The U.S. Supreme Court has agreed to consider one question in a decade-old case two whistleblowers won against State Farm Fire & Casualty Co., proving to a federal jury in Gulfport that the insurer defrauded the National Flood Insurance Program.
State Farm appealed the 2011 verdict on more than one point, but the high court will consider whether attorneys for the whistleblowers, Cori and Kerri Rigsby, violated federal law by disclosing the lawsuit to members of the media while it was still under seal in 2006. A whistleblower lawsuit is sealed so federal prosecutors have time to investigate the alleged government fraud and decide whether to undertake prosecution.
In this case, the whistleblowers proceeded with the case after the government decided against intervening. The sisters, who worked as claims adjusters for State Farm after Hurricane Katrina, alleged the insurance company charged the federal flood program for damage its policies should have covered as wind losses.
The Supreme Court's decision to consider the case will not necessarily change the jury's 2013 verdict.
The federal trial judge and the 5th U.S. Circuit Court of Appeals found early disclosure had not harmed the case and also that the Rigsbys previous legal team, not the women, leaked the lawsuit. If the Supreme Court disagrees, it could throw out the fraud verdict as part of the penalty for disclosure, said one of the Rigsby's attorneys, Maison Heidelberg of Jackson. On the other hand, he said, the verdict could stand even if the disclosure question is resolved in State Farm's favor.
A State Farm spokesman said the company is pleased with the court's decision to hear its appeal and welcomes the review.