Appeals court sides with Allstate, State Farm

NEW ORLEANS -- A federal appeals court has upheld the dismissal of two Illinois insurance companies from a lawsuit that accuses them of overbilling the federal government for Hurricane Katrina's flood damage in Louisiana.

But Wednesday's ruling by the 5th Circuit Court of Appeals revives the case that lawyers for a group of purported "whistleblowers" filed against several other insurance companies and adjusting firms after the August 2005 storm.

The appeals court ruled that Northbrook-based Allstate and Bloomingto-based State Farm were correctly dismissed from the Louisiana suit because they already were defendants in a similar suit in Mississippi.

But the 5th Circuit said a lower court erred in dismissing six other insurers and six adjusting firms that aren't named in the Mississippi case.