Cori and Kerri Rigby have won their appeal and have been granted the ability to expand their claims of fraud regarding the adjustment of NFIP claims from Hurricane Katrina.1 The Fifth Circuit Court of Appeals found:

After Katrina, Gulf Coast residents whose homes were damaged or destroyed looked to their insurance companies for compensation. Many of these homeowners were covered by at least two policies, often provided by the same insurance company: a flood policy excluding wind damage, and a wind policy excluding flood damage. A private insurance company would frequently administer both policies, but wind policy claims were paid out of the company’s own pocket while flood policy claims were paid with government funds. This arrangement generates the conflict of interest that drives this case: the private insurer has an incentive to classify hurricane damage as flood-related to limit its economic exposure.


The Rigsbys seek further discovery into the same alleged scheme they argue produced the McIntosh claim. The district court denied this request, explaining that "[b]eyond the McIntosh claim, Relators’ conclusory allegations in the Amended Complaint as to the existence of other specific FCA violations do not satisfy the particularity requirements of [Federal Rule of Civil Procedure] 9(b), and expanded discovery would lead to an inappropriate fishing expedition for new claims."


We cannot blind ourselves to the verdict in this case and the associated record developed at trial, at least in this distinctive setting. This case presents something exceptional that most (if not all) plaintiffs in FCA cases are unable to show when seeking discovery: a jury’s finding of a false claim and a false record. Coupled with the allegations in the final pretrial order, this "amounts to more than probable, nigh likely, circumstantial evidence" that additional false claims might have been submitted…. At a minimum, the trial record supports a high probability that State Farm submitted more than one false claim.


"In pursuing traditional or test case trials, the judge may conduct a unitary trial, bifurcate liability and damages, or create other helpful trial structures." Manual for Complex Litigation § 22.93 (4th ed. 2015). But a "court must identify and minimize any risk of unfairness in requiring litigants to present claims or defenses in a piecemeal fashion." Id. The district court appropriately employed its discretion to isolate the McIntosh claim for trial. But in denying the Rigsbys any additional discovery after a verdict in their favor, the district court abused its discretion in a manner that affected their substantial rights. . . . The Rigsbys’ allegations in the final pretrial order and the verdict on the McIntosh claim provide sufficient justification to permit additional limited discovery.

The decision certainly is not good publicity for State Farm because the opinion recites findings which repeat wrongful practices at a managerial level. The failure to resolve this last piece of Katrina litigation seems to be a disaster which could have been avoided through settlement.

In Rigsby Sisters Beat State Farm Again and HAAG Qui Tam Settlement Disclosed, I predicted that State Farm would appeal the decision. Since State Farm always seemed to win at the Fifth Circuit Court of Appeals regarding Hurricane Katrina cases, I bet the claims managers in Bloomington were a little surprised by this decision. There has to be second guessing because a whole new can of worms has been opened with the Court allowing discovery into other claims. 

1 Rigsby, et al v. State Farm Fire & Cas. Co., No. 14-60160 (5th Cir. July 13, 2015).