State Farm® Asks Court to Dismiss False Claims Act Suit and to Hold Rigsby Sisters and Their Lawyers Accountable for Conspiracy and Fraud
State Farm, in a series of motions filed today in United States of America ex al Cori and Kerri Rigsby v State Farm Insurance, has asked the Court to throw out the False Claims Act suit brought by Cori and Kerri Rigsby because it has no merit. The lawsuit is based primarily on the allegation that State Farm manipulated policyholder claims to shift responsibility from its homeowner policies to the National Flood Insurance Program (“NFIP”). State Farm asks the Court to reject the suit for a number of reasons:
* The Rigsbys have failed to identify any specific facts that support their accusations. The Rigsbys have had numerous opportunities to provide sworn testimony to support the allegations made in their False Claims Act suit and have been unable to do so. Their testimony concerning the very policyholder dispute they spotlight refutes and contradicts their claims and demonstrates State Farm’s proper investigation and payment of flood claims.
* The Rigsbys have not provided the Court with any facts to establish that State Farm submitted any false claims to the Government. They do not have standing to pursue any claims on behalf of the Government, as is required in proceeding with a False Claims Act suit. The only other policyholder they mention did not even have a flood policy. Published reports by the General Accounting Office and the Department of Homeland Security found no evidence that insurers manipulated claims to impose responsibility on NFIP.
* The Rigsbys and their counsel have engaged in improper and unlawful conduct, ranging from wrongful disclosure of the sealed lawsuit to violation of federal criminal laws regarding protection of computer data. Such conduct should disqualify them from proceeding with this suit.
State Farm’s motion for summary judgment and counterclaim outlines actions undertaken by Cori and Kerri Rigsby and others to unlawfully obtain confidential policyholder information from State Farm to advance their own personal and financial goals and agendas.
No later than February 2006, and maybe as early as October 2005, the Rigsbys, together with attorneys Dickie Scruggs and others, schemed to abuse and exploit their access to State Farm’s confidential computer systems and policyholder records. State Farm has filed a counterclaim against the Rigsbys seeking damages for their admitted, unauthorized, theft of information from State Farm, in violation of the federal Computer Fraud and Abuse Act.
In an opinion filed in McIntosh v State Farm on Friday, April 4, United States District Court Judge L.T. Senter disqualified Cori and Kerri Rigsby from testifying as witnesses in any litigation in the Southern District of Mississippi against State Farm in which the Scruggs Katrina Group or its successor the Katrina Litigation Group has represented plaintiffs. He ruled that any documents presented by the Rigsby sisters be barred unless it can be shown that they were secured through legitimate methods of discovery. He also disqualified the Katrina Litigation Group from representing anybody against State Farm for property damage claims related to Hurricane Katrina because the Scruggs Katrina Group paid sham “consulting fees” of $150,000 per year to each of the Rigsby Sisters.
According to Judge Senter’s opinion, “It is apparent to me, from my review of the deposition testimony of the Rigsby sisters, that there was no legitimate reason for these payments and that the ‘consulting’ work that ostensibly justified these payments was a sham"
The company believes the Bartlemus, Frickleton, Robertson & Gorny, P.C., and Graves Bartle & Marcus LLC firms should be disqualified in this action for the reasons laid out by Judge Senter in the McIntosh opinion, in addition to their conduct in wrongfully accessing State Farm policyholder information.
Background and Selected Excerpts from Motions Filed April 8, 2008
Background: United States of America ex al Cori and Kerri Rigsby v State Farm Insurance. This lawsuit brought by Cori and Kerri Rigsby against State Farm and other defendants alleges State Farm misdirected claims to be paid under the National Flood Insurance Program (NFIP) following Hurricane Katrina. Damage caused by flood rather than wind is paid under the NFIP. In April 2006, the so-called “whistleblower” or “qui tam” lawsuit was brought by Dickie Scruggs and two Missouri firms, Bartlemus, Frickleton, Robertson & Gorny, P.C., and Graves Bartle & Marcus LLC, on behalf of the Rigsby sisters who worked for a company that provided State Farm with adjusters to assist in handling policyholder claims on the Mississippi Gulf Coast after the August 2005 storm. Dickie Scruggs withdrew after pleading guilty to, “conspiracy to corruptly influence a state circuit court judge,” but the two Missouri firms continue to represent the Rigsby sisters.
From: STATE FARM FIRE AND CASUALTY COMPANY’S ANSWER, DEFENSES AND COUNTER-CLAIM TO RELATORS’ PERSONAL CLAIMS IN REALATORS’ FIRST AMENDED COMPLAINT, p. 46 (PDF 643 KB)
In its counter-claim, State Farm alleges that the Rigsby sisters and their lawyers engaged in a:
“Fraud Scheme to Unlawfully Obtain and Misappropriate Confidential and Proprietary Information From State Farm In Furtherance of Their Conspiracy"
“26. Rather than conducting legal proceedings concerning State Farm in accordance with lawful processes and legal procedures, the Conspirators agreed to, and did, engage in multiple illegal and/or unlawful acts to further the interests of their conspiracy.
27. Objects of the conspiracy included the unlawful misappropriation of State Farm’s property, including documents and electronically stored information (“ESI”), to prepare for and litigate civil actions against State Farm, and to unlawfully extort civil settlements from State Farm through improper use of criminal process and influence over certain prosecutorial authorities.
28. To these ends, amongst other illegal, unlawful and/or improper conduct, the Conspirators knowingly encouraged, solicited, and participated in a fraud scheme to wrongfully misappropriate confidential and proprietary information from State Farm to further the objectives of their conspiracy"
State Farm moved to dismiss the False Claim Actlawsuit for two key reasons: The Rigsby sisters – even after filing an amended complaint in May 2007 -- have no facts to support their allegations, have essentially admitted these allegations were incorrect and therefore have no standing to bring such groundless allegations before the Government.
From: COUNTER-CLAIM, p. 16-17 (PDF 643 KB)
“In this case, the Rigsbys have failed to identify with particularity any allegedly false claim that was submitted by State Farm to the government for payment, let alone the who, what, when, where, and how of each such transaction. In the two instances the Rigsby’s cite as example, one case Mullins there was actually no NFIP policy in effect. And in the other, the McIntosh claim, Kerri Rigsby, who participated in the adjustment process related to the McIntosh flood policy claim, … testified under oath as to both the validity of the payment for flood damages and as to the insufficiency of the October 12, 2005 report. [in a deposition taken in Melissa Marion and Andrew Marion v. State Farm Fire and Casualty Company, State Farm Mutual Automobile Company and John and Jane Does A-H; in the United States District Court for the Southern District of Mississippi, Southern Division; Civil Action No. 1:06cv00969-LTS-RHW, on June 20, 2007,]
Q. Do you believe this report – this report would support a $250,000 payment under the National Flood Insurance Program on the home?
1. A. No.
2. Q. And when you made the payment or agreed or authorized your subordinate, who was working -- primarily working the claim, to request authority for $250,000, you thought there was at least that much flood damage to the home, didn’t you?
3. A. Was a lot of the damage to that home.
4. MR. VAN CLEAVE: Objection. Leading.
5. A. It was a large home. It was insured for a lot of money, and I -- yeah, I believe I thought there was $250,000 worth of flood damage to that home.”
State Farm Counterclaim of Conspiracy/Computer Fraud – In publicly-filed legal papers, State Farm asserts: “Objects of the conspiracy included the unlawful misappropriation of State Farm’s property, including documents and electronically stored information (“ESI”), to prepare for and litigate civil actions against State Farm, and to unlawfully extort civil settlements from State Farm through improper use of criminal process and influence over certain prosecutorial authorities.” Both Cori and Kerri Rigsby have admitted, under oath, that they violated their agreements with State Farm to protect its computer data and to keep it confidential. [Counter-Claim, ¶¶ 36 and 37]. Kerri Rigsby further testified that she provided State Farm’s documents to Dickie Scruggs and other Conspirators for use in policyholder lawsuits filed against State Farm. [Counter-Claim, ¶ 53].
From: COUNTER-CLAIM, pp 67-68 (PDF 643 KB)
“For example, the Rigsbys have testified under oath that, at the time of the “data dump,” they had in their possession a list of Dickie Scruggs’ State Farm policyholder clients and used that list for purposes of determining which policyholder files to access and print and/or download.
In E.A. Renfroe & Company, Inc. v. Cori Rigsby Moran and Kerri Rigsby; in the United States District Court for the Northern District of Alabama, Southern Division; Civil Action No. 2:06cv01752-WMA-JEO, on January 14, 2008, Cori Rigsby gave sworn testimony confirming the data-mining operation for Dickie Scruggs:
Q. Ms. Rigsby, you’ve testified regarding engineering roster. Was that the only roster used to download data on or about June 3?
Q. What other roster did you use?
A. I had a roster of Dick’s clients.
In addition to admitting, under oath, to using a Scruggs-supplied list of clients from which to select and download State Farm claim files, Cori and Kerri Rigsby also provided deposition testimony confirming the presence of several other conspirators during additional meetings when State Farm computer data was illegally accessed. It is because of these unlawful acts, State Farm asks the Court to Disqualify above cited counsel.
From: STATE FARM FIRE & CASUALTY COMPANY’S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO DISQUALIFY BARTIMUS, FRICKLETON, ROBERTSON & GORNY, PC AND GRAVES BARTLE & MARCUS, LLC, pp. 7-9 (PDF 122 KB)
“The Rigsbys’ more recent deposition testimony leaves no doubt that their attorneys – Edward “Chip” Robertson, Tony DeWitt, Mary Winter, and Todd Graves – were full participants in the scheme to gain unauthorized access to State Farm’s confidential databases. On this point, Cori Rigsby testified:
MR. ROBIE: At any point in time, did you furnish your State Farm laptop to any lawyer?
CORI RIGSBY: Yes.
A. Tony DeWitt.
Q. Who’s Tony DeWitt?
* * *
A. He’s my Qui Tam lawyer.
Q. He’s still your lawyer?
Q. And when did you give Tony DeWitt your laptop?
A. In April.
Q. Did you also give him your password?
A. I don’t remember.
Q. Well, it wouldn’t do much good to have the laptop without the password, would it?
A. Well, I was sitting right next to him.
Q. All right. Did you boot it up for him?
A. I don’t remember.
Q. What were you searching for?
A. I’m not – I’m not sure of the exact – that we had a list. There were some documents that we were talking about. We were talking – I’m not sure which documents he retrieved. I let him in the computer, and I can’t speak after that.
Q. Where did this take place?
A. It took place in Pascagoula.
Q. Did you print documents as a result of that search?
A. No, sir.
Q. Did he read documents off your computer?
A. I’m assuming he did.
* * *
Q. Did you go to his office?
Q. He came to you?
Q. He came to your house?
A. No. We met in a trailer.
Q. Pardon me?
A. We met at a trailer.
Q. Okay. Who else was there?
A. Tony DeWitt. There were two meetings in this trailer, and I’m going to get confused as to who was at which meeting.
Q. Well, do your best.
A. Okay. Tony DeWitt, Dick Scruggs, Zach Scruggs, Mary Winters, Chip –
Q. Chip who?
A. I don’t remember Chip’s last name. Kerri, myself and my mother.
Q. Now, whose trailer was this?
A. I believe it was Dick’s trailer.
Q. And where was it at?
A. It seems like it was in the – in a parking lot by the Longfellow house. I could be wrong on that.
Q. How did you know to go there?
A. Dick set up the meeting.
(C. Rigsby McIntosh II Dep. at 392:16-395:25.)
At the continuation of Kerri Rigsby’s deposition, she similarly testified that she attended secret meet with her “qui tam counsel.”
MR. ROBIE: You met with Mr. Scruggs in a trailer sometime in ’06?
KERRI RIGSBY: I did.
Q. And when was that?
A. I believe that was March of ’06.
. . . .
Q. You drove with your mom and your sister?
Q. Anyone else?
A. It was just the three of us.
Q. And who did you meet with at the trailer?
A. We met with several attorneys at that trailer.
Q. Give me their names, please.
A. Tony Dewitt, there was an attorney named Mary, Todd, and Chip.
Q. Mary’s last name?
A. I don’t recall her last name.
Q. Is she an attorney?
A. She is an attorney. She works with Tony Dewitt.
Q. Does Tony Dewitt have a law firm name?
A. It does, but I don’t know what the name is.
Q. How about Todd, was he an attorney?
A. He’s an attorney, but I don’t believe he’s in the same office.
Q. Do you know what firm he’s with?
A. I don’t.
Q. And Chip, does he have a last name?
A. He does, but I don’t recall his last name.
Q. Is he a lawyer?
A. He’s a lawyer. I believe he’s the head of that firm that Tony works with.
. . . .
Q. And where was this trailer set up?
A. In Pascagoula, right off the beach.
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