Blowing Past the Heavy Cost of Katrina Lawsuits
Ah, lawsuits. Nothing beats suing the pants off of a big, greedy company to make all right with the world.
Now Brian Williams probably doesn't really believe that, so why did he ignore the obvious downsides to massive punitive damages in Hurricane Katrina court claims?
Read my story here.
NBC’s Brian Williams quickly breezed through news of a court ruling in Mississippi pertaining to Hurricane Katrina insurance claims. But unlike coverage of the case in the Associated Press and The New York Times, the “Nightly News” anchor cast the ruling only as a victory for storm damage victims, without looking at how it could harm the insurance industry or gum up courts by encouraging lawsuits.
Williams told viewers of the January 11 program about “A big legal victory today for a Biloxi, Miss., couple who sued State Farm Insurance for refusing to pay” their Hurricane Katrina damage claim. The ruling could prove helpful to “hundreds of other victims in that region” who could “benefit as a result,” the anchor insisted. All told, Norman and Genevieve Broussard walked out of court with nearly $3 million, Williams added.
But Williams failed to tell viewers that most of that award was $2.5 million in punitive damages, or that the Broussards “wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages,” as Garry Mitchell of the Associated Press reported on January 11 (a story which appeared in The Washington Post the following day).
Even pared in half from their initial request, the punitive damages award would be “distressing” for insurers, economist Robert Hartwig of the Insurance Information Institute (III) told Mitchell. “It adds even more cost and more uncertainty to the other problems that already exist in the Mississippi homeowners insurance market,” said Hartwig.
What’s more, the “jury decision could also lead policyholders to conclude that instead of settling” out of court that “they should hold out in the hope that a jury would award them millions of dollars in punitive damages,” New York Times reporter Joseph Treaster wrote in the January 12 paper, citing Philadelphia attorney Randy Maniloff.