Ordinarily, I’m concerned about a misuse of the RICO statutes, but I think that “criminal enterprise” is a good description of insurance companies.

State Farm accused of Katrina racketeering

Federal lawsuit claims insurance company manipulated damage reports
The Associated Press
Updated: 5:39 p.m. ET June 20, 2007

NEW ORLEANS – State Farm Fire & Casualty Co. engaged in a “pattern of racketeering” by manipulating engineering reports on Hurricane Katrina damage so the company could deny policyholder claims, lawyers for a group of Mississippi homeowners allege in a lawsuit filed Wednesday.

The federal suit against State Farm represents a new legal strategy for attorney Richard “Dickie” Scruggs, who has played a prominent role in challenging the insurance industry for its handling of Katrina claims.

Hundreds of homeowners in Mississippi and Louisiana have sued their insurers for denying their claims after the Aug. 29, 2005, storm. The suits typically accuse insurers of bad faith and breach of contract for refusing to pay for damage from Katrina’s storm surge.

Wednesday’s lawsuit on behalf of Mississippi Gulf Coast homeowners is the first in which Scruggs and his legal team accused an insurer of violating the civil Racketeer Influenced Corrupt Organization Act, commonly known as RICO.

Scruggs, who helped negotiate a multibillion dollar settlement with tobacco companies in the mid-1990s, said he had filed similar civil RICO suits against tobacco companies. They are tougher cases to build, but can carry stiffer penalties, he added.

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