Posts Tagged ‘Whistleblower Lawsuit’

Whistleblower Alleges Katrina Insurance Fraud

Sunday, October 3rd, 2010

A whistle blower lawsuit filed against the Allstate Insurance Company alleges that the company inflated the amount of flood losses sustained by three clients in connection with Katrina-related homeowners’ insurance claims that Allstate had disputed. The whistle blower is an attorney who represented the homeowners and reports direct knowledge of the allegations, asserting that Allstate fabricated insurance documents to shift its own claims obligations to the federal government. Flood losses are not covered by a standard homeowners policy, but instead are covered when the government’s National Flood Insurance Program provides insurance. Although the whistle blower lawsuit was filed more than three years ago, Allstate was just informed of the matter last week. The whistle blower filed the suit of the government for which he seeks three times the amount of fraud losses plus civil fines and legal expenses. The case will be heard in New Orleans. While the facts of the case have yet to be determined by the court, it is clear that the existence of a government-funded program provides incentives for cost-shifting at taxpayer expense.