A group of Mississippi Gulf Coast residents filed a federal lawsuit today against State Farm Fire & Casualty Company. The suit alleges that State Farm violated the civil Racketeer Influenced Corrupt Organization Act, also known as RICO.
In the lawsuit, plaintiff’s attorney Richard “Dickie” Scruggs accuses State Farm of engaging in a “pattern of racketeering” by having engineering reports changed to deny policyholder claims over Hurricane Katrina damage. State Farm policies typically cover damage caused by wind, but not flood waters or storm surge. The suit alleges home inspection reports were manipulated to avoid pay outs.