Citizens to discuss hurricane judgment
Louisiana Citizens Property Insurance Corp. plans to hold a special board meeting Friday to discuss settling a $100 million-plus judgment the insurer incurred for taking too long to begin handling claims for hurricanes Katrina and Rita, Insurance Commissioner Jim Donelon said Tuesday.
Plaintiff attorneys have offered to settle the case, Donelon said, but he could not discuss the details of that proposal.
Plaintiff attorney Fred Herman also said he could not comment on the proposed settlement.
Herman said Citizens and plaintiff attorneys will return Wednesday to 24th Judicial District Court in Gretna to again argue whether aggrieved Citizens policyholders should be allowed to seize Citizens’ cash to satisfy the judgment.
In 2009, 24th Judicial District Court Judge Henry Sullivan found that Citizens didn’t start adjusting claims from hurricanes Katrina and Rita quickly enough and ordered the insurer to pay $5,000 to each of the more than 18,000 policyholders affected.
Late last month, the court gave plaintiffs permission to seize around $104 million from Citizens’ bank account. The bank has until Feb. 15 to surrender the money, Herman said.
In its motion, Citizens argues that it shouldn’t have to pay until it exhausts every avenue available to appeal the judgment. Citizens has asked the U.S. Supreme Court to review the case. Citizens claims its constitutional rights to due process were violated because the state court didn’t give Citizens a chance to defend each of the more than 18,000 cases in court.
Rather than post the $100 million bond required for an appeal, Citizens worked out a deal to pay the plaintiffs and their attorneys $6 million.
Donelon said Sullivan ordered Citizens to post the bond even though state agencies, like Citizens, don’t have to post appeal bonds.
“It’s just further evidence of the egregiousness of this ordeal,” Donelon said.
Citizens says that the court-approved arrangement requires the plaintiffs to delay collecting the rest of the judgment until Citizens has tried every possible avenue of appeal. The plaintiffs’ effort to seize Citizens’ assets last month violated that agreement, according to Citizens.
However, plaintiff attorneys argue that their clients have fulfilled the agreement.
Citizens has already filed and lost several appeals, the plaintiff attorneys say, and the judgment is now collectible.
Citizens’ latest motion is just an effort to prolong the process, plaintiff attorney Wiley J. Beevers said in a news release.
“Throughout this ordeal, it seems their efforts have been to avoid paying the policyholders who suffered at their hands when they failed to timely begin the claims process,” Beevers said.
Beevers said if the 24th Judicial District Court or the 5th Circuit Court of Appeal turns down Citizens again, the insurer will probably abandon its effort to get the U.S. Supreme Court to review the case.
Herman said there are no federal issues. Citizens attempted to move the case to federal court, and the federal court refused to hear the case.