State Farm, whistleblowers settle Katrina lawsuit

State Farm has settled a lawsuit with whistleblowers over how they handled flood insurance claims after Hurricane Katrina.

The settlement was reached in U.S. District Court in Gulfport with Judge Sul Ozerton presiding, according to our media partner Sun Herald.

The company has agreed to pay the federal government $100 million for potential liability as part of the settlement of a lawsuit brought by two sisters, Kerri and Cory Rigsby, filed in 2006.

The sisters, who once worked for State Farm as claims adjusters and lived in Ocean Springs, proved that State Farm defrauded the National Flood Insurance Program by charging it for flood damage to a policyholder’s Biloxi home when wind was the cause of the damage.

As part of the settlement, State Farm also agreed to drop countersuits against the Rigsbys.

Federal whistleblower law entitles the Rigsbys to 25 percent to 30 percent of the settlement or $25 to $30 million.