Feb 1, 2012 5:55 AM by AP

Citizens board hires attorney to dispute judgment

BATON ROUGE, La. (AP) - The governing board of Louisiana's property insurer of last resort agreed Tuesday to a $500,000 contract with a law firm to lodge a challenge with the U.S. Supreme Court of a $93 million judgment against the company.
The Louisiana Citizens Property Insurance Corp. was found to have moved too slowly in dealing with claims payments after the 2005 hurricanes. More than 18,500 policyholders stand to receive $5,000 each.
The Citizens board of directors approved the hiring of law firm Gibson, Dunn & Crutcher LLP for the first $150,000 payment for the work. It wants to ask the Supreme Court to consider reversing the $92.8 million judgment, which has grown to nearly $104 million with interest.
Citizens' officials had already chosen the firm. The board Tuesday approved actions already taken by Citizens chief executive Richard Robertson and his staff.
In a long-running court case, the Louisiana Supreme Court said Citizens failed to begin adjusting claims for hurricanes Katrina and Rita in 2005 within the 30 days required by law.
Robertson said the company wasn't given proper due process to dispute the lawsuit and is asking the nation's highest court to consider an appeal. The Supreme Court doesn't have to take up the case and could deny even considering it.
Citizens offers insurance coverage to homeowners and businesses unable to obtain insurance from private companies.
Robertson said the company has the cash on hand and assets to cover the judgment and interest without a special assessment of private insurance companies.
"We would still be sound. We would be less sound than we are today," he said.
When Citizens money used to pay claims gets low, the company assesses private insurers for each property policy, and that cost is passed on to private insurance customers.
Nearly all of the Citizens board's discussion about the judgment and lawsuit was done in executive session, shielded from public view. The board voted in open session.
Robertson said the law firm will be paid $500,000 for its work. If the Supreme Court agrees to look at the case, additional fees will be negotiated with the lawyer and will be considered by Citizens' board.


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