult for homeowners to pursue their claims.

With the class action, Filo said his firm is hoping to put pressure on LIGA, create a template that can help others in Mudd's situation and finally get them resolved. The class the firm is seeking is limited to those who reported damages from hurricanes Laura and Delta, and whose insurance companies went insolvent. But those affected by Hurricane Ida will likely find themselves in a similar situation soon, Filo noted, meaning thousands of people could be affected.

Mudd's insurer alone had approximately 30,000 policies and 16,000 Ida-related claims, according to an April 2022 press release by the Louisiana Department of Insurance announcing the transfer of unresolved claims to LIGA.

For the organization, taking over thousands of cases from insolvent insurers has been a big lift. LIGA Executive Director John Wells did not immediately return a request for comment, but previously told The Times-Picayune that the organization was trying to deal with the claims as quickly as possible.

According to Wells, the association's cases quadrupled to 40,000 after the storms and bankruptcies. After two quiet years, that number was down to about 6,000 at the end of October.

"What's left are the last of the worst claims from the worst companies out there," he told The Times-Picayune.

After three years of waiting, Mudd said she just wants to be able to finally fix her house. The $20,574 paid out by her insurance company barely covered the new roof she had to install, leaving her with cracks in the walls, leaking windows and out of pocket expenses for replacing furniture and appliances. Since then, the cost of repairs has only increased.

"Hopefully somebody will shake those people up," she said. "Because that's their job." As the representative of hundreds of homeowners, should the class action be granted, that somebody could very likely be her.