Court turns down lawsuit accusing insurance companies of overbilling federal government for Hurricane Katrina's flood damage

A federal judge threw out lawsuit that accuses insurance companies of overbilling the federal government for Hurricane Katrina's flood damage to Louisiana homes.

Photo: Court turns down lawsuit accusing insurance companies of overbilling federal government for Hurricane Katrina's flood damage

Allan Kanner, the New Orleans-based attorney who filed the suit on behalf of a group of former insurance adjusters, said U.S. District Judge Peter Beer dismissed the case on procedural grounds and didn't rule on the merits of the allegations.

Kanner's suit accuses Allstate Insurance Co., State Farm Fire and Casualty Co. and other insurers of misrepresenting claims to the National Flood Insurance Program to limit their liability for storm damage after Katrina laid waste to tens of thousands of Gulf Coast homes.

Insurers have denied inflating flood damage estimates to avoid paying more money on claims for wind damage. The companies, which say their homeowner policies cover damage from wind but not rising water, sell separate flood insurance policies that are federally subsidized.

State Farm spokesman Phil Supple confirmed that Beer dismissed the case.

Kanner would not say if he planned to appeal Beer's ruling, which the judge issued verbally at the conclusion of a hearing Wednesday.

Kanner said the "upshot" of Beer's ruling is that "if anything is going to get done, it has to get done by the Department of Justice."

A similar case, filed by prominent attorney Richard "Dickie" Scruggs, also is pending in federal court in Mississippi. Scruggs said that case remains on hold while federal officials consider intervening.

Kanner filed the Louisiana suit on behalf of Branch Consultants, which is identified in court papers as a Georgia-based insurance and construction consulting firm. The former adjusters who are plaintiffs in the case aren't named in the suit.

The list of defendants also includes Liberty Mutual Fire Insurance Co., Fidelity National Insurance Co., American National Property & Casualty Co., Scottsdale Insurance Co. and St. Paul Travelers Cos.