Katrina victims shocked by small payments in levee failure case

Class-action claimants shocked by tiny settlements

NEW ORLEANS - An 11-year-old federal class-action lawsuit for the Hurricane Katrina levee failures is finally ready to pay 120,000 claims, but a relatively small pot of money, large legal and processing costs and confounding court notices delivered this week have many storm survivors confused and angry.

A committee of 35 plaintiff attorneys originally pursued claims totaling more than $10 billion from the U.S. Army Corps of Engineers, the construction firms involved in designing, building and maintaining the floodwalls and levees and the local levee districts.

They won rulings at the U.S. District Court in New Orleans, paving the way to collect billions in damages caused in two separate flooding incidents: One for flooding caused east of the Industrial Canal by the Mississippi River Gulf Outlet, or MRGO, and another for the failure of levees in New Orleans and Jefferson Parish.

But the U.S. 5th Circuit Court of Appeals later reversed itself and declared the Corps of Engineers immune from claims related specifically to the levee failures. While the MRGO case continues against the Corps, by 2012 the only defendants left in the levee-failure case were the three local levee districts. They agreed to settle that case in 2013, but they had only $17 million in insurance proceeds to pay the claims: $10 million from the Orleans Levee District, $5 million from the East Jefferson Levee District and $2 million from the Lake Borgne Levee District.

About $3 million in interest brought the pot of money for the class action to over $20 million, but costs of administering the settlement – including sending notices, analyzing flood data and calculating awards – have topped $2.5 million.

Hilsoft Notifications, a company that made $895,000 to send out the initial notices to claimants, declined to comment. So did Greg Rigamer, a demographer who was running a firm at the time that worked on the claim payment distribution model and who testified as an expert in the case.

Meanwhile, the 35 lawyers representing the class were awarded $3.5 million to cover a portion of their costs of bringing the case. Lead class counsel Joe Bruno says the lawyers suggested that amount to the court, even though he said it was dwarfed by what they spent on expert reports, investigations of government records, witness depositions and other expenses.

What’s more, he said the levee district’s insurance companies insisted on expanding the scope of the settlement to include money for Hurricane Rita damage, non-flood property damage, money for renters and businesses and even for people who were just visiting the area during the storms. That way, the levee districts could preclude all of those types of victims from bringing any further claims for the 2005 storms.

That potentially watered down awards for those who actually lost property and even those whose family members died in places where the levees and floodwalls failed.

There is about $14.2 million left to pay about 120,000 claims, an average payment of $118 per claim. The payments range from as low as $3 to about $3,000. The claims checks will be sent as soon as all objections are addressed, but Bruno said it’s unclear when that will be. Claimants who got letters this week have until March 29 to mail objections to the special master overseeing the settlement, Denham Springs-based Shelby Easterly III.

Even with the smaller-than-expected awards, there are claimants who are getting a lot less than what court documents say they should be receiving under a court-approved model that tallies points for different kinds of claims and then uses the points to calculate payments.

One of those is Marcus Jackson. His father and mother, the Rev. Royal Jackson Sr. and Elizabeth Jackson, drowned in New Orleans East during Katrina. A court notice in 2013 said each survivor would be awarded 807,000 points for a wrongful death claim. That should translate into at least $732 for two deaths alone, plus more points for survivor and property ownership claims. Instead, Jackson got a notice in the mail this week telling him he would get $44.

His sister, Ivy Jackson-Flemon, is getting just $3.22 as a visitor from Houston, even though she filed her parents’ death notices with her claim form and has tax forms showing she owned a portion of her parents’ home.

Beyond the pittance she’s getting, Jackson-Flemon was insulted that the notice told her not to call the court, the disbursing agent or the special master. Bruno said the limited access to the court’s agents is by design – to save additional millions that would have been spent from the settlement fund to pay staff to handle complaints and questions.

“If they’re going to do this, they should do it in an orderly manner, in a way that makes sense for everybody,” said David Quinn, whose family lost its home in Chalmette because of 11-foot-high rushing flood waters. “Because I’m sure everybody getting these letters are going through what we’re going through right now and they’re not understanding what they’re looking at.”

Forgive Quinn’s confusion. He got one letter from the court-appointed disbursing agent addressed to him that says his home wasn’t in the hurricane-affected area; then another letter, addressed to his wife Sheila said she had property and contents damage that entitle her to $110; and a third letter went to their son Derek, who was 12 years old at the time, and awarded him $56.

They all lived together in the same house in Chalmette that took on water up to the ceiling. A court notice in 2013 estimated a family with a home that flooded in more than 4 feet of water would qualify for at least $463. Altogether, this week’s notices say they’re getting $166.

© 2017 WWL-TV


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