A federal court in Texas dismissed a lawsuit alleging that twenty-four insurers and independent claims adjusting companies violated the False Claims Act by conspiring to inflate government-subsidized flood insurance claims after Hurricane Katrina so that the amount of damages that private insurers had to pay for wind damage was less. U.S. ex rel. Kermith Sonnier v. Standard Fire Ins. Co., et al., 2015 WL 409823 (S.D. Tex. Jan. 29, 2015).
The plaintiff originally filed suit in 2009 in Louisiana, four years after Hurricane Katrina struck the Gulf Coast. That suit was dismissed in 2012, and the plaintiff filed suit in Texas, seeking civil penalties for each violation of 31 U.S.C. §3729. Fourteen defendants were voluntarily dismissed. The remaining defendants moved for dismissal on the grounds that the plaintiff could not satisfy three requirements of a False Claims Act, namely, that (1) he was an “original source” and that there had not been public disclosure; (2) that he was the first to file suit and not while any other suit was pending; and (3) that any claim presented to the government was even false. The court found that the plaintiff was not an “original source” because the allegations of fraud had been reported to the public through the media as well as Congressional hearings. The court dismissed the remaining claims on this basis and the other grounds for the dismissal motion were not reached.