A total of 699 Gulf Coast homeowners filed suit in federaldistrict court Tuesday claiming that State Farm used a pro-formaengineering report to deny claims stemming from HurricaneKatrina.

The homeowners' suit, filed in U.S. District Court for theSouthern District of Mississippi, alleges the insurer denied manyclaims without investigating whether home damage was caused bywater, and therefore exempt from coverage, or wind, which would becovered.

Last September, Mississippi Attorney General Jim Hood filed asimilar suit in state court asserting that water damage caused bystorm surge was covered under homeowners' policies since it wascaused essentially by wind.

The insurance companies failed in their efforts to move the suitto federal court and the case is now back in state court.

Noted Gulfport plaintiff's attorney Richard Scruggs filed thisweek's suit, alleging that State Farm relied on a “one size fitsall” report prepared by Dallas-based engineering firm HaagEngineering Company because it concluded that Katrina's storm surgearrived before its wind could do any damage.

The suit alleges that before State Farm engaged Haag, manycompany-commissioned engineering reports concluded that much of thedamage to State Farm policyholders was caused by wind.

State Farm refused to pay engineering firms for any reportsinconsistent with the Haag report, according to the suit.

“Therefore State Farm extorted reports and findings denyingevidence of wind damage from its employees and independentcontractors through financial incentives including nonpayment ofservices already provided,” the suit states.

A State Farm representative, Phil Supple, said the suit wastotally without merit. “State Farm has evaluated every Mississippiclaim individually, and we are committed to paying ourpolicyholders what is owed to them under their contracts with us,”he said.

He also noted that the company has already paid $1 billion toMississippi policyholders for Katrina claims.

A Haag Engineering representative, David Marguiles, emphasizedthat the company is not targeted in the suit, and called the“plaintiff's attempt to suggest that experience, research andexpertise are evidence of bias is ridiculous on its face.”

“Haag's reports were based on the facts and the application ofsound engineering principles to those facts,” he said.