Judge Rejects Settlement For Katrina Victims With State Farm Insurance; Film Review

Spike Lee, director of the HBO documentary, When the Levees Broke, on the New Orleans Disaster of 2005.
Originally uploaded by Pan-African News Wire File Photos.

January 27, 2007

Judge Puts Settlement on Katrina in Question

By JOSEPH B. TREASTER
New York Times

A federal judge in Mississippi, citing the need for more information, has rejected — at least temporarily — a settlement by State Farm Insurance that was expected to provide several hundred million dollars to help policyholders rebuild homes destroyed by Hurricane Katrina 17 months ago.

In an eight-page order, Judge L. T. Senter Jr. of Federal District Court in Gulfport, Miss., said he was rejecting the agreement because it did not provide enough information for him to conclude that it was “fair, just, balanced and reasonable.”

State Farm said last night that it had expected the agreement to be approved and that it now looked forward to addressing the judge’s concerns.

The lead trial lawyer in the case, Richard F. Scruggs, and Mississippi officials also expected court approval.

Last night, Mr. Scruggs and Jim Hood, the attorney general of Mississippi, said they were optimistic that the agreement would be revived. Mr. Hood said he was confident that State Farm would “fix the things that need to be fixed.”

In the agreement, State Farm said it would pay at least $130 million to policyholders and participants in the negotiations and said costs to the insurer could increase by another $600 million. The State Farm settlement was expected to be a model for other insurers to use in seeking settlements, which would help jump-start the lagging recovery of Mississippi’s coast.

The dispute with State Farm and other insurance companies centered on the insurers’ refusal, as stated in their policies, to pay for damage from the heavy flooding — driven by the high winds of Hurricane Katrina — that swept over the Mississippi coast on Aug. 29, 2005. Some insurers refused not only to pay for flood damage, but declined to pay for harm to houses that had been battered by wind and waters.

Even so, the insurers paid $5.3 billion for wind damage to more than 330,000 homes in Mississippi and $10.3 billion for nearly a million homes in Louisiana. The rejected settlement did not include homeowners in Louisiana.

The settlement, which was announced on Tuesday, was twofold. One part settled 640 lawsuits arising from the hurricane for $80 million; the other required State Farm to reopen up to 35,000 damage claims that state officials and trial lawyers said had been underpaid. In that part, State Farm had agreed to pay at least $50 million.

Judge Senter’s order dealt exclusively with the second part, the reopening of the damage claims. It was not clear whether the settlement of the 640 lawsuits would proceed. But during the negotiations, participants said that State Farm had refused to settle unless both the lawsuits and the 35,000 damage claims were parts of one agreement.

A spokesman for State Farm, Phil Supple, said yesterday that the two elements were separate. But he would not respond to questions seeking to clarify the linkage and whether the entire agreement might be scuttled if the judge’s concerns about the 35,000 damage claims could not be resolved. In an interview, Mr. Scruggs said he expected the settlement of the 640 lawsuits to stand, partly because State Farm has already paid the first installment.

“We’re going to start dispersing those settlement funds next week,” Mr. Scruggs said.

As part of the overall settlement, Mr. Hood, the Mississippi attorney general, agreed to drop a criminal investigation into State Farm’s handling of hurricane damage claims and to remove the company from a civil lawsuit accusing it and other insurers of treating policyholders unfairly.

Mr. Hood said he was continuing the lawsuit against other insurers. On Thursday he urged other insurance companies to follow State Farm’s lead, to settle hundreds of other lawsuits and to reopen thousands of storm damage claims.

In rejecting the agreement, Judge Senter raised concerns about a lack of detail on how much money policyholders might receive. He noted that State Farm had agreed to pay at least $50 million for reopened claims. But, he said, “there is no way I can ascertain how this sum compares to the total claims” of the approximately 35,000 homeowners, nor “how thinly this large sum may be spread.”

He said he was also troubled about the potential unfairness of an arbitration process intended by the negotiators to provide an appeals process for homeowners who requested that their claims be re-evaluated. He said that under the agreement, arbitration hearings were to be limited to two hours and that there was no apparent provision for legal representation for homeowners.

Judge Senter said the agreement also failed to provide information on what the lawyers had done to justify an agreed-upon payment of up to $20 million in relation to reopening the 35,000 damage claims. The lawyers are to receive another $26 million for settling the 640 lawsuits.

Carl Tobias, a professor at the University of Richmond School of Law, said he thought Judge Senter was being “extraordinarily careful to attempt to protect the interests of all the homeowners.”

Professor Tobias said he did not think the settlement “was all over,” but, he added: “A lot of work has to be done to satisfy this judge.”


City of sunken dreams

By Andrew Ward
January 26 2007 15:48
Financial Times

Kimberly Polk sits on a park bench with the New Orleans skyline visible across a stretch of water behind her. She is holding a picture of her daughter, Serena, who drowned in the flood that followed Hurricane Katrina.

The five-year-old was staying with her father in New Orleans when the storm struck in August 2005. Her body was found eight months later, under debris. “She came to me in a dream and said `Mamma, I’m falling,’” recalls Polk, sobbing. “All I could see was water that she was falling into... I never got a chance to say goodbye.”

Polk’s story is one of numerous heartwrenching moments in When the Levees Broke, Spike Lee’s epic documentary on Katrina and its aftermath. The film is one of several that are helping to keep a focus on the issues raised by Katrina: urban poverty, racial inequality and government incompetence. “Documentaries are helping keep the story alive and posing questions about what happened,” says Douglas Brinkley, a New Orleans historian and author of The Great Deluge, a book about Katrina.

Natural disasters have always attracted documentary makers. But the scale and severity of Katrina, and the fact that it struck one of the US’s most photogenic cities, only strengthened the pathos.

Feature filmmakers are also fascinated by such disasters. But the stories generated by Katrina - the torpid government response, the jarring scenes of anarchy and despair among those stranded in the city - demanded the rigorous analysis and penetrating commentary of documentaries rather than the soft-focus gloss of Hollywood reconstructions. Unlike the September 11 attacks, Katrina cannot be easily distilled into stories of good versus evil. While 9/11 had clear-cut heroes and villains, Katrina’s central characters were more ambiguous. Rescue workers performed heroically but the overall relief effort was botched. The human suffering was tragic but why did people ignore orders to evacuate? The looting was ugly but should we expect obedience of people abandoned by their government?

These are among the issues Lee attempts to unravel in his film. Presented in four segments each lasting an hour, it combines news footage with more than 100 original interviews to produce a forensic autopsy of the disaster. The result is a devastating case against the federal response and the decades-long neglect of the New Orleans levee system. But Lee largely avoids picking scapegoats, realising that the failures were more often systemic than individual.

When the Levees Broke is most effective when telling its story through eyewitness accounts of people such as Polk. Only when it turns to celebrities and activists, such as Harry Belafonte and Al Sharpton, does it slip into polemic.

The film was made for HBO, the US cable channel, and aired in full for the first time on the first anniversary of Katrina. A month later it won three awards at the Venice Film Festival. Its UK premiere was spread over two nights on BBC 4 last month.

Other documentary makers have chosen a narrower focus. For more than a year before Katrina, novice New Orleans filmmakers Vincent Morelli and Jason Berry had been making a documentary about the city’s dysfunctional public school system. When disaster struck, they were ideally placed to tell one of the storm’s most important background stories: how failed schools fed the cycle of poverty and crime revealed as the city flooded. Left Behind seeks to explain why New Orleans had some of the worst schools in the industrialised world, with drop-out rates up to 70 per cent and education standards below those of Kenya and Zimbabwe.

The film follows three teenage African-American boys through their final year at an inner-city school. Each shows flashes of untapped intelligence and unfocused ambition, but the odds are against them - their broken homes and unruly, dilapidated schools offer little respite from the guns, drugs and gangs that dominate their neighbourhoods. Denied permission to film inside school, the filmmakers smuggle a hidden camera into class with the students. The pictures show a teacher making a vulgar gesture to his out-of-control class and karate-kicking a student.

Just as telling is footage from meetings of the city’s school board, where members feud over control of its $500m budget and resist proposals for reform. By showing how New Orleans has short-changed its young people through years of corruption, mismanagement and racial division, the film exposes the rotten political culture behind many of the city’s social ills.

Left Behind is a low-budget, rough-edged documentary filmed with a digital video camera and edited on a laptop in a coffee shop. Without Katrina, it would have struggled to gain an audience beyond New Orleans. But, by putting the city’s problems on the national agenda, the disaster has given Morrelli and Berry a chance to project their story more widely.

It was also helped by such collaborators as the linguist and political activist Noam Chomsky and the rapper Ice T, who provide trenchant commentaries on race and poverty. The film has so far been limited to three sell-out cinema screenings in New Orleans, but film-festival slots are being lined up and national television channels are showing interest, says Morrelli. Securing a distribution deal was less challenging for Leslie Woodhead, one of Britain’s leading documentary makers. A lifelong jazz fan, Woodhead won backing from the BBC and Robert Redford’s Sundance Channel to make a film about saving New Orleans’ musical heritage. Saving Jazz tells the story of Herman Leonard, a legendary 83-year-old jazz photographer whose archive was damaged by the floods.

Another contribution comes from Greg MacGillivray, who made the Imax film Everest and who was shooting an Imax movie about Louisiana’s vanishing wetlands when Katrina struck. Originally intended as a warning about how loss of the region’s swampy ecosystem was putting New Orleans in peril, the film became a postmortem about how decades of human meddling had fatally weakened the city’s natural defences. With its images of airboats hurtling across wetlands, alligators playing beneath the water, and birds streaming across vivid sunsets, Hurricane on the Bayou reveals the fragility of the watery lands upon which New Orleans rests.

Finally, Walter Williams, a comedy writer-turned-documentary maker and New Orleans native, is making short films about returning evacuees, posting them on MrBill.Com, his website. Williams says the rush of filmmaking in New Orleans since Katrina offers hope that the city’s creative spirit survived the storm. Just as the music played by slaves in the city’s Congo Square still resonates in every note of modern jazz, Katrina provides a new layer of memories. “This city’s story,” he says, “is one of constant evolution and recovery from one setback after another.”

Andrew Ward is the FT’s Atlanta correspondent.
Copyright The Financial Times Limited 2007