Jackson Walker L.L.P.
ATTORNEYS & COUNSELORS
100 Congress Avenue, Suite 1100
Austin, Texas 78701
Thomas T. Rogers
(512) 236-2220
(512) 236-2000
fax (512) 236-2002
www.jw.com
March 11, 2002
VIA FACSIMILE: 913/826-7199
Mr. Tony Melchionne
National Catastrophe Center
Farmers Insurance Group of Companies
P.O. Box 2968
Shawnee Mission, KS 66201-1368
Re: Civil Investigative Demand/Farmers Insurance Exchange, Texas Farmers Insurance Company and Fire Insurance Exchange — Dated January 30, 2002
Dear Tony:
Please find attached a copy of my transmittal letter to Ray Olah with the Texas Attorney General Consumer Protection Division responding to the above-framed Civil Investigative Demand. Attached to my letter to Mr. Olah is a list of the claim files that were copied and provided to the Consumer Protection Division.
Prior to the production of these documents, my paralegal, Linda Zander, reviewed the contents of each claim file for the purposes of removing any material subject to the attorney/client privilege. A number of claim files that were furnished to us for review contain petitions filed by Garcia and Robinson. As you know, however, most of these claims that were reviewed for submission to the Consumer Protection Division contain a variety of problems in the handling of the claim, which we understand to be a direct result of the extraordinary volume of water damage claims being made. Without analyzing each claim file in detail and visiting with each adjuster, it would be impossible to evaluate each file to determine if there was a potential good faith problem, under TEX. INS. CODE Arts. 21.21 and 21.55, or the scope of any problem. The Consumer Protection Division is focusing its investigation on the individuals named in the CID and I do not expect that they will be raising any issues with Farmers regarding the handling of individual claims. After the Consumer Protection Division has reviewed these files, however, they may make further inquiry about claims handling practices. As you and I have discussed, however, the Consumer Protection Division will learn that Farmers’ handling of the tremendous volume of these water damage claims does not differ materially from what other carriers are experiencing.
With that being said, Farmers does not have a choice but to respond to the Civil Investigative Demand, and does not have a choice to refuse production of claim files involving the individuals named in the CID. Accordingly, what we have endeavored to do here is furnish a sample to the Consumer Protection Division, leaving out the more troublesome files. As the investigation by the Attorney General proceeds, it may well be that Farmers will be required to produce additional claim files, including those with very obvious problems. As soon as I hear anything further from the Consumer Protection Division, I will contact you. Should you have any questions or comments in the interim please do not hesitate to contact me.
Very truly yours,
Thomas T. Rogers
TTR/sas/200242.0095
cc Ms. Kathleen Reilly (via fax)
This article appears in November 14 • 2003.