State Farm Fire and Casualty Co., a subsidiary of State Farm Insurance, has agreed to pay the federal government $100 million in restitution over its alleged mishandling of flood insurance claims after Hurricane Katrina.
The settlement marks the conclusion of legal proceedings that began more than 16 years ago when two whistleblowers filed a lawsuit against the Illinois based insurance company.
State Farm also agreed to dismiss counterclaims it filed against the whistleblowers. The company had alleged that the whistleblowers breached their employment agreements and violated other laws by taking company documents while working as independent adjusters.
Cori and Kerri Rigsby, sisters and former adjusters based in south Mississippi, sued the company for fraud after they said they witnessed the company shifting state claims to federal flood insurance that should have been paid by private wind insurance.
The Rigsbys won their case in 2013 in Harrison County. The sisters said State Farm defrauded the National Flood Insurance Program (NFIP) by charging it for flood damage to a policyholder’s home when the destruction was caused by wind.