Louisiana Voice

The announcement last week that the state had, at long last, settled the class-action lawsuit with victims the 1983 flood who lost their homes and businesses because of the damming effect of Interstate 12 which they said impeded the flow of floodwaters was of more than passing interest to me.

I began working for the state’s insurance agency, the Office of Risk Management, in January 1991 and that case, already seven years old, was one I inherited on Day One and which was still an open case when I retired in 2011.

(Another one I inherited that ultimately resulted in a multi-million-dollar settlement involved a couple returning home on a rural road after partying late into the night. She was apparently very tired because she had her head in his lap when he became distracted and ran off the road, flipping his vehicle and ejecting her, causing crippling injuries.)

The flood case was bounced around with the original defense attorney being replaced after failing to argue that the Interstate was built to federal specifications and that the proper party to sue would have been the feds.

Then, when it finally went to trial, the state’s hydraulics expert showed up to testify without the proper computer program in his possession. Inadvertently left back in his home in Colorado, it would have been used to illustrate parameters and data which he said would be in the state’s favor.

Instead, he fumbled and stumbled his way through testimony, attempting to ad lib his testimony but fooling no one, especially the presiding judge who nearly held the poor guy in contempt.

Following that debacle, I felt the state should file a claim with his errors and omissions insurer.

As a point of clarification, contractors with the state, be they attorneys, physicians, constructors, or experts in myriad litigation cases, are required to offer proof that they carry what is called E&O (errors and omissions) coverage for any possible commissions of malpractice or other screw-ups.

Except for whatever reason, this expert had never been asked about his E&O verification or else, just failed to provide it. That’s what I learned when I called and asked him about his coverage. And there was no point in pursuing him for any liability because he certainly did not have the financial resources to atone for such a multi-million-dollar oversight.

So, bottom line, the jury awarded $92 million (plus judicial interest, which began on the day the lawsuit was filed and would not end until final payment was made) to the 1,246 victims of the flood, victims who included 400 families and 96 businesses. Interest is not paid on settlements such as that reached last week.

When judicial interest was added in, the total award came to about $150 million — 30 years ago.

Last week’s settlement was for $95 million, plus $6 million the state has previously placed into an account for the plaintiffs, making a total settlement of $101 million.

The award was made during the administration of the late Gov. Mike Foster, who determined that the state simply could not afford to write a check for such a momentous award.

That was before the state had what is known as excess coverage. That’s an insurance policy the state buys to cover awards north of $5 million. Under such coverage, the state would be liable for the first $5 million with the excess insurer being on the hook for the balance.

The problem with that was the excess insurer had a pesky habit of refusing to honor such claims, basing their position on the argument that the state should have settled for a lower amount when settlement was still an option. Because of difficulties with excess carriers, the state dropped such coverage for a while but, I believe, resumed its coverage a few years later.

But at the time of the judgment, the state had never had excess coverage, so it was obligated for the full $150 million award and Foster just said nope, the state wasn’t gonna pay it.

And that’s the way it rocked along for my entire 20-year tenure as nursemaid to the file. Occasionally, the Risk Director would drop by my cubicle and ask that I run the interest calculations to the current date to learn what the latest amount owed was.

The last time I ran the figures, I recall that the amount due had swollen to about $250 million or so – a quarter-billion-dollars. Those periodic calculations were simply exercises in futility as no effort was ever made to pony up any money for the plaintiffs. In the 11 years since my retirement, the amount had grown to more than $330 million, according to State Rep. Bill Wheat, R-Ponchatoula, making that $101 settlement something of a bargain for the state.

And bear in mind, these occasional interest runs occurred during the latter stages of the Jindal administration when the state was dead broke and Jindal was grabbing money from several state agencies (like the Office of Group Benefits, which saw its $500 million surplus evaporate under Jindal) just to keep the lights on. Restrooms were being stocked with fragments of toilet paper rolls stolen from other restrooms in something reminiscent of a game of musical toilet seats.

The lead plaintiff attorney once called me to attempt to negotiate a settlement and because was a clear violation of prohibitions of ex parte contact (any action taken in a legal proceeding without the participation of the other side’s attorney), he nearly got disbarred, but managed to convince the disciplinary board that he thought I was an attorney. Called to testify against him, I could only say I could not read his mind and if he said he thought I was an attorney, I had no way to dispute that.

The final settlement amount was negotiated by the administration of Gov. John Bel Edwards who, perhaps not coincidentally, is a native of Tangipahoa Parish

(Full disclosure: I was a lousy claims adjuster, the B.S. efforts by the agency attorney to blow smoke up my toga by once calling me “one of the best” notwithstanding, and my “retirement” most probably preceded by a few days my being shown the door because of my having launched this blog just weeks before.)