Allstate Accuses Homeowners of Fraud to Avoid Paying Katrina Claim

In the wake of Katrina’s devastation, insurance companies have been trying every trick in their thick tome of lies, dodges, denials, and legal skulduggery to avoid paying out what they owe Gulf Coast homeowners, but Allstate seems to have hit a new low even for an insurance industry which was pretty well down the bottom of the list to begin with. They’ve tried – with some unconscionable success – to claim that wind damage which they have to pay off on was actually water damage which they don’t. That’s bad enough, but now Allstate is accusing some homeowners of fraud.

For the second time in as many federal insurance trials in Louisiana, Allstate Insurance Co. has alleged that the homeowners bringing suit have committed fraud, and has asked for the case to be dismissed.

In the Slidell case Weiss v. Allstate, which begins Monday at U.S. District Court in New Orleans, Allstate says that a $40,000 boathouse that is part of the claim by Merryl and Robert Weiss is not really located on the property at issue, but on a neighboring lot also owned by the Weisses.

“Allstate has just discovered that Plaintiffs have misrepresented their claim that is the subject of this litigation by demanding payment for a boathouse that is not and was never located on the property at issue,” according to the memo by Allstate lawyer Judy Barrasso, filed this week.

The house that is the subject of litigation is at 13 Treasure Isle. Allstate says the boathouse is at 14 Treasure Isle.

Attorneys for the Weisses have not responded in court filings because they say that at a status conference this week Judge Sarah Vance refused to consider Allstate’s motion. They say evidence will show next week that no fraud has been committed.

“The Weisses were offended and embarrassed that their insurer of over 12 years, Allstate, would authorize and condone the recklessly untrue statements made by its Attorney,” John Denenea Jr., a lawyer for the Weisses, said in a written statement. “The Weisses look forward to exposing Allstate’s blatant misrepresentations at the trial on Monday.”

This is, on its face, the shoddiest tactic I’ve ever heard of, and I know of some beauts. Trying to get out from under their obligations by accusing the victims of a disaster of a criminal act on the basis of what would be a minor technicality even if it were true – which it apparently isn’t – is nothing short of outrageous.

As reporter Rebecca Mowbray notes, the consequences would be more serious for the Weisses than a lack of payment for the loss of their boathouse. The charge opens them to losing all their Katrina coverage, including what they’ve already been paid.

If proven, insurance fraud would not only short-circuit the case, but it could endanger any payments the Weisses have already received on their Katrina claim. “A misrepresentation of any material fact or circumstance bars coverage for ‘any loss or occurrence,’ which includes all of the Plaintiffs’ requests for payment arising from the occurrence at issue here — Hurricane Katrina,” the Allstate motion reads.

Allstate is trying to scare off plaintiffs, and the first time they used this tactic, it unfortunately worked.

In February, during the first insurance trial in federal court, the Marrero case Tomlinson v. Allstate was withdrawn on the eve of going to the jury after Allstate charged that the plaintiffs had committed fraud by misrepresenting a rental agreement to live in a rental property that they owned while their home was being fixed. Barrasso also represented Allstate in the Tomlinson case.

What the insurance industry is refusing to consider in its mad rush to protect its profits is that if they win a significant number of these cases, they’ll endanger the whole concept of insurance. I mean, why would anybody spend the outrageous amounts of money insurance companies demand in premiums if they’re going to bring criminal charges against you when you try to collect on a legitimate claim? Would you buy insurance if you knew they weren’t going to pay and might try to send you to jail if you tried to make them pay what they owed you? I wouldn’t.

It’s only their credibility that keeps them in business. Destroy our belief that they will pay what they owe and we’ll stop buying insurance. How do they propose to stay in business if that happens?

It may be time for Dennis Haysbert to reconsider his role as their spokesman.

One Response

  1. […] insurance companies moving heaven and earth to make sure they don’t have to pay off. Allstate is using intimidation and State Farm is cooking the engineering reports. […]

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