Deadline Looms for Filing Suits Against Insurers Over Katrina

Courts in Louisiana already inundated by a wave of litigation against insurance companies over damage from Hurricane Katrina are bracing for a last-minute barrage of lawsuit filings as a deadline nears.

Thousands of Louisiana home and business owners are expected to sue their insurers, both in federal and state courts, in the days leading up to Katrina’s second anniversary on Wednesday.

Many of the cases involve policyholders accusing companies of shortchanging them for wind damage from the Aug. 29, 2005, hurricane. Insurers say their policies cover damage from wind but not a hurricane’s rising water.

The deadline for filing suit was originally last August, but state lawmakers extended it. Many home and business owners weren’t taking any chances last year and thousands filed suit in the days leading up to Katrina’s first anniversary.

State and court officials expect long lines to form next week on the eve of the storm’s second anniversary.

“Common sense suggests there might be,” said Loretta Whyte, head clerk for U.S. District Court in New Orleans.

The longest lines haven’t formed yet. New Orleans attorney Wiley Lastrapes, Jr., didn’t have to wait long on Aug. 23 at Orleans Parish Civil District Court to file suits against insurers on behalf of nine clients.

“I didn’t want to be here at a time when it’s going to be chaos,” Lastrapes said.

Some lawyers are warning clients that Tuesday or Wednesday is the deadline for filing suit, but insurance department officials say policyholders may have at least an extra day.

Lawmakers apparently passed two laws that gave conflicting dates for the extended deadline, which the federal courts also follow. One version set Aug. 30 as the deadline for filing Katrina suits, while another set it for Sept. 1. Meanwhile, the deadline for filing lawsuits over Hurricane Rita damage is either Sept. 25 or Oct. 1.

Rep. Timothy Burns, a Mandeville Republican who co-sponsored one of the laws, said policyholders should err on the side of caution and file by Tuesday.

“I would urge everybody not to wait,” Burns said. “Don’t take the chance.”

Janet Lynch, whose mother’s home in eastern New Orleans was ruined by Katrina, has spent nearly two years haggling with her insurance company over how much damage could be attributed to wind. With the deadline looming, Lynch’s attorneys filed a lawsuit on her behalf last week.

“The real loser in this is my mother, who is 86 years old,” Lynch said. “She sits around and she counts the things that she lost. That’s all she does.”

In Mississippi, where Katrina damaged or destroyed tens of thousands of homes, property owners have another year to file suit against insurers. More than 1,200 cases have been filed in federal court in Gulfport, Miss., and only 449 of those cases remained open as of Tuesday.

Among those preparing last-minute lawsuits in Louisiana is Attorney General Charles Foti. His office is expected to sue insurance companies for allegedly shortchanging homeowners who applied for housing grants through the state’s cash-strapped Road Home program.

The Louisiana Recovery Authority initially estimated insurance policies would cover 76 percent of damage incurred by Road Home applicants. But the LRA now estimates insurers have covered 69 percent of damage. The difference translates into an increased cost of $5,700 per grant, according to the LRA. The federally funded, state administered Road Home expects a shortfall of $4 billion after all applications are processed.

More than 6,500 Katrina-related cases, mostly involving insurance disputes, have been filed in federal court in New Orleans. More than 2,800 already have been settled or dismissed, Whyte said.

“Nobody wants to go to court,” said lawyer Joe Bruno, who represents thousands of policyholders. “We want to resolve these claims with the insurance companies, and we have been resolving them every day.”

Phil Supple, spokesman for State Farm Insurance Cos., said Louisiana policyholders filed more than 200,000 claims with the company after Katrina. Less than 1 percent of those have resulted in lawsuits, he added.

“State Farm continues to work toward settlements with policyholders in hopes of avoiding costly and lengthy litigation, which benefits neither our customers nor our organization,” Supple said.

Only a handful of cases have been tried by a judge or jury. The first verdict in Louisiana for a federal Katrina insurance case came in April, when a jury ordered Allstate Insurance Co. to pay $2.8 million to a Slidell man whose home was destroyed by Katrina.

Allan Kanner, a lawyer and court-appointed liaison for plaintiffs in many of the federal insurance suits, said he is surprised and disappointed that more cases haven’t been tried.

“I think that’s on the slow side,” he said. “I guess I would like to see cases moving faster and more efficiently for all the parties.”

Chief Judge Helen Berrigan said she is satisfied with the pace of the litigation so far, with many cases settling before a trial. Judges from other districts can be brought into New Orleans to hear cases if the court is overwhelmed by a last-minute glut of lawsuits, Berrigan noted.

“So far, that has not been necessary,” she said.

State courts also are fielding thousands of Katrina insurance cases. In New Orleans, 1,963 cases were filed in Civil District Court by Katrina’s first anniversary. At least 1,063 have been filed since then, the court’s chief clerk said.

Meanwhile, Aug. 29 is the deadline for filing claims against the federal government and Army Corps of Engineers over damage from failure of levees and floodwalls in Katrina’s aftermath.

Corps spokesman Vic Harris said about 326,000 claims already have been filed for billions of dollars. In March, thousands of residents visited the Corps’ New Orleans headquarters to beat an earlier deadline for filing such claims.

“It’s looking like most of the people who wanted to file already have,” Harris said Wednesday.