Final Hurricane Ike suits settle for $135M

By Marilyn Tennissen | May 28, 2013

After almost five years and more than 10,000 litigants, the lawsuits over Hurricane Ike have come to a close.

Lead plaintiffs attorney Steve Mostyn announced Tuesday that the Texas Windstorm Insurance Association has agreed to settle the remaining litigation for $135 million.

Mostyn and a group of plaintiff lawyers, including state Rep. Craig Eiland, D-Galveston, have represented more than 10,000 homeowners, small businesses, municipalities, school districts and other organizations in litigation relating to the 2008 hurricane that hit Galveston.

The settlement applies to 1,200 homeowners, who were among thousands filing suit against TWIA on allegations that the agency failed to reimburse property owners in a timely manner and denied or underpaid claims.

Last week, the Record reported that Mostyn was believed to be behind the efforts to kill legislation that would have reformed TWIA finances. State Sen. Larry Taylor, R-Friendswood, said “efforts to reform the coastal windstorm insurance program (TWIA) have been frustrated by the delaying and obstructionist tactics being employed by the Texas Trial Lawyers’ Association in the final days of this session."

“In an effort to get the bill out of the senate I agreed to compromise and remove the provision from SB 1700,” Taylor said. “Just as TTLA pledged to stop opposing the bill, word got to me that trial lawyer and Democratic mega-donor Steve Mostyn alone was pressuring senate members to block a vote.”

Without the reforms, the state insurance commissioner could have placed the windstorm agency into bankruptcy.

Mostyn said the $135 million in the settlement is less than one-third of the money the association had set aside to settle the claims.

“These settlements should also end misguided attempts by some politicians to force TWIA into receivership,” Mostyn said in a press release. “The proposal to place TWIA into receivership could have led to lengthy delays in claims processing, possible foreclosures for policyholders, and an inability of TWIA to secure funding through the sale of bonds to pay claims.”

Mostyn's firm is believed to have made $86 million in legal fees from Hurricane Ike litigation.

In February 2011, Eiland admitted he received more than $620,000 in legal fees from Hurricane Ike suits. He is also vice-chair of the Insurance Committee of the Texas House, which is responsible for overseeing TWIA. He has said that the legal fees would not impact how he would vote on issues pertaining to TWIA.

The settlement ends most of the litigation, with a small handful of cases still pending.

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