In the aftermath of Hurricane Katrina, Mississippi House Speaker Billy McCoy said the House would tackle the Gulf Coast insurance dilemma: thousands of people who lost their homes and have no separate flood insurance.
"We can't make insurance companies do something that's not in their policies," McCoy said, "but ... we are going to take a lead role in doing anything we can."
Not so fast, Billy. Mississippi Attorney General Jim Hood thinks otherwise. He is suing five insurance companies, asking a state court to void the plain language of policies and make the companies do what is not in those policies.
Homeowner policies for hurricane damage specifically exclude damage caused by flooding, and for good reason: Flood damage is far more costly to insure. Hood seeks to invalidate those exclusions and force insurers to pay as much as $15 billion for flood damage. In his complaint, Hood makes the incredible claim that residents bought homeowner policies to insure against "any and all" hurricane damage "with the reasonable expectation that these policies would provide such coverage."
That expectation isn't remotely reasonable. Even Hood acknowledges in his complaint that the polices excluded coverage for "loss or damage resulting from water, whether or not driven by wind." In other words, a storm surge — which is exactly what devastated the Mississippi coast.
If that language wasn't clear enough, the "Insurance Consumer's Hurricane Checklist," published by the Mississippi Insurance Commissioner, has for years warned consumers in the plainest possible words: "Remember that homeowners' policies do not cover flood damage caused by rising water. ... If you live in a flood-prone area, contact your agent about obtaining flood insurance."
Hood didn't dream up this lawsuit by himself. He was egged into it by Richard "Dickie" Scruggs, a private attorney from Pascagoula, Miss. Scruggs is a class-action specialist perhaps best known for skinning a $250 billion settlement out of tobacco companies a few years ago.
Not one to ignore his own advice, Scruggs is filing his own class action against Gulf Coast insurers. Never mind that the claims are fantastic. Baseless claims are a Scruggs trademark.
Last year he organized dozens of lawsuits against nonprofit hospitals across the country, claiming they had overcharged uninsured patients. Thus far these complaints have distinguished themselves by being heaved out of court.
In a suit against a Michigan hospital, for instance, a federal judge dismissed all complaints in June: "Simply put," said the court, "the arguments plaintiffs advance ... have no support in law. Indeed, no court presented with a similar case has found for the plaintiffs on any substantive legal issue."
A New York court was a little more expressive in dismissing one of these complaints: "Plaintiffs here have lost their way; they need to consult a map or a compass or a Constitution because plaintiffs have come to the judicial branch for relief that may only be granted by the legislative branch. ... Plaintiffs argue, without basis in law, that private nonprofit hospitals are required to provide free or reduced-rate services to uninsured persons."
And now Mississippi plaintiffs are arguing that insurance companies are required to pay flood damages to uninsured persons.
Let's get real here. Only about 30 percent of Mississippi coastal residents had flood insurance. Among the other 70 percent, there will be many legitimate questions as to whether damage was caused by wind, water or both. The state should make sure those people get a fair shake from their insurance companies.
By the same token, the companies deserve a fair shake, and a wholesale assault on legal contracts hardly qualifies as fair.
Post-Katrina looting was bad enough when ordinary citizens helped themselves to liquor and TV sets from untended stores. But the lawsuits filed by Jim Hood and Dickie Scruggs are immeasurably worse, being little more than attempts to loot under color of law.