Federal Judge Disapproves $50 Million State Farm Settlement with Policyholders for Hurricane Katrina Claims
A federal judge has put a $50 million Hurricane Katrina class action settlement for as many as 35,000 State Farm policy holders on hold due to the need for more information from the parties involved, especially the insurance company. U.S. District Judge L.T. Senter of the U.S. District Court of Southern Mississippi decline to sign off on the widely-reported settlement and wrote that the settlement did not establish a “fair, just, balanced or reasonable” procedure for handling such claims. The rejected agreement promised that State Farm would reconsider Hurricane Katrina insurance claims and denials for some 35,000 policyholders who did not sue the company.
Specifically, Senter questioned everything from plaintiff cases and blanket security given to State Farm and its agents to the moneys involved and the scope of the insurance settlement. Senter especially wondered if the blanket immunity and proposed claims process would give State Farm too much power in these types of cases. He also said the plan was not a global settlement because it didn’t do enough to include claims of those people currently involved in litigation who may wish to opt into this settlement, and added that the $50 million cap should be broadened. With that said, the leading plaintiff attorneys in the settlement said that they still plan to make initial payments to the hundreds of families they represent in the settlement apart from the proposed class.
It is unknown whether this federal decision will affect a separate $80 million settlement between State Farm and some 640 cases already in litigation.
