With the plaintiff verdict last week in Rigsby v. State Farm, the focus now turns to how big of a can of worms the verdict opens. 
The theory of the case was that State Farm fraudulently categorized wind damage as water damage. This meant State Farm wasn’t responsible for paying for the damage–the federal flood insurance program was.
Such a transfer of liability relieved State Farm of the burden of having to pay for the losses. Instead, the National Flood Insurance Program was on the hook for damages.
Last week’s trial involved a threshold case. There has been no discovery of the other 6,000 flood claims adjusted by State Farm.
So does the verdict in this case open the door to discovery in the other 6,000 cases? The answer is arguably yes. So almost 8 years after Katrina made landfall, there could be a new wave of Katrina litigation on the horizon. Granted it would all be within the Rigsby’s qui tam case, but still.
State Farm probably has a point that the vast majority of the damage to the homes involved was caused by water. What percentage of the 6,000 flood claims involved a genuine issue of wind vs. water? I don’t know the answer, but my guess is that it is only a fraction. There were a lot of homes flooded by storm surge up rivers, bayous, lakes, etc.
Anyone who visited the Coast shortly after the storm could see that in general, the slabs stopped with the storm surge line. On the other hand, however, there were reportedly eye witness accounts of wind destroying some structures before the surge arrived.
The general consensus of public opinion on the Coast seems to be that State Farm was not intellectually honest in adjusting claims.
State Farm may have been mostly right. But it’s in big trouble if it got greedy and categorized everything as flood as a matter of policy.
It will be interesting to see where this goes from here.