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Order and Reasons: Dismissal Branch qui tam

Order and Reasons: Dismissal Branch qui tam

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Published by: nowdoucit on Jan 26, 2011
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11/13/2011

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UNITED STATES DISTRICT COURTEASTERN DISTRICT OF LOUISIANAUNITED STATES OF AMERICA
EX REL.
BRANCH CONSULTANTS, L.L.C.CIVIL ACTIONVERSUSNO: 06-4091ALLSTATE INSURANCE. CO.,
ET AL.
SECTION: R(1)
ORDER AND REASONS
In this False Claims Act case arising out of HurricaneKatrina, defendants American Reliable Insurance Company, StandardFire Insurance Company, Colonial Claims Corporation, LibertyMutual Fire Insurance Company, SIMSOL Insurance Services, Inc.,American National Property & Casualty Company (“ANPAC”), FidelityNational Insurance Company, and Fidelity National Property andCasualty Insurance Company (“Fidelity”) have filed motions forsummary judgment. In addition, all of these defendants plusAllstate Insurance Company and Pilot Catastrophe Services, Inc.have filed motions to dismiss. Because the Court lacksjurisdiction over Branch’s claims, defendants’ motions areGRANTED, and this case is DISMISSED.
Case 2:06-cv-04091-SSV-SS Document 886 Filed 01/24/11 Page 1 of 68
 
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I. Introduction
This case arises out of the aftermath of Hurricane Katrina.The storm struck southern Louisiana and Mississippi in lateAugust of 2005, causing damage in the billions of dollars. Innumerous places, particularly within New Orleans, homes andcommercial property were damaged by the wind and rain generatedfrom the hurricane, as well as by flooding that inundated thearea.Although insurance against wind and rain is available fromprivate insurance companies, flood insurance generally is not.“It is uneconomical for private insurance companies to provideflood insurance with reasonable terms and conditions to those inflood prone areas.”
Gowland v. Aetna
, 143 F.3d 951, 953 (5thCir. 1998). In 1968, the federal government established theNational Flood Insurance Program (“NFIP”), which provides flood-insurance coverage “at or below actuarial rates,” and payments onthese insurance policies are made with federal money.
Id 
. TheNFIP is in turn administered by the Federal Emergency ManagementAgency. In 1983, FEMA established a program within the NFIPknown as “Write Your Own” (“WYO”), which allowed certain privateinsurers to issue standard, government-guaranteed flood insurancepolicies in their own names.
See generally 
44 C.F.R. § 62.23.FEMA drafts the policies and the insurers cannot alter themwithout governmental approval.
Id 
. §§ 61.4(b), 61.13(d);
see
Case 2:06-cv-04091-SSV-SS Document 886 Filed 01/24/11 Page 2 of 68
 
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also Dwyer v. Fidelity Nat. Prop. & Cas. Co.
, 565 F.3d 284, 285(5th Cir. 2009). The private companies under WYO act as “fiscalagents” of the United States and are responsible for adjustment,settlement, payment, and defense of claims under the policies.44 C.F.R. § 62.23(d)-(g). Payments under the policies, however,“ultimately come[] from the United States treasury.”
Dwyer 
, 565F.3d at 285.The damage caused by Hurricane Katrina resulted in atremendous number of NFIP claims. On account of this strain,FEMA relaxed the requirements for submitting proofs of loss toclaim flood damage. Specifically, when policyholders did notdispute the insurance company’s adjustment, FEMA waived theproof-of-loss requirement and allowed the claim to be paid on thebasis of adjuster’s reports.
See Monistere v. State Farm Fire &Cas. Co.
, 559 F.3d 390, 394-95 (5th Cir. 2009);
Eckstein v.Fidelity Nat. Prop. & Cas. Ins. Co.
, 07-4567, 2009 WL 1870558, at*4 (E.D. La. June 29, 2009).Branch Consultants brought this
qui tam
action in 2006 onbehalf of the United States government under the False Claims Act(“FCA”). Branch accuses certain WYO insurance companies andadjusters that were involved in the adjustment of NFIP floodclaims after Katrina of fraud in the administration of the floodinsurance program. Branch alleges that the circumstances afterKatrina gave the defendants complete control over adjustments and
Case 2:06-cv-04091-SSV-SS Document 886 Filed 01/24/11 Page 3 of 68

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