Hurricane Katrina did enormous damage — to homes, families, and lives; to commerce; and to political capital. Probably worse, plenty of folks compounded the immediate injury by spreading or prolonging it.
An instance of such compounding occurred, according to a qui tam case against several insurance companies, when the insurers collaborated to file fraudulent proofs of loss with the federal government. The emergency conditions that existed in the aftermath of Katrina "created a perverse incentive for WYO insurers [that provided both wind and flood coverage] to understate losses due to wind (which an insurer would be required to pay under the insured's homeowner's policy) and overstate losses due to flood, thereby shifting the loss from the WYO insurers to the federal government." United States ex. rel. Branch Consultants v. Allstate Ins. Co., No. 07-31191, slip op. at 3 (5th Cir. Feb. 18, 2009).
Whistleblowers filed a qui tam case against more than a dozen insurers but suffered dismissal because another whistleblowing contingent filed a similar case first. The Fifth Circuit reversed. It held that the first-on-file case barred the later one only as to the same defendants and didn't eclipse analogous allegations against different defendants.
Blawgletter's partner Jonathan Bridges has a role in the Branch Consultants case and compliments the Fifth Circuit for its brilliant opinion.
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Bonus for looking down here: Click on this link to find out what qui tam stands for.