The former head of the Mississippi Development Authority is calling for state Attorney General Jim Hood to withdraw a lawsuit against insurance companies regarding claims on the Gulf Coast.
Leland Speed says that Hood's plan to renew his lawsuit against a national insurance company over homeowners' claims following Hurricane Katrina hurts not only the homeowners, but economic development on the Gulf Coast as well.
Speed, who left MDA at the end of last year and is currently chairman of EastGroup Properties and other development companies, claimed that Hood's determination to pursue a class-action lawsuit will only slow the process of recovery.
"We don't enjoy the reputation of having the finest business climate in America, and this isn't going to help it a damn bit," said Speed.
Hood, however, argued that he is merely trying to make State Farm live up to its earlier agreement and will not let them off the hook for their proper obligations.
"My job as Attorney General is to protect Mississippians from anyone, including corporations, who would do them harm. Thousands of our Coastal business owners were victims of insurance companies. Our suit also sought to protect them," Hood wrote in an e-mail.
According to Hood, his renewal of legal proceedings against State Farm stem from the fact that they haven't adhered to an agreement reached in January of this year. (Hood originally filed a lawsuit against State Farm and other insurers in September 2005 for failure to cover damages.)
This agreement would have required payments of at least $50 million to 35,000 Gulf Coast policyholders who hadn't sued the company whose claims could be re-opened for consideration.
Hood said that State Farm had failed to "establish an administrative procedure to reevaluate claims," "establish an orderly, fair and prompt resolution of claims," and set up arrangement approved by the U.S. District Court for the Southern District of Mississippi.
"Now they are trying to get out of their contractual obligations," said Hood.
A federal judge, L.T. Senter Jr., refused to endorse this deal, and Hood has said that further litigation, instead of more negotiations for a deal, are the next step.
Representatives for State Farm have said that they are disappointed in Hood's decision, since they have plans in place to distribute money to policyholders that would be negated by a class-action lawsuit.
Hood said that this deal was completely from an agreement reached with Mississippi Commissioner of Insurance George Dale that called for at least $50 million to be paid to 35,000 policyholders whose claims would be re-opened.
Unlike Hood's deal, however, Dale's agreement is not subject to judicial oversight.
"Judicial oversight is necessary to see that the process is fair and efficient. The Commissioner of Insurance has no leverage to impose on State Farm as a Federal Court does," said Hood.
But Speed blasted Hood, saying that his lawsuit will inhibit private mediation between individual homeowners and the insurance company.
He argued that if these negotiations set up by Dale fall apart, these policyholders will still have the ability to sue State Farm without resorting to Hood's slow-moving class-action suit.
"The system seems to be working. In my opinion, we don't need to go back and stir the pot anymore," said Speed. "Companies have reached out and are trying to compromise.
"What has been put forward does not take away any policyholder's right to go back to court."
He said that the progress made so far without resorting to legal action indicates that Hood is trying to knock down a straw man.
"What has been put forward does not take away any policyholder's right to go back to court," said Speed. "Mediation in certain circumstances can be better for both parties - it takes a lot less time."
Despite Hood's claim that his suit will help small business owners as well as homeowners, Speed countered that "in business, you stay the heck out of the courthouse, to the degree that the real world allows you to do that."
He noted that Mississippians affected by Katrina have received more monetary aid than any other disaster victims in American history.
Speed argued that the free market and private mediation now need to take the lead in bringing people and businesses back to the Gulf Coast.
"We've got to get on with the rebuilding," said Speed.
Hood said that he doesn't have immediate plans to re-visit his criminal investigation into State Farm's claims practices. This investigation was dropped as part of January's agreement.
Reader Comments
Posted: Thursday, June 07, 2007
Article comment by:
Billy Bova
Comments like these from Mr. Speed only show that he is ignorant of how our government is suppose to work! It is the job of our elected State Attorney General to protect every person and business in the state from giant corporations which make billions of dollars in annual profits from abusing us and not treating us with unethical, sometimes illegal behavior. Typical comments coming from a millionaire, elitist snob who hates regular folks who work hard everyday to make a living! Shame on you, Mr. Speed.
Posted: Thursday, June 07, 2007
Article comment by:
Rich Pyorre
This lawsuit may help uncover the lies and deceit by State Farm Executives. I have documentation of State Farm's perjury to the IRS and of their manufacturing evidence in another case.
