Federal Grand Jury in Miss. Seeks State Farm Transcript

A federal grand jury in Jackson, Miss., has ordered a transcript from an Oklahoma case in which State Farm Insurance Co. was hit with a $13 million judgment involving a lawsuit by policyholders from a 1999 tornado.

Records filed in U.S. District Court in Jackson show the grand jury issued subpoenas to attorney Jeff Marr, who represents 71 State Farm policyholders in Oklahoma, to produce a transcript of the trial, sworn testimony taken outside court from 26 individuals, the policyholders’ claims files and other records.

The grand jury wants the records delivered by Oct. 11 to the federal courthouse in Jackson, The Sun Herald newspaper reported Saturday.

Court documents show among those who testified in the Oklahoma case were State Farm’s top officers: chairman and CEO Edward B. Rust Jr., president and vice chairman Vincent J. Trosino and claims vice president Susan Q. Hood.

The grand jury also has subpoenaed testimony given by engineers from Dallas, Texas-based Haag Engineering Inc. and engineering reports from Haag.

State Farm officials have declined comment.

A federal jury in Oklahoma City found in May that State Farm “intentionally and with malice breached its duty to deal fairly and act in good faith” with policyholders who sued over damages from the 1999 tornado.

The jury found State Farm hired Haag Engineering knowing the company was predisposed to produce damage assessments that would allow the insurer to minimize or deny policyholder claims, according to court records.

The grand jury in Jackson is looking into how the insurance industry handled post-Hurricane Katrina claims in Mississippi.

Shortly after Hurricane Katrina, Haag engineer Timothy Marshall completed a damage assessment of the Mississippi coastline that concluded, unlike later reports, that Katrina’s surge preceded the wind. His report also listed peak wind gusts of 115 mph in Bay St. Louis, found the hurricane to be below Category 3 strength and said there were no tornadoes.

State Farm adjusters have said management viewed Marshall’s report as “The Bible.” State Farm and Nationwide adjusters attended training seminars conducted by Haag, according to court records in Mississippi.

Haag engineers also assessed damaged property for insurance companies after Katrina.