Representative Gene Taylor's Blog
Blog Postings for Representative Gene Taylor of Mississippi's 4th Congressional District

• U.S. Attorney subpoena's engineering firm's computer hard drive
  U.S. Attorney seeks computer hard drive in ongoing Katrina probe By Michael Kunzelman, Associated Press Writer NEW ORLEANS -- An engineering firm that helped adjust insurance claims on the Gulf Coast after Hurricane Katrina is seeking to block an employee's computer hard drive from being turned over to a federal grand jury in Mississippi. Forensic Analysis & Engineering Corp. asked a federal judge on Wednesday to bar Zach Scruggs - an attorney for hundreds of homeowners suing insurers after Katrina - from complying with a subpoena for the hard drive obtained by U.S. Attorney Dunn Lampton. Lampton, whose jurisdiction includes Mississippi's Gulf Coast, has convened a grand jury that is believed to be investigating the insurance industry's handling of claims after Hurricane Katrina. Some state and federal officials and homeowners' attorneys have accused insurers of overbilling the federal government billions of dollars for Katrina's flood damage. The companies say their policies cover damage from wind but not rising water. They sell separate flood insurance policies that are subsidized by the federal government. Forensic says it doesn't want to interfere with Lampton's investigation, but argues that its employee's hard drive may contain privileged information that should remain confidential. Scruggs' firm, for one of its cases against State Farm Fire & Casualty Co., obtained the hard drive from Forensic employee Nellie Williams in July. Forensic, which helped State Farm adjust claims after Katrina, says Scruggs' firm wasn't entitled to obtain the hard drive. On Oct. 9, U.S. Magistrate Judge Robert Walker in Gulfport, Miss., agreed to temporarily block Scruggs from disseminating any information obtained from the hard drive. Two days later, however, Lampton's office served Scruggs with the subpoena for the hard drive. Scruggs subsequently asked for Walker's permission to comply with the subpoena. Walker hasn't ruled on that request. Forensic's lawyers say the timing of Lampton's subpoena was "odd, but coincidence just cannot be the explanation." Instead, the firm's attorneys claim Scruggs tipped off Lampton's office to the existence of the hard drive "in direct contravention" to Walker's order. "Knowledge of the exact location of the hard drive and its potential contents are most likely not a lucky guess," Forensic attorney Kathryn Platt wrote. Richard "Dickie" Scruggs, Zach's father and law partner, said they told federal investigators about the hard drive before Walker issued his Oct. 9 order. "We weren't trying to circumvent Judge Walker's order," he added. "We have complied with the letter and the spirit of his order." A spokeswoman for Lampton's office declined to comment on the subpoena or on the grand jury's proceedings. In May, Allstate Corp. and Nationwide Mutual Insurance Co. disclosed that they have been subpoenaed by a federal grand jury in Mississippi and would be cooperating with its probe of Katrina insurance claims. Lawyers for State Farm also have confirmed that at least two of its employees were targets of a federal grand jury's probe of its Katrina claims handling in Mississippi. But it wasn't immediately clear whether the Allstate and Nationwide subpoenas were linked to the same probe. "It's hard to tell where they're aiming," Scruggs said of the grand jury proceedings. "They haven't shared it with me." Scruggs also has cooperated with Mississippi Attorney General Jim Hood, whose office has investigated allegations that insurers fraudulently denied claims after Katrina. Scruggs' firm provided Hood's office with copies of internal State Farm documents obtained by two sisters who helped the company adjust claims. In June, however, U.S. District Judge William Acker in Alabama ruled that Scruggs "willfully" violated a court order to return the documents. Acker named two special prosecutors to handle the case after U.S. Attorney Alice Martin declined to prosecute Scruggs for criminal contempt charges. Forensic said Scruggs' handling of the hard drive is "not completely dissimilar" from the contempt proceedings in Alabama. Scruggs, for his part, rejected that comparison.

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• Insurance market failure on the Texas Coast
  Homeowners turn to state for wind insurance By Hunter Sauls, The Facts (Brazoria County, TX) October 24, 2007  After the devastation of hurricanes Katrina and Rita, selling windstorm insurance along the Gulf Coast no longer is a risk many insurance companies are willing to take.
  
  As more people turn to the quasi-public Texas Windstorm Insurance Association, many don’t know their new policies come with some requirements they haven’t seen before.
  
  Within the last 18 months, more than 2,500 Texans have purchased new windstorm insurance policies with the Texas Windstorm Insurance Association each week, said Jim Oliver, general manager of the association. The norm is about 400 or 500 a week, he said.
  
  About 207,000 policies had been written by the end of September, but at the end of the year it should be 250,000. Oliver said the insurance association will carry more than 50 percent of windstorm policies along the coast, even higher in some counties.   *********   With more than 250,000 policies along the Texas coast by the end of the year, Texas Windstorm is exposed to more than $60 billion in potential payable damages, Oliver said. It never would get that high because no single storm or even storm season would destroy the entire covered area, he said. But several high points, such as Galveston and Corpus Christi, could cost more than $2 billion each if a major storm hit.
  
  “If we had a storm in any of these areas, the possibility the damages would exceed our current resources, requiring the state to get involved and issue tax credits is pretty significant,” he said.
  
  Looking at the damages and the effect on the state’s funds is irrelevant because the damages from past storms have largely been absorbed by private companies, he said. They aren’t there anymore.
  
  “In 2005 when Rita hit Beaumont, we had only 3,700 policies there,” Oliver said. “Now we have over 21,000 policies in Jefferson County alone.
  
  “To look at past exposure is really meaningless,” Oliver said. “You have to look at current exposure — otherwise you’ll be woefully short.”  

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• Senate insurance reform news - Oct. 23, 2007
  Schumer seeks expanded flood insurance program By Keith Herbert, Newsday More New Yorkers are turning to unregulated insurers for property coverage, further proof that federal regulation is needed to stabilize the homeowners' insurance market on Long Island, Sen. Charles Schumer said Monday.
  During a news conference at the home of a Huntington homeowner, Schumer (D-N.Y.) cited the trend to support his call for legislation that would expand a federal flood insurance program to include hurri