Hood says he is trying to keep the peace

John O'Brien Mar. 7, 2007, 4:11pm


Editor's note: This is the first of a three-part series of stories based on Legal NewsLine's conversation with Mississippi Attorney General Jim Hood.

WASHINGTON, D.C. - Mississippi Attorney General Jim Hood, though he has created quite a fuss lately, says it was all in the name of keeping things quiet.

"I'm trying to keep the legal environment calm," he told Legal NewsLine at the National Association of Attorneys General spring meeting. "We're trying to settle this litigation instead of trying to increase it."

Instead, things have erupted in Mississippi, where Hood's case against five insurance companies -- State Farm has taken the lead in opposing Hood -- over an alleged lack of coverage after Hurricane Katrina has received nationwide coverage.

Critics of Hood say his case was designed to make the insurance companies pay for something they did not owe -- flood damage, covered by a federal flood program -- by using the power of his office to force a settlement.

Backers of Hood say he is merely attacking a corrupt entity (the insurance industry) whose members conspired to deny any claim that had any water damage.

By filing his lawsuit only weeks after the hurricane, he gained the reputation as a "sue-first, ask-questions-later" attorney general. It didn't help that other affected states -- such as Louisiana and Alabama -- did not file state-backed lawsuits.

Hood said he intended to streamline the litigation process in his state with the suit and pointed to the 1994 Northridge earthquake in California over which there is still pending litigation. The Democrat did not want that in his state, though he says State Farm's public relations department has been vilifying him over it. He also described the Wall Street Journal as State Farm's "mouthpiece."

"It's a tough battle to get your message out," Hood said. "We're trying to get a settlement everyone can live with.

"Everyone's not going to be happy with it, but that's the nature of a settlement. You take some, you lose some."

And, for the time being, Hood's state has lost part of State Farm's business. The company said Mississippi's political and legal climates have become too unpredictable and recently announced that it will stop writing new homeowner and commercial policies.

Hood said he believes State Farm's decision to withdraw partially from the market was intended to intimidate U.S. District Judge L.T. Senter, who is handling Hood's case.

Recently, Hood and State Farm reached a settlement that would provide an estimated $500 million to policyholders who claimed damages incurred during Katrina were covered by State Farm. Part of the settlement was rejected by Senter, who worried that State Farm had too much control of the arbitration process in which policyholders and State Farm would participate if the policyholder rejected State Farm's initial offering, an automatic 50 percent of the structure's value according to the policy.

The proposed settlement separated policyholders into two groups -- those who have already filed suit against State Farm, and those who haven't but will.

Senter's rejection of the settlement did not stop 640 of those who had already attached their names to the suit from being given their money by State Farm. Checks have already been sent to several.

But the second group, estimated at 35,000 policyholders who will make claims, was more problematic to Senter. He did not feel it could be certified as a class because policyholders' homes were affected in different ways by the hurricane.

Since then, an agreement hasn't been reached and Hood's attempt to keep things quiet has pretty much disappeared.

Once State Farm decided to scale back business in the state, Hood said he felt betrayed because the company had promised to stay in the state when the proposed settlement was reached.

Revenge, State Farm argues, has nothing to do with it. The company says it is too hard to make money in the state now.

At a press conference, he compared the company to a cult and called their practices "decadent." He has repeatedly referred to the company as "robber barons," defined as "a ruthlessly powerful U.S. capitalist or industrialist of the late 19th century considered to have become wealthy by exploiting natural resources, corrupting legislators or other unethical means."

When asked why he considers State Farm a "robber baron" yet is still introducing legislation designed to keep the company in the state, Hood mentioned the jobs that would be lost and that he views the practices in a historical perspective.

"History repeats itself," he said. "The actions by this company need (publicizing)."

So, for now, Mississippi will continue with its noisy problem. Hood and Rep. Gene Taylor recently testified before a House subcommittee against the insurance industry's post-Katrina practices.

"They've abused it. Our objective is to settle this litigation and have a template set (for the other companies to use for a settlement," Hood said. "We'll have peace when we do that."

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Mississippi Attorney General
550 High St Suite 1200
Jackson, MS 39201

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