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The Honolulu Advertiser
Posted on: Monday, December 31, 2007

Louisiana suing bowl sponsor

By Ferd Lewis
Advertiser Staff Writer

NEW ORLEANS While its name and logo are on tomorrow's Allstate Sugar Bowl and next week's national championship games here, the insurance company is one of 11 targets of a government lawsuit.

The suit was brought last month by outgoing Louisiana Attorney General Charles C. Foti Jr., alleging violations of the Louisiana Monopolies Act in claims resulting from Hurricanes Katrina and Rita.

"This alleged scheme gave insurers an unjust advantage over policy holders, which they used before, during and after one of the greatest disasters this country has ever suffered, by reaping huge profits from the misfortunes of persons whom they pledged to protect from the risk of loss," Foti said in a statement released by his office.

"I believe this unjust advantage resulted in the unjust enrichment of themselves to the detriment of the state, policy holders and commerce in Louisi-ana," the release said. "But to be clear, these abuses were not new to the recent hurricanes."

Allstate, through spokesman Mike Siemienas, denied the allegations. "This complaint is a hodge-podge of recycled, unfounded and, in some cases, previously discredited allegations. Similar allegations have already been dismissed by the federal District Court for the eastern district of Louisiana. Allstate will vigorously fight this suit," Siemienas said.

Foti was defeated in last month's elections and leaves office Jan. 14. A spokesman for the attorney general's office said no announcement had been made by the incoming attorney general as to whether the suit will be pursued or dropped.

The attorney general's petition, filed in New Orleans District Court, alleges 11 companies "participated in a scheme to rig the value of property damage claims paid by insurance companies to their insureds," according to the attorney general's statement. "They allegedly used damage-estimating software programs to engage in horizontal price-fixing as well. The combination allegedly artificially held down property damage claim payouts with the intended goal of increasing the profits of each company involved. When hurricanes Katrina and Rita struck Louisiana in 2005, virtually all of the property damage insurers were setting premiums and adjusting claims under this alleged scheme," the statement claimed.

"I think it is very curious a company who, in the opinion of many has hindered the recovery here, is putting its name and logo at Louisiana State games, (New Orleans) Saints games and the Sugar Bowl," said Richard C. Trahant, an attorney in another Katrina-related case against Allstate.

Reach Ferd Lewis at flewis@honoluluadvertiser.com.

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