As you open this issue, Richard Scruggs’ cell door is closing. He is getting acquainted inside a federal prison that will be his new home for the next five years. Scruggs was the lead attorney for policyholders affected by Hurricane Katrina and the most vocal critic of all things anti-concurrent causation, storm surge, and corporate greed (lest we forget tobacco, as well). But in late June 2008, he was brought down in stunning fashion, like so many others these days, for the very thing he purported to fight.
In many ways, Scruggs was convicted for acting in much the same immoral manner that he has accused insurers of doing. For those unfamiliar with his litigation, Scruggs alleged that insurance companies used doctored forensic and engineering reports to limit or eliminate claims paid after Katrina struck, a storm that is still very much alive in the newly built litigation wings of Big Insurance. He also alleged that insurers sought to shift claims to the National Flood Insurance Program by attributing losses to flood waters rather than hurricane winds, thereby limiting their own losses. It remains to be seen who will be handling these cases at press time.
In a word, what led to Scruggs’ conviction was greed. It boiled down to a lawsuit about how $26.5 million in attorneys’ fees should be divvied up between several firms who had joined together to form the Scruggs Katrina Group to fight the aforementioned insurance “devil.” Scruggs, in a bid to compel a favorable ruling — which would have resulted in more money for him, money he has admitted he didn’t really need — arranged for a $50,000 bribe to be delivered to Judge Henry L. Lackey. But the only thing compelling Judge Lackey was the FBI, which had fitted him with a recording wire.