Lawyers for some of the nation’s largest insurance companies asked a federal judge today to dismiss a lawsuit filed by a former Louisiana attorney general, calling it a “bald attempt” to force insurers to increase payouts for hurricanes Katrina and Rita. U.S. District Judge Stanwood Duval Jr. heard arguments from lawyers on both sides of the case, but didn’t immediately rule on the companies’ request for him to dismiss the class action suit filed in 2007 by former Attorney General Charles Foti. Lawyers for Allstate Insurance Co., State Farm Fire and Casualty Co. and other insurers claim the Attorney General’s Office is trying to take over the rights to more than 155,000 policyholder claims, to recover money the state paid out through the federally funded Road Home homeowner grant program after the 2005 hurricanes. But the companies say the state already had deducted insurance payments in calculating grant awards.
Insurers’ attorneys called the suit “a bald attempt by the state to squeeze more money out of the insurance companies” after they already have paid out more than $40 billion to Gulf Coast policyholders after Katrina. “In the history of federal and state disaster relief for catastrophes, there is no known precedent for what the state seeks to do in this case,” company lawyers wrote in court papers.