Farmers Insurance paid state Rep. Joe Nixon, R-Houston — the sponsor of the controversial tort-reform package passed by the Lege this spring — for a claim not covered under his homeowners insurance policy so that the company could secure Nixon as a “friend of Farmers during the legislative session,” according to an internal Farmers e-mail. An e-mail inquiry about the questionable payout to Nixon was sent by Farmers’ former National Mold Claims manager Isabelle Arnold on April 30 to her supervisor, Jim Daues, the company’s top claims officer. “This is a non-covered loss, where the claims manager [and another Farmers adjuster] both denied [the claim],” she wrote. “I understand that the insured is a legislator and that Jim Killian [a Farmers government affairs officer] and John Hageman [head of Farmers’ Texas operations] had strong-armed [the claims officers] into paying this non-covered claim.
“Then [Nixon] came back wanting more money,” she wrote — a request the claims officers denied. “Jim Killian then called [the claims officer and told him] to pay because [Nixon] is a legislator, even though it’s not covered.”
Daues sent an e-mail reply to Arnold on June 4, saying that Hageman said, “Mark Toohey [from Farmers’ corporate office in California] and Kevin Kelso [Farmers’ corporate vice-president for finance] all called me about this claim and wanted Mr. Nixon to be a friend of Farmers in the legislative session. … Each one strongly suggested that an additional payment would be very helpful to the cause.”
On Aug. 5, Nixon denied the allegations. “This is another attempt to impugn the character of the legislator who passed tort reform,” Nixon told the Quorum Report. “I filed a claim under my policy in 2001. It was investigated. It was not disputed. The claim was a private matter for which I had to sign a release at the conclusion of my claim.” But sources tell the Chronicle that Nixon actually filed four separate claims, none of which were covered under his policy, for which he was paid more than $300,000. The matter is currently being investigated by a Travis Co. grand jury.
Arnold filed suit against Farmers on June 30 alleging that she was fired for making a concerted effort to change the way Farmers was handling mold-related claims — including its practice of paying on claims not covered by homeowner policies. (For more on Farmers and Arnold, see “Mold Grows on House of Farmers,” July 18.)
This article appears in August 8 • 2003.