The U.S. Supreme Court on Monday denied Louisiana Citizens Property Insurance Corp.’s request that it review state court rulings in a class action lawsuit that resulted in a $105 million judgment against the insurer.
“We’re disappointed but not surprised,” Citizens Chief Executive Officer Richard Robertson said.
The Supreme Court reviews only a small percentage of the cases requested, and it didn’t help that the Affordable Care Act and Arizona’s immigration law were on this week’s docket, he said.
“Given the action by the United States Supreme Court, we believe that the final piece of the collection of the Citizens judgment awaits the ruling of the 1st Circuit Court of Appeal,” plaintiff attorney Fred Herman said.
“And we expect the bank to move quickly after that ruling to deliver the funds to 24th Judicial District Court for distribution to the policyholders,” Herman said.
In the federal case, Citizens argued that its constitutional right to due process was violated by state court decisions in the class action lawsuit. More than 18,000 policyholders joined the class action, alleging that Citizens took too long to begin adjusting claims from hurricanes Katrina and Rita.
Citizens appealed the state court decision and won at the appellate level, but in December the state Supreme Court overturned the appeals court and reinstated the $92.8 million judgment.
The award has grown to $105 million as a result of legal interest.
For now, Citizens is awaiting a decision in the state’s 1st Circuit Court of Appeal on whether the policyholders can seize that money from Citizens’ banker, Regions Bank, Robertson said.
Citizens plans to appeal a related decision from the state’s 5th Circuit Court of Appeal to the Louisiana Supreme Court, Robertson said, and if Citizens also loses in the 1st Circuit, the insurer will likely appeal to the state Supreme Court.
In its most recent filings, Citizens and its banker have argued that Citizens is a state agency, which means its assets can’t be seized unless the state-backed insurer’s board agrees or the state Legislature passes a law ordering the payment.
Meanwhile, Citizens has scheduled a special board meeting at 3:30 p.m. Thursday to discuss the impact of a new law on the company’s policies in coastal parishes.
State law requires that Citizens charge 10 percent more than private insurers. However, a bill passed during the most recent session of the state Legislature allows Citizens to forego the fee in coastal parishes.
Citizens has estimated that rolling back its rates to reflect the new law will cost the company around $15.8 million, with around $2.6 million of that for wind-and-hail-only policies.