Judge bars Missouri lawyers from State Farm case

Monday, May 19, 2008 | 7:27 p.m. CDT; updated 12:14 a.m. CDT, Tuesday, July 22, 2008

GULFPORT, Miss. — A federal judge on Monday disqualified a group of Missouri lawyers, including a former high-ranking prosecutor, from working on a case against State Farm Insurance Cos. over its handling of policyholder claims after Hurricane Katrina.

U.S. District Judge L.T. Senter Jr. barred the lawyers from representing two sisters, Cori and Kerri Rigsby, in a lawsuit that accuses State Farm of violating the federal False Claims Act.

Senter’s order applies to lawyers from Bartimus, Frickleton, Robertson & Gorny, which has an office in Jefferson City, Mo., and to Bartle, Marcus & Graves, based in Kansas City, Mo.

Todd Graves, who joined the latter firm after serving as a U.S. Attorney in Missouri, is one of the disqualified lawyers. Graves said he couldn’t comment on the ruling because he hadn’t read it yet.

Senter faulted the lawyers for failing to act after they learned of alleged ethical misconduct by another attorney in the case, Richard “Dickie” Scruggs.

Scruggs hired the Rigsby sisters as paid consultants after they fed him reams of internal State Farm records they obtained while helping the Bloomington, Ill.-based insurer adjust claims on Mississippi’s Gulf Coast after the August 2005 hurricane.

Senter said the consulting arrangement between Scruggs and the Rigsbys was improper and unethical because the sisters were witnesses in many of the cases Scruggs filed. The judge said the Rigsbys’ other lawyers took no action after learning of the payments.

“I do not consider this to be a repudiation or disavowal of Scruggs’ arrangement with the Rigsby sisters,” Senter wrote. “Rather, continuing to act as co-counsel with Scruggs and taking no other action after learning of this arrangement constitutes a tacit approval, if not an outright ratification of the arrangement.”

State Farm spokesman Fraser Engerman said the company is pleased with Senter’s ruling, but he declined any further comment.

Anthony DeWitt, of the Jefferson City firm, said he and his colleagues are likely to appeal Senter’s ruling.

“The judge is wrong,” he said. “We’re going to exercise every option available to get this judge to recognize the error he’s made.”

The case that Scruggs and the Missouri lawyers filed against State Farm accuses the insurer of defrauding the federal government by inflating flood damage estimates after Katrina.

State Farm and other insurers say their homeowner policies cover damage from wind but not rising water. They sell separate flood insurance policies subsidized by the federal government.

Scruggs withdrew from the case after he was indicted in November 2007 on charges that he conspired to bribe a state judge. He has pleaded guilty to a conspiracy charge and is awaiting sentencing.

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