Exclusive: Whistleblowers Say State Farm Cheated Katrina Victims
August 25, 2006 11:53 AM

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Brian Ross and Joseph Rhee Report:

State Farm Insurance supervisors systematically demanded that Hurricane Katrina damage reports be buried or replaced or changed so that the company would not have to pay policyholders' claims in Mississippi, two State Farm insiders tell ABC News.

Kerri and Cori Rigsby, independent adjusters who had worked for State Farm exclusively for eight years, say they have turned over thousands of internal company documents and their own detailed statement to the FBI and Mississippi state investigators.

In an exclusive interview with ABC news, to be broadcast on 20/20 -- Watch 20/20 tonight at 10 --and World News, the Rigsby sisters say they saw "widespread" fraud at the State Farm offices in Biloxi and Gulfport, Miss.

"Katrina was devastating, but so was State Farm," says Cori Rigsby.

At one point, they say State Farm brought in a special shredding truck they believe was used to destroy key documents. State Farm says shredding is standard to protect policyholders' privacy.

The sisters say they saw supervisors go to great lengths to pressure outside engineers to prepare reports concluding that damage was caused by water, not covered under State Farm policies, rather than by wind.

They say reports that concluded that damage was caused by wind, for which State Farm would have to pay, were hidden in a special file and new reports were ordered.

Cori Rigsby says she recalls a senior coordinator ordering that an engineering company be told to alter the findings in its report so that State Farm would not have to pay. "Tell them if they don't change their report, we're not paying their invoice," she remembers the supervisor saying.

A lawyer for State Farm, Wayne Drinkwater, told ABC News he was unfamiliar with the Rigsby sisters but denied State Farm cheated policyholders or pressured outside engineers to reach particular conclusions in their damage reports.

"We, of course, have not been cheating," Drinkwater said.

The allegations, if proven, would support the suspicions of thousands of homeowners along the Mississippi Gulf Coast who have been unable to collect enough insurance money to rebuild their homes.

Many have filed lawsuits against State Farm and other insurance companies alleging the companies of wrongly denying or low-balling their claims. The Rigsby sisters' allegations are now a key part of suits filed against State Farm by well-known Mississippi lawyer Dickie Scruggs, famous for taking on the tobacco companies.

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August 25, 2006 in Hurricane Katrina | Permalink | User Comments (314)

User Comments

The insurance companies are all crooks. Just ask any Florida resident.
Posted by: George f | Aug 25, 2006 12:09:46 PM

Sing it with me:
"And like a good neighbor, State Farm is there!"
Posted by: Won't you be my Neighbor? | Aug 25, 2006 12:09:49 PM

Insurance companies are a rip off. Pay pay pay and get nothing. State Farm should hold its managers and supervisors accountable if this really did go down like the whistleblowers say. Those managers are no better than crack heads begging for your change at the gas station. Just looking for a hand out and reason why its not their fault.
Posted by: Robert | Aug 25, 2006 12:13:29 PM

You can't blame anyone else for anything except President George W. Bush! How dare you, the Democrats must take over the House & Senate and win the White House.
Remember, George W. Bush is to blame for every single thing wrong with America. Right?
Posted by: Patsy | Aug 25, 2006 12:13:49 PM

Well like a good neigbor state farm is there???? I think I'd rather have a crack house as a neighbor rather than State Farm
Posted by: gary | Aug 25, 2006 12:14:05 PM

This doesn't surprise me at all. I work at an insurance company and if it is not the company its their agents comitting fraud against the company for their own gain.
Posted by: JoJo | Aug 25, 2006 12:15:57 PM

After suffering through State Farm's brand of paying off claims after a natural disaster I believe every single word these women are saying. We in Cheyenne, Wyoming were hit by an extremely damaging and freaky flood on August 1, 1985. My husband and I were paid about $1200.00 for some window damage done by hail but we ultimately wound up losing our home and having to claim bankruptcy due to the damage done to our house that State Farm claimed they did not cover. These insurance companies want higher and higher fees to "cover" (and I use that term loosely) and they want their payments "right now" too. However, when it comes to ponying up to the bar and paying their part when something happens, they squirrel out of it like the huge, money-hungry, power-driven mega-monsters that they are. The insurance situation in this country is a disgrace and desperately needs to be over-hauled as well as investigated thoroughly!

Complaints against State Farm

Gulf Coast Homeowners File Class Action against State Farm

Perjury and State Farm

Katrina aid drowns in flood of bueaucracy, paperwork


From the desk of Betsy Combier: I suggest that you read "Insult to Injury: Insurance, Fraud, and the big Business of Bad Faith" by Ray Bourhis