State Farm, Whistleblowers Facing Off At U.S. Supreme Court

Oct. 31--Two whistleblowers from Ocean Springs are headed to the U.S. Supreme Court Tuesday to defend the guilty verdict they won against State Farm Fire & Casualty Co. for defrauding the National Flood Insurance program after Hurricane Katrina.

The Supreme Court is set to hear oral arguments on State Farm's appeal Tuesday -- 11 years and two months after the hurricane.

The court has agreed to consider one question in the case a federal jury decided in Gulfport: whether attorneys for the whistleblowers, Cori and Kerri Rigsby, violated federal law by disclosing the lawsuit to members of the media while it was under seal in 2006. A whistleblower lawsuit is sealed, so federal prosecutors have time to investigate the alleged government fraud and decide whether to undertake prosecution.

The Rigsbys, who worked as State Farm claims adjusters after Hurricane Katrina, proceeded with the case after the government decided against intervening. The sisters proved at trial in 2013 that State Farm charged policy limits of $250,000 to the federal flood program while minimizing wind losses the insurance company owed on the claim of Biloxians Thomas and Pamela McIntosh.

The case included an infamous sticky note in the McIntosh file, attached to an expert report blaming wind for the loss, that said, "'Put in Wind File. DO NOT Pay Bill. DO NOT discuss.'"

Ozerden ordered State Farm to pay $750,000 in damages in the case, with the Rigsbys set to receive 15 percent. However, the Rigsbys have not been compensated for pursuing the claim because of the appeal.

The Supreme Court's decision to consider the case will not necessarily change the jury's verdict. If the question is resolved in State Farm's favor, an attorney for the Rigsbys has said, the court could allow the fraud verdict to stand or set it aside.

The federal trial judge and the 5th U.S. Circuit Court of Appeals found early disclosure had not harmed the case and also that the Rigsbys previous legal team, not the women, had leaked the lawsuit.

The 5th circuit also upheld the jury's verdict and directed the judge in the case, Sul Ozerden, to allow the Rigsbys to examine other State Farm claims for evidence of fraud. State Farm has denied any wrongdoing. The broader fraud investigation also has put on hold pending the appeal's outcome.

The Supreme Court calendar shows that New York attorney Kathleen M. Sullivan is set to argue the case for State Farm, while Tejinder Singh of Bethesda, Maryland, is the attorney for the Rigsbys. Both attorneys are experienced appellate practitioners.

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