Scruggs Nation, Day 13: phase II

First, I must extend thanks to all citizens of the Scruggs Nation who are so vigilant in trying to keep me informed.  Readers from coast to coast, with disparate points of view, have reached out to me.  Your identities stay confidential with me.  Thank you for your trust.  I view myself less as someone who knows what is going on and more as someone who is trying to ask the right questions to figure out what the heck is going on. 

As you know, Joey Langston, an associate of both Scruggs and Tim Balducci, not to mention a figure closely linked to Mississippi AG Jim Hood, had his offices searched by the FBI yesterday.  What they were looking for or what they found, if anything, I dont know.  The fact that Langston withdrew from the public eye and pulled back from court appearances on behalf of Scruggs last week suggests that Langston knew some trouble was brewing for him.   As a point of interest, you can look back at the documents I posted yesterday in Scruggs Nation, Day 12, and see that both Joey Langston and Tim Balducci are listed as among the counsel for Dickie Scruggs in the Luckey v. Scruggs lawsuit.  By saying this, I dont mean to suggest this case furnishes any of the motivation for the FBI search — I dont know.  The case is merely one of a number of threads that tie Langston, Balducci and Scruggs.  There are others, and these will be spoken of here in due time.     

Today, lets look over a news story that may have gotten blown around and misplaced in the melee after Hurricane Scruggs made landfall late last month.  Here is a recent story by AP reporter Mike Kunzelman on Ex rel. Rigsby, the False Claims Act "whistleblower" lawsuit filed by the Rigsby sisters in April 2006.   Lets look at part of the story here:

The indictments announced last Thursday by U.S. Attorney Jim Greenlee present an awkward question for the Justice Departments civil division: Should the federal government take over a case brought by a lawyer now under federal indictment?

"It does put them in a little bit of quandary," said Randy Maniloff, a Philadelphia-based lawyer who represents insurance companies and has closely followed the wave of litigation spawned by the Aug. 29, 2005, hurricane.

The Justice Department has until Jan. 31 to decide whether to intervene in the case.

However, legal experts say the department doesnt need to take over Scruggs case to investigate allegations that insurers defrauded the federal government by falsely blaming Katrinas flood waters for damage to homes.

As recently as Oct. 30, Justice Department attorneys said in court papers that they were conducting an "active civil investigation" of the allegations in Scruggs suit. On Tuesday, a federal magistrate in Gulfport said the government still hasnt elected whether to intervene.

I dont have any special insight as to what the Justice Department is going to do with this case, but one would suspect that with the two-year anniversary of Ex rel. Rigsby peeking its head up over the bushes, if the U.S. Attorneys Office was going to do anything with this lawsuit it would have done it by now.  One would also suspect the attraction of getting involved in this case — whatever this attraction may once have been, and it apparently has not been much– is diminished by the odor of scandal, alleged criminal activity and alleged ethical shortcomings now wafting steadily from the direction of Dickie Scruggs.   

In light of the prosecution of Scruggs in federal court in Alabama over alleged violation of Judge William Ackers injunction in the Renfroe v. Rigsby suit over the taking of State Farm claims documents by the Rigsby sisters, in light of the bribery indictment and, possibly, in light of whatever is going on with Langston, wouldnt it kind of seem like the government is at war with itself for the Justice Department to step into Ex rel. Rigsby at present?  (By the way, for new readers or veteran readers who need remedial courses in anything to do with these two lawsuits, I have written extensively about them here — simply use my blogs search feature to the right to find posts as background).  That question, of course, assumes there is anything substantive to the lawsuit — and possibly there is little or nothing at all to its premise that insurers conspired to rip off the federal Treasury by pushing Katrina wind damage payments onto federally backed flood policies.

It seems undeniable that these allegations have steadily lost their public cachet as Congressional legislation to juice up the National Flood Insurance Program with wind coverage faltered. This could mean the allegations of widespread insurer fraud were mere props to push through the legislation and were tossed aside like an old Tickle Me Elmo once the novelty wore off and their usefulness was done. Or on the other hand, the allegations could be true, mostly true, somewhat true or a tiny bit true, but as Congress itself was in part to blame for creating and maintaining the system that led to the alleged abuses, and as the truth of the allegations would still mean money got into the hands of people who needed it, the Congressional investigations may have produced rapidly diminishing marginal utility to individual members associated with them.  

Lastly, in other news, Hood Talks! — (through written responses to questions).  This AP story on the search of Langstons office, if you scroll down a bit, contains this great stuff about the AG: 

Scruggs has been a major force in the wake of Katrina, representing hundreds of homeowners who sued over hurricane damages.  He also worked closely with Mississippi Attorney General Jim Hood in lawsuits against State Farm.  Hood has said Scruggs was his "confidential informant." 

Hood has refused to discuss the bribery case in detail, but says it will have no effect on the lawsuits filed by the state on behalf of hurricane victims.

"The federal indictment has absolutely nothing to do with our case against State Farm," Hood said in a written response to questions.

Hood wont say if he is pursuing state bribery charges against Scruggs, who was one of his major political contributors and a close ally in the legal battle with insurance companies.

(Hat tip: Yall Politics).

If I was to bet, I would bet hes not, but Im awaiting the line in Vegas and on the Irish online gaming sites before committing.

Finally, for the multitude of new readers, I again encourage you to use my blogs search bar to look up the numerous posts I have written on these subjects, particularly the "confidential informant" issue, which is one of my favorites and which I find endlessly hilarious.  For you newer folks who may wonder what this blog is and why it is, my day job is insurance coverage lawyer/litigator, and I began this blog two years ago as a forum for discussion of insurance coverage cases, industry developments and insurance theory, in part to cast off the image of insurance coverage as boring and a fit subject only for dweeby little people who mumble incomprehensibly about such annoying concepts as "occurrences," "allocation of the burden of risk," "coverage grants" and "ambiguity in drafting."  My goal was to show that insurance coverage involves an intellectually fascinating collision of interests taking place not only in the maze of abstract policy language, but in the real world, and that this sheds light on the broad drama of human conflict.  I would say that, in light of events chronicled at length here, this proposition requires no further proof.  See you tomorrow. (Unless something big happens, and then maybe see you later today).    


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