April 22, 2006

Suit against the Army Corps of Engineers for negligence in building "MR GO"

Here is a report concerning a pending class action lawsuit in federal court in Louisiana, alleging that the flooding of New Orleans was caused by the Army Corps of Engineers' malpractice in designing and constructing "MR GO" [the Mississippi River Gulf Outlet].   Doug Simpson posted about this a few days ago.  Most probably, MR GO was a pork project from yesteryear, which may have been opposed by some civic groups in New Orleans, but which undoubtedly was pushed through by the political elite of Louisiana at the time, and probably the state government as well.  I wonder how the suit can survive sovereign immunity defenses?  Can every business who supported the construction of MR GO be brought in as a defendant?

One must also wonder whether it makes sense to distract the Army Corps of Engineers with this lawsuit at the very time you are counting on it to rebuild critical facilities. 

Putting that aside, there is that $12 billion dollars that the National Flood Insurance Plan has already paid out in cash for Katrina flooding damages in New Orleans.

It seems to me that the NFIP should be subrogated to the rights of the plaintiffs in the class action to the tune of $12 billion dollars.  If the NFIP's policyholders are not part of the class as defined by the suit, they should be -- I don't see how they could reasonably be excluded.  The NFIP, as we all painfully know at this point, is bankrupt and survives only because by law it can tap directly into the United States Treasury to pay claims.  See the links provided by Doug Simpson on the NFIP.

On the other hand, generally an insurer may not assert subrogation rights unless its insured has been fully compensated.  Therefore the NFIP's subrogation rights probably do not arise until a particular policyholder has been fully compensated.

Apr 22, 2006 1:24:00 AM | Katrina Losses/Coverage

3 Comments

Alison

Do you have to be a home owner to file suit?

Posted by: Alison | February 24, 2007 at 06:13 PM

Dave Stratton

Please see my post of 2/25.

Posted by: Dave Stratton | February 25, 2007 at 02:49 PM

Carolyn A. Bell

I would like some information on the Mr GO class action lawsuit. I live in the upper ninth ward and my home was destroyed by the storm and I'm still displaced. Am I eligible for some type of compensation? Please E-Mail me at your convience. Thanks

Posted by: Carolyn A. Bell | March 06, 2007 at 09:37 AM

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Insurers accused of being Nazis Mississippi Attorney General Jim Hood has likened insurers in Mississippi to Nazis. I don't have a dog in this fight -- my firm doesn't do any work for State Farm or Allstate, and we are not involved in hurricane-related litigation. And I've taken my lumps from insurance companies too. But this is a bit much. Many billions of dollars have been paid out in Mississippi and Louisiana by private insurers and the National Flood Insurance Program as a result of Katrina. Many more billions have been spent by the federal government. Later: According to the Mississippi Insurance Department, insurers have paid in excess of nine billion dollars in claims in Mississippi as a result of Katrina. Of which six billion was paid out in the three coastal counties of Mississippi that were hardest hit. The NFIP has paid out about 14.5 billion dollars in flood claims resulting from Katrina; 12 billion of those payments were in Louisiana, so probably about 2 billion dollars of that was paid in Mississippi. Also in early April, a 3.4 billion dollar HUD grant program for Mississippi was announced.
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