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Allstate Cheated Feds According to Whistleblower

Allstate Cheated Feds According to Whistleblower

 

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Carl Barbier, the United States federal judge serving New Orleans, unsealed a three year old case related to post-Katrina insurance claims late last month. The case, John H. Denenea Jr. vs. Allstate Insurance Co., charges that the homeowner’s insurance giant produced falsified filings to defraud the National Flood Insurance Program of payments owed to Katrina victims.

Denenea’s case is the third such qui tam allegation against homeowner’s insurance companies’ misrepresentation of flood damage claims. In 2006, two distinct cases arose, followed by Denenea’s in 2007. In the first of the former cases two insurance claim adjustors, the Rigsby Sisters, filed primarily against State Farm. Their case indicated that State Farm altered engineering reports that would require, by NFIP standards, the federal government to pay out substantially more for damages than the insurance company.

The other ’06 case came from Branch Consultants, insurance adjustors as well, who charged a handful of insurance companies with supplying falsely adjusted claims to the NFIP program. Again, the claims were fudged specifically to bleed more money from the federal government than it actually owed.

Denenea’s case charges only All State, which overlaps with the Branch Consultants case since All State was reinstated to the list of defendants earlier this year. According to Denenea, All State bulked up the replacement costs of items on damages attached to flood insurance claims and minimized the replacement costs of items on standard homeowner’s insurance claims. Consequently, the total bill overcharged NFIP with a wrongfully designated portion of the total damages claims.

Judge Barbier said the US government will not intervene in Denenea’s case. With Denenea at the helm of further prosecution, he stands recoup for his work up to 30% of the government’s share in any final settlement. Several uncertainties remain, however, in the future of his case. Among them, whether or not his case can be consolidated to some extent with the Branch Consultants’ since All State overlaps on both cases’ list of defendants.

Sources:

Gibb, Gordon. “All State Subject of Qui Tam Whistleblower Lawsuit.” Lawyers and Settlements. 7 Oct. 2010. http://www.lawyersandsettlements.com/articles/15135/qui-tam-whistleblower-lawsuit-government-18.html

Mobray, Rebecca. “Whistleblower suit filed against Allstate unsealed in federal court.” Nola.com. 28 Sep. 2010. http://www.nola.com/business/index.ssf/2010/09/whistleblower_suit_filed_again.html

 
 
 

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