Mississippi files suit against State Farm-Action over Katrina claims agreement

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http://www.chicagotribune.com/business/chi-tue_insure_0612jun12,0,1674165.story?coll=chi-bizfront-hed

Mississippi files suit against State Farm
Action over Katrina claims agreement

Associated Press
Published June 12, 2007

JACKSON, Miss. -- Mississippi Atty. Gen. Jim Hood sued State Farm Fire and Casualty Co. on Monday, claiming the company failed to honor an agreement for a mass settlement of claims over Hurricane Katrina damage.

In January, Hood agreed to drop State Farm from a lawsuit his office filed against several insurance companies for refusing to cover damage to homes from Katrina's storm surge.

Hood did that after State Farm settled with lawyers for homeowners on a $50 million payout to about 35,000 southern Mississippi policyholders who hadn't sued the company but could have their claims reopened.

But the pact fell apart after a federal judge refused to endorse it. Hood has said he didn't negotiate the terms of that settlement and shared the judge's concerns about the deal.

The state is seeking compensatory and punitive damages against the Bloomington, Ill.-based insurer for an alleged breach of contract. Hood did not rule out reopening a criminal investigation that he ended in January as part of the agreement. Hood's office was investigating allegations that the company had fraudulently denied policyholder claims.

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