Scruggs Leaks Can’t Save State Farm From Katrina FCA Suit

— State Farm Fire & Casualty Co. must face a False Claims Act suit brought by two former contractors over Hurricane Katrina flood damage claims, despite allegedly improper press leaks by former plaintiffs’ attorney and bribery convict Richard Scruggs, a Mississippi federal judge ruled Friday.

U.S. District Judge Halil S. Ozerden denied the insurer’s Dec. 21 renewed motion to dismiss the complaint by Cori and Kerri Rigsby, two sisters who worked as claims managers for EA Renfroe & Co. Inc., an independent contractor for State Farm. The plaintiffs alleged that State Farm knowingly submitted a false $250,000 flood claim that was reimbursed by the federal government.

The decision affirmed a January 2011 ruling by Judge L.T. Senter Jr. that denied State Farm’s motion to dismiss the suit on the grounds that Scruggs and other attorneys for the Rigsbys had improperly spoken to news organizations about the complaint while it was under seal.