(CN) - In a Katrina-related insurance fraud case, the 5th Circuit dismissed Allstate and State Farm as defendants but allowed the lawsuit to proceed against a dozen other insurers and adjusting firms.
Branch consultants, on behalf of the government, sued insurers and adjusters under the False Claims Act, claiming they exploited the Federal Emergency Management Agency's "Write-Your-Own" (WYO) insurance program used by many victims of Hurricane Katrina. The defendants allegedly understated losses due to wind and overstated losses due to flood, thereby shifting the loss from the WYO insurers to the federal government.
A federal judge in Louisiana dismissed the claims against all defendants, citing the Act's first-to-file jurisdictional bar. The judge said the complaint alleges the "same general conduct and theory" of insurance fraud as the FCA action in States ex rel. Rigsby v. State Farm Insurance Co.
The federal appeals court in New Orleans affirmed dismissal of the claims against Allstate and State Farm, because they were the only defendants in both cases.
"But under the facts of this case, we cannot hold that 'suit as to one is suit as to all,'" Judge Haynes wrote.
"Here, nothing in the Rigsby complaint provided the government with facts from which it could discern a widespread fraud involving all WYO insurers or the identities of other specific fraudfeasors. Thus, the claims in the present case against previously unnamed alleged fraudfeasors are not barred by the first-to-file rule."
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