Richard "Dickie" Scruggs

Dickie Scruggs Pleads Guilty; Son Still Faces Bribery Trial

Posted: March 15, 2008 08:54 AM

Updated: March 15, 2008 10:18 AM

OXFORD (WLOX) -- After years of crusading for shipyard workers, smokers and Katrina victims, Mississippi's most famous lawyer pleaded guilty on Friday to "conspiracy to bribe a judge". Scruggs and fellow attorney Sidney Backstrom both pleaded guilty to conspiracy to bribe a circuit court judge for a favorable ruling in a dispute over Katrina legal fees.

Prosecutors says they'll ask that Backstrom serve two and a half years in prison and recommend a five year sentence for Scruggs.

It's not official, but a former president of the Mississippi Bar Association says Scruggs and Backstrom have, in effect, already lost their ability to practice law in our state. Biloxi attorney Don Dornan says the Bar Association automatically suspends a lawyer's license any time he or she is convicted or pleads guilty to a crime.

"In 2002, the Supreme Court amended the rules the provide that if any attorney is convicted or pleads guilty to a crime involving bribery or interference with the administration of justice then that attorney would be ineligible to have his license reinstated," said Dornan. "So any lawyer who is convicted or pleads guilty of that type of crime would not be able to return to the practice of law."

Dornan says the bribery pleas are a blight on the judicial system. He says the pubic needs to know that people who engage in that type of behavior will be dealt with harshly.

Scruggs' son and law partner, Zach, did "not" enter a plea. He is still scheduled to go to trial March 31st.

An FBI search of Dickie Scruggs law offices in Oxford on November 27th was the first sign of trouble for the famed attorney. At the time Scruggs' lawyer downplayed the search. A day later Dickie Scruggs, Zach Scruggs, Sidney Backstrom, former State Auditor Steve Patterson and lawyer Timothy Balducci surrendered to federal authorities in Memphis. All pleaded not guilty of trying to bribe Third District Circuit Court Judge Henry Lackey with $50 thousand cash.

The indictment said Scruggs and his associates wanted Judge Lackey to rule in their favor in a civil lawsuit against Scruggs' firm. Judge Lackey reported the bribery attempt to the federal investigators.

In a news conference following the indictment U.S. Attorney Jim Greenlee said " Attempted bribery of a circuit judge, strikes at the heart of our judicial system."

Court papers named Balducci as the person who approached Judge Lackey to offer the bribe on Scruggs behalf. The indictment also detailed recorded conversations between the parties discussing the bribery offer. Days after his 'not guilty' plea, Timothy Balducci did a 180 degree turn and pleaded 'guilty'. He also agreed to cooperate with federal investigators. Steve Patterson struck a deal with prosecutors in January.

The three remaining defendants filed motion after motion to get the March 31st trial delayed or moved out of Mississippi. Sidney Backstrom asked twice to be tried separately from the Scruggs and even Zach Scruggs tried to have his case tried separately from his father's case. The judge denied all of those motions.

Dickie Scruggs' last legal maneuver, pleading guilty, did not surprise coast criminal defense attorney Tim Holleman. Holleman said after reading transcripts of recorded conversations he felt there would be pleas before the March 17 deadline for deals.

Holleman said Zach's case "could" be impacted by what happened because law partner Sidney Backstrom is getting a slightly different plea deal than Dickie Scruggs.

"Mr. Scruggs did not make a deal to cooperate," said Holleman. "He had an open plea, meaning he was going to plead guilty and the judge is going to sentence him without him agreeing to cooperate I assume against his son. That's the reason to do that."

"Mr. Backstrum who also pled guilty agreed to cooperate meaning he is going to testify more than likely. The only case that I can see him testifying in is Zach Scruggs' case."

Scruggs' fame would have made the bribery case national news on its own, but his family ties to retired Senator Trent Lott added to the intrigue and speculation since the story broke. Lott's wife and Scruggs' wife are sisters.

The Scruggs indictment came just two days after Lott's surprise announcement he would retire from the U.S. Senate. Federal prosecutors denied any connection in the two events, but as the case against Scruggs unfolded, Trent Lott's name kept coming up.

Another judge Bobby DeLaughter, said he was approached about ruling in Scruggs' favor with the promise of using Scruggs' connection to Lott to get DeLaughter's name in for a federal judgeship.

Then, prosecutors and defense attorneys said they planned to call Lott to testify if the case against Dickie Scruggs went to trial. After the guilty pleas, the federal government dropped underlying charges wire fraud against Dickie Scruggs and Backstrum.

To view the entire plea agreement, click here.

To view the fact basis document, clic here.

By Danielle Thomas

Background till this point.

Human Rights, Bill of Rights, property and personal rights more often today require a lawyer to enforce than ever before. So between you and rights are lawyers earning a fee. It's a modern rights tax.

Richard Scruggs has been at the forefront of many of those fights. In the 1990s, he came to national attention when he spearheaded the assault on the tobacco companies, winning nearly $250 billion from the industry which led to the Russell Crowe 1999 Hollywood courtroom drama "The Insider."

Mr. Scruggs, who has earned hundreds of millions of dollars personally by bringing enormous lawsuits against powerful and well connected defendants. The big time litigation began with asbestos makers all the way up to the tobacco industry. Of recent he has filed hundreds of lawsuits on behalf of policy holders against the insurance industry to pay victims of Hurricane Katrina. He has described his battle with insurers as personal.

His aggressive assault on big industries, often on behalf of people of modest means, has earned him respect, fear and criticism. After he helped bring numerous lawsuits against nonprofit hospitals in 2004, hospital officials said that defending themselves was distracting them from the job of treating uninsured patients. Scruggs said it was the uninsured patients he was standing up for. His lawsuits alleged that the hospitals were overcharging patients for medical services. He also found hospitals throughout the United States had been suing patients of these "Free Hospitals" when there never was any hope of getting payment. The only winner in the suing being the lawyers in running millions of claims.

We have decided to include the Scruggs story in our story. When I began looking at the lawyer judge bribery story, I thought I was just looking at another example of corruption. But this appears to be an "industry hit" and it is currently being played out in the state of Mississippi law Courts. This is about a lawyer who has taken on the legal food chain.

Scruggs is facing two criminal proceedings. The first began a few months ago after a judge ordered the return of some documents that Dickie thought contained some critical evidence. He did return it, but via the State Attorney-General. The judge hit him with a charge of criminal contempt of court.

The next hit arrived in the form a claim by the FBI that Mr Scruggs and his son had employed a lawyer by the name of Timothy Balducci to bribe a judge.

This is fast becoming the most interesting case in America's legal history.

Some of the current news

Only arrogance could account for Scruggs' risk
By WYATT EMMERICH - For the Delta Democrat Times

Thursday, December 13, 2007 1:25 PM CST

Dickie Scruggs' indictment is a real head scratcher.

How could a smart man who has reportedly made a billion dollars in legal fees risk it all trying to bribe a local judge over a few measly millions?

If Scruggs is indeed worth a billion, as some experts conjecture, then the legal fee dispute involved no more than a few week's interest on his billion.

How could Scruggs risk his jet, his yacht, his influence and his lifestyle for a small cell in a federal prison? It just doesn't add up.

The most common explanation is hubris. You may need to look that word up in a dictionary, but it's a great word. The word is perfect for describing the process by which arrogance and overconfidence lead to catastrophic mistakes in judgment - Scruggs felt invincible.
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Another explanation is greed. Scruggs has battled fellow lawyers over fees before. He has a reputation for wanting his share and then a chunk of his partner's share as well. This line of thinking imagines Scruggs so obsessed with grabbing all the chips on the table that he would stop at nothing.

A third explanation is corruption. The argument is that Scruggs made his way to the top of the lawsuit business because he had the audacity to bribe judges. According to this theory, he's been doing it so long it was second nature. Scruggs' connection to the Paul Minor bribery case indicates he's not new to using money to influence judges.

Politics on the Coast, influenced by New Orleans, has always had the reputation of being seamier than in the northeastern hill country. Maybe Scruggs was just a fish out of water, having moved north from the wide-open Coast.

Further adding to the weirdness is that the alleged bribe was to get the judge to send the fee dispute to arbitration. Scruggs' opponents had tried on several cases to force Scruggs to arbitrate. Why would Scruggs bribe a judge to get a decision that his opponents had been wanting all along? (One theory here is that Scruggs belatedly realized it would be easier to bribe a low-level arbitration attorney than an appellate judge.)

Another explanation could be that Scruggs is innocent and that Tim Balducci was acting on his own without Scruggs' knowledge. Once Balducci was caught, he decided to implicate Scruggs in order to save his own bacon.

This is a real problem with white collar criminal prosecutions. The bad guy, who has already proven his dishonesty, points a finger at his boss in exchange for a lesser sentence. It becomes a “he said, she said” deal in which the accuser has already established a lack of integrity or honesty.

If Balducci would try to bribe a judge, why wouldn't he lie about Scruggs to get a lesser sentence?

The prosecution of Bernie Ebbers was a classic case of this, relying primarily on the accusations of his subordinate Scott Sullivan.

Sullivan, perhaps the mastermind of the Worldcom chicanery, got off light after delivering Ebbers' head on a platter to the feds. Could this be the fate of Scruggs?

If Balducci was caught red-handed, and if he is the type of person who would bribe a judge, why wouldn't he cut a deal with the feds? Balducci is a nobody. Nailing Scruggs could make a federal prosecutor's career.

This is a slimy set of motivations and incentives all around.

I have read the Scruggs indictment, and I believe the case is weaker than many people may think. I say this because all the wired recordings referenced by the indictment involve Balducci. There is nothing concrete on Scruggs.

As an example, item 13 of the indictment states, “On September 27, 2007, Timothy R. Balducci and Steve A. Patterson had a telephone conversation wherein Balducci told Patterson, ‘All is done, all is handled, and all is well.'”

Now they may well have been talking about a bribe. But they could have just as well been talking about the completion of a legal brief. If the feds are going to put a quote in an indictment of this magnitude, it should be something along the lines of “I gave the judge $50,000 in cash and he promised me he would rule in our favor.” “All is done” is about as vague as you can get. It just doesn't cut it.

The real link between Dick Scruggs and Balducci is the money. Scruggs conveyed the money to Balducci for “jury consulting” services. The indictment argues that this was a fraudulent means of disguising the bribe. Maybe so. But how are the feds going to prove that Scruggs knew the money was going to the judge?

It's like when a company hires a lobbyist to influence legislation. The company assumes the lobbyist will act within the law. Can you hold the company responsible if the lobbyist offers a legislator a bribe?

I predict this will be similar to the Paul Minor case, which resulted in a hung jury the first time around, before the feds succeeded a second time. If the evidence on Scruggs is circumstantial, it is very possible that at least one juror will refuse to convict, resulting in a hung jury.

Here's a frightening possibility: If Scruggs really is a master at bribing judges and jurors, imagine how hard he will work on the trial of his life. If Scruggs has bribed judges at will, how hard will it be for him to bribe one juror out of 12?

Scruggs' real threat is the complete intolerance of Mississippians toward anything that even hints at judicial corruption. A corrupt cop is much worse than a corrupt crook. Scruggs' governmental role and legal prominence means the average citizen will hold him to a very high standard. If that's the case, circumstantial evidence will be sufficient. Jurors may decide that protecting the integrity of our courts is worth the possibility of sending an innocent man to jail. Guilt by association may prove to be enough.

Certainly that was the case with Bernie Ebbers, who was convicted by a deeply divided jury. You could also argue that Paul Minor was guilty of nothing more than a misdemeanor campaign finance violation. Great power requires great responsibility. The high and mighty are held to a high and mighty standard. Any deviation from impeccable morality is not tolerated by the citizens of our state.

Wyatt Emmerich is president of Emmerich Newspapers, owner of the Delta Democrat Times.

Dickie Scruggs

12/12/2007
Scruggs gets new judge in contempt proceedings
by John O'Brien
Scruggs
BIRMINGHAM, Ala. - A federal judge from Florida will preside over the criminal contempt case against prominent Mississippi trial lawyer Richard "Dickie" Scruggs taking place in Alabama.

Eleventh Circuit Court of Appeals Chief Judge J.L. Edmondson appointed Judge C. Roger Vinson Tuesday, nearly a month after Scruggs' defense team successfully argued that each of the federal judges in Northern Alabama district should recuse themselves from the case.

Edmondson wrote that Vinson indicated he is "willing and able to perform the duties of district judge" in the case against Scruggs.

Scruggs claimed that because each of the Northern Alabama judges personally knew Judge William Acker, they should not be allowed to preside over the case. It was Acker who kickstarted the indictment of Scruggs by hiring special prosecutors to make the charges.

He claimed Scruggs did not comply with an injunction in December by refusing to hand over documents from E.A. Renfroe, a claims-handling company working with State Farm after Hurricane Katrina, back to the company's attorneys.

Instead, Scruggs gave them to Mississippi Attorney General Jim Hood. Acker recommended to U.S. Attorney Alice Martin that she pursue criminal contempt charges, but she declined. Hood had asked Martin not to because he considered Scruggs a confidential informant for his class action case against five insurance companies, including State Farm.

That's when Acker enlisted the help of special prosecutors who would file charges. For that, Scruggs' legal team moved to disqualify not just Acker, but all federal judges for the Northern District of Alabama.

"Undersigned counsel have great respect for all the judges and magistrate judges in the Northern District of Alabama, so it is with trepidation but out of great concern that we raise the issue of recusal," says Scruggs' motion, filed Nov. 13.

"Simply put, how can any one of the Honorable William M. Acker's colleagues, in a case in which he has taken a great personal interest, including signing the charging document 'on behalf of the United States of America,' decide the issues involved -- including the request to dismiss charges and/or to set aside the appointment of prosecutors -- without thinking about the effect the rulings will have on the esteemed Senior Judge with whom he or she serves?"

Vinson graduated from the U.S. Naval Academy and spent six years as an aviator before obtaining his J.D. from Vanderbilt University. President Ronald Reagan appointed him to the federal bench in 1983.

Scruggs is also facing criminal charges in Mississippi, where federal prosecutors say he and four others conspired to bribe a state judge with the goal of compelling arbitration in an attorneys fees dispute with another law firm.

The two sides disagreed on how to split up $26.5 million in attorneys fees earned in a settling of 640 cases under Hood's class action suit against State Farm.

Scruggs's Co-Defendant Agrees
To Plead Guilty in Bribery Case
Associated Press
December 5, 2007 12:59 p.m.

JACKSON, Miss. -- Timothy Balducci, a co-defendant in the federal bribery case against plaintiffs attorney Richard "Dickie" Scruggs, has agreed to plead guilty to one count of conspiracy and to cooperate with the government.

Mr. Balducci entered the plea late Tuesday after initially pleading not guilty. No sentencing date was set, and Mr. Balducci was released on his own recognizance. The charge carries a five-year sentence.

Federal prosecutors have alleged that Mr. Balducci earlier this year approached state Circuit Court Judge Henry Lackey on Mr. Scruggs's behalf and offered to pay him $40,000 for a favorable ruling in a civil case. The case before Judge Lackey involved a dispute between Mr. Scruggs and other lawyers over $26.5 million in fees from a mass settlement of lawsuits that homeowners filed against State Farm Insurance Co. after Hurricane Katrina.

Judge Lackey reported the alleged "bribery overture" to federal authorities, who, according to Judge Lackey, equipped the judge's chambers with video and audio recording equipment and taped several conversations between Mr. Balducci and Judge Lackey.

Mr. Scruggs was released on $100,000 bail last Wednesday, while co-defendants Zach Scruggs and Steve Patterson were released on $50,000 bail the same day. Another lawyer, Sidney Backstrom, was arraigned and released on his own recognizance Thursday.

Mr. Scruggs, who has earned millions of dollars bringing lawsuits against asbestos makers and the tobacco industry, over the past two years filed hundreds of lawsuits on behalf of policyholders against the insurance industry to pay more for Hurricane Katrina damages. He has described his battle with insurers as personal. Mr. Scruggs's home in Pascagoula, Miss., and those of many of his friends and family, including his brother-in-law, Sen. Trent Lott, were damaged or destroyed in the hurricane.

JACKSON, Miss.5 December 2007 - An attorney has pleaded guilty to conspiracy to bribe a judge and is assisting federal prosecutors in a case involving one of the nation's wealthiest trial lawyers, according to court documents.

Timothy Balducci entered the plea late Tuesday after initially pleading not guilty.

According to court papers, Balducci was accused of delivering thousands of dollars to a judge at the behest of prominent attorney Richard "Dickie" Scruggs for a favorable ruling in a civil case.

The case before the judge involved a dispute between Scruggs and other lawyers over $26.5 million in fees from a mass settlement of lawsuits that homeowners filed against State Farm Insurance Cos. after Hurricane Katrina.

Scruggs and the other attorneys appeared in court a week ago and pleaded not guilty to charges against them.

Scruggs, a brother-in-law of Sen. Trent Lott, R-Miss., earned millions from asbestos litigation and from his role in brokering a multibillion-dollar settlement with tobacco companies in the mid-1990s. His case against the tobacco companies was portrayed in the 1999 movie "The Insider," starring Al Pacino and Russell Crowe.

No sentencing date was set and Balducci was released on his own recognizance. The charge carries a five-year sentence.

$50,000 bribe offer alleged
An indictment accuses Scruggs of conspiring to pay the judge $50,000 to rule in his favor in a lawsuit brought by other attorneys who sought fees for work on Katrina insurance litigation.

Circuit Court Judge Henry Lackey reported the "bribery overture" to federal authorities and agreed to assist investigators in an "undercover capacity," according to the indictment.

Scruggs' son and law partner, Zach Scruggs, former Mississippi Auditor Steve Patterson and attorney Sidney Backstrom were also indicted in the case. Patterson, who is not an attorney, worked for Balducci's law firm in New Albany, Miss.

They face charges including one count of defrauding the federal government and two counts of wire fraud.

"I'm convinced that these guys did not do what they're accused of doing," said Joey Langston, a lawyer for Scruggs' firm.

Balducci allegedly said during one conversation with Zach Scruggs and Backstrom that "we paid for this ruling; let's be sure it says what we want it to say," the indictment says.

After Katrina hit on Aug. 29, 2005, the Gulf Coast native sued insurers on behalf of hundreds of policyholders whose claims were denied after the storm.

Background from some years ago

Ground Zero for the class-action litigation filed against more than 400 not-for-profit hospitals and health systems isn't an urban warehouse staffed 24/7 by teams of lawyers and investigators. It's an elegantly appointed second-floor law
office of plaintiff attorney Richard Scruggs overlooking the Lafayette County
Courthouse square in Oxford, a northern Mississippi college town of 12,000 and home to the late author William Faulkner and the University of Mississippi.

Scruggs, 58, is a nattily attired and courtly country lawyer whose wave of lawsuits have struck the tax-exempt hospital industry like a tsunami, with more hospital
defendants added almost weekly. Lawyers who have faced Scruggs or worked with him advise hospitals to take his legal actions seriously. They say his name is still cursed in the boardrooms of asbestos and tobacco companies for the
multi-billion-dollar settlements he and his legal team have extracted from them.

Scruggs and his team of 10 other law firms filed the 52 hospital lawsuits in federal courts on behalf of uninsured patients alleging that not-for-profits routinely overcharge self-pay patients, hound them with aggressive collection policies and fail to provide adequate charity care even as they hoard millions of dollars in cash reserves and property in violation of their tax-exempt status. The American Hospital Association is named a co-conspirator and defendant in a number of the lawsuits.

Since June when the Scruggs-led legal team began filing the lawsuits, hospitals have scrambled to reassess their charity-care, collection and governance policies. And Scruggs has already claimed one victory in the litigation against hospitals, inking an agreement in August with North Mississippi Health Services, Tupelo, the largest rural health system in the country, which had not even been sued when the agreement was announced.

In defense of access

Scruggs disagrees that the case is only about the economic harm and humiliation suffered by poor and uninsured patients socked with harassing bills that have driven some to bankruptcy. He says it's also about how hospitals' policies are affecting access.

He says the harm the hospitals have created with their charity-care policies is more insidious in some ways than what the tobacco and asbestos industries have wreaked with their products. "These hospital policies discourage patients who need medical care from seeking treatment at the price of aggressive collection practices," he says. "They've erected a bar to hospital beds. Patients will delay and delay treatment until they can no longer wait and the problem becomes most acute and far more expensive."

While Scruggs agrees that hospitals collect less than 5% of the money owed them by poor and uninsured patients, he contends hospitals have a reason for expending all that effort to collect from poor people unable to repay debts that are usually written off: "These policies are designed to discourage the utilization of healthcare services," he says.

He says former hospital chief executive officers and chief financial officers he's interviewed say many hospitals develop their own in-house collection firms because outside collection agencies usually decline to tackle such accounts with little likelihood of repayment. "You can't squeeze blood out of a turnip, but you can keep the turnip from coming back," he says. "This is a form of patient-dumping. They don't want these patients to come back." He paraphrases a frequently used axiom used by not-for-profit hospital executives: "No margin, no mercy."

A Mississippi icon

So who is this new Darth Vader of the tax-exempt hospital industry, directing the attacks on community and faith-based hospitals? Scruggs is a self-made Mississippi legend. In one of the nation's poorest states he has amassed a fortune of several hundred million dollars by suing big corporations that have harmed or killed people through their products. Scruggs led the effort to end the tobacco industry's 50-year legal winning streak in 1998 by recovering a historic, $205 billion settlement with 46 states.

Scruggs, the son of divorced parents, attended a military academy in Georgia where he excelled in swimming. He attended the University of Mississippi and earned both his undergraduate and law degrees. In between, the ROTC graduate accepted a commission to fly A-6 Intruders for the U.S. Navy. After leaving the Navy in 1974 and finishing law school three years later, he worked for two different Jackson, Miss., defense law firms, leaving each after two years, before finally setting up his own shop in Pascagoula, Miss. "I guess I was not content to sit back and pay my dues and work within a big, structured law firm," he recalls. "I saw too many lawyers spreading themselves too thin and shooting from the hip, rather than preparing their cases. I didn't think they were doing it right and thought I could do it better."

Scruggs is an excruciatingly polite man quick with a joke or anecdote, who speaks with a genteel Southern accent. He seems at ease in his dark-wood-paneled office surrounded by law books, modern art paintings and a view of the stately county courthouse out his balcony window. On a small stand sits a photo of Scruggs with presidential candidate Sen. John Kerry. In a small-population state like Mississippi, it's hard not to know other movers and shakers. While Scruggs has supported Democrats, his brother-in-law is conservative U.S. Sen. Trent Lott (R-Miss.). Scruggs says he enjoys a terrific relationship with Lott, who, while railing against the power of trial lawyers, assisted in helping resolve the tobacco litigation.

And Scruggs' fame has spread beyond Mississippi. He was depicted in the film "The Insider," starring Al Pacino and Russell Crowe. And he is the rumored model for the novel The King of Torts by former Oxford resident John Grisham.

Colleagues and foes alike cite his innovative legal theories and work ethic, even as they disagree on his tactics.

Former Mississippi Attorney General Mike Moore, an Ole Miss law school classmate of Scruggs, says the two worked together for six years on the tobacco litigation. "He was my field general on the private side," says Moore, now practicing with the Jackson, Miss., law firm of Phelps Dunbar. "His negotiating style is friendly, but tough. His presentation is unpretentious, frank and open. But people will find if they take him for granted they'll find themselves at the end of a very blunt stick."

Moore knows from personal experience. He and his firm represent four hospitals and health systems sued as part of the class-action litigation and he participated in the settlement agreement with North Mississippi Health Services.

Moore says Scruggs is well-prepared and always looks for the big picture. "He has great tenacity and no fear," he says of his friend and adversary. Stuart Gerson, a former Justice Department official with the Washington law office of Epstein Becker & Green, says Scruggs has triumphed through "tremendous opportunism" and persistence. Gerson, who battled Scruggs before and whose firm represents some of the defendant hospitals, says in the tobacco cases Scruggs "litigated and litigated and litigated and lost and lost and lost until he found a defendant too weak to litigate who agreed to a settlement. He was able to establish a precedent, which he used like a shoehorn to extract other settlements and ultimately bring down the industry. I can't argue with his success."

A dispute is born

Surprisingly, the genesis of the class-action litigation against hospitals was not rooted in the complaints of uninsured patients, but instead derived from a dispute between a disgruntled and angry physician and a hospital that the physician believed had done him wrong. A letter to a friend described what surgeon John Bagnato learned about the alleged business practices, including the billing and collection tactics of uninsured patients, of 442-bed Phoebe Putney Memorial Hospital in Albany, Ga.

David Merideth, a lawyer in Ridgeland, Miss., and former emergency room physician, brought Scruggs the letter from his medical school classmate Bagnato, who had been embroiled in a certificate-of-need dispute with the hospital over his proposed surgery center. Bagnato "was very persistent and very persuasive," says Merideth, also Scruggs' friend. Bagnato's letter detailed alleged conflicts of interest on the hospital's board, overseas accounts and charity-care policies Bagnato found abhorrent.

"If you took the numbers from that single Georgia health system and extrapolated them you arrived at roughly $2 trillion in cash and property assets that not-for-profit hospitals have socked away and are sitting on," Merideth says. "This is potentially a bigger public-interest issue than tobacco, with greater money at stake and bigger public-policy issues. It put the notion in my head that Dickie Scruggs should hear this."

A Phoebe Putney spokeswoman denied Bagnato's allegations and cited a defamation and fraud lawsuit the hospital filed against Bagnato's business manager in a state court on Aug. 17. That suit, as well as the Scruggs team's litigation against the hospital, are pending.

Scruggs says he sued the American Hospital Association for both substantive and tactical reasons. "The AHA was the hub of the wheel that set the tone if not the substance of the business models being employed by the not-for-profit hospitals we challenged," he says, citing AHA publications and guidance on the principles of running successful hospitals. "There was great cross-pollination. They are the master puppeteers. The exploitation of hospital tax-exempt status has spread through the medium of the AHA."

He says the plaintiff lawyers also sought to sue the AHA because they are seeking to consolidate the more than 50 lawsuits filed around the country in 22 states before a single judge in one courtroom. On Sept. 30, a multidistrict litigation judicial panel will hear a request from the plaintiffs to combine those cases.

The AHA has called the lawsuits "baseless" and a diversion of resources that could be used for community healthcare.

AHA spokesman Richard Wade says adding the association to the lawsuits may serve Scruggs' legal aims, but that doesn't make it valid. "If you're going to sue somebody, you have to have a reason," Wade says. "And if you don't, you make it up out of whatever scraps are available. We're a voluntary association; we don't mastermind anything. ... This is a social problem that hospitals did not create."

Scruggs says the AHA is disingenuous when it claims that his legal team will divert hospital resources needed for patients to costly litigation.

"There's not a single hospital system we have challenged in our litigation that doesn't file more lawsuits in a month than I have in my entire career," Scruggs says. "They engage in litigation wholeheartedly every day. They are a litigation machine. It's not a distraction to these hospitals, it's what they do. Their business is suing every bit as much as treating patients and harassing them for collection."

Scruggs says the litigation has cost about $500,000 to date and the law firms have established a $1.5 million war chest for expert witnesses and research, with more available as needed. He says the law firms pay the expenses for their own cases.

Scruggs predicts if the judicial panel does not consolidate the cases, some hospitals will settle, some will fight and win, and some will fight and lose. "But regardless of this litigation, the issue won't go away until it's resolved. We've given them (the hospitals) an easy way out."

REVIEW & OUTLOOK
Wall Street Journal
Mississippi Justice
March 15, 2007; Page A16

These columns have tried to monitor the increasingly marauding behavior of state attorneys general (see below), and few examples can match the assault of Mississippi's Jim Hood on State Farm insurance.

We've been digging into the gory details, which also reveal how one more AG has teamed up with the trial bar to squeeze law-abiding companies into dubious settlements. This tale is worthy of a Grisham novel, full of stolen documents, turncoat employees, attorneys who flout court orders, and an upcoming contempt hearing.

Within weeks of Hurricane Katrina, Mr. Hood filed a civil suit against State Farm and other insurers for denying flood claims -- even though their policies excluded flood damage. State Farm was also sued by Mississippi tort baron Dickie Scruggs. When the insurers refused to roll over, Mr. Hood turned up the pressure with a criminal probe. And his leverage in that probe included certain internal State Farm documents.

How Mr. Hood got his hands on those documents is a story all its own. It revolves around E.A. Renfroe, a company with offices in Alabama that was hired by State Farm to send insurance adjusters to evaluate Katrina claims. Two sisters, Cori Rigsby Moran and Kerri Rigsby, had worked as adjusters for Renfroe since the late 1990s. Both had signed employment agreements and codes of conduct promising to protect the confidential information of companies for which Renfroe worked.

Yet around February of 2006, the Rigsby sisters seemed to be thinking of something beyond contracts. According to court documents, they met with Mr. Scruggs (a friend of their mother's) and gave him State Farm documents they'd stolen from work. Mr. Scruggs at this point was working on his civil litigation against insurers, and the Rigsbys started clandestinely working with him. In June of 2006, the two copied 15,000 more pages of claims information and, on Mr. Scruggs's advice, gave a copy first to Mr. Hood and then to Mr. Scruggs. They also went on national television to crow about their theft, and to accuse State Farm of misconduct.
* * *

We'll leave it to readers to decide what motivated the Rigsby sisters, who claim they found evidence of State Farm fraud and so should be hailed as heroic whistleblowers. But it's worth noting that neither woman went to Renfroe management with their concerns before they stole the papers. Instead, they both took jobs with the Scruggs Katrina Group -- a coalition of trial lawyers suing over the hurricane -- and are now each earning $150,000 a year as "consultants" for advising on insurance litigation.

The real fireworks started when Renfroe sued the two sisters in federal court, alleging they'd broken employment agreements and a trade secrets law, and demanding return of the documents. Guess who then interceded? None other than Mr. Hood, who filed a brief admitting the documents were now at "the heart" of his criminal probe and couldn't be returned. Never mind that Renfroe had already agreed that Mr. Hood could keep his copies.

Mr. Hood claimed to be worried that, if the documents were returned to Renfroe, State Farm would see them and know what "evidence" the prosecutor had against it. In other words, the AG admitted in a court document that his strategy was to deny evidence to State Farm to make it easier for him to scare the company into a settlement. His demand for a stay of the proceedings would also have helped Mr. Scruggs -- the man who'd got him the documents -- keep his own set of papers.

To his credit, Alabama federal Judge William M. Acker Jr., showed himself wise to this racket. In a blunt opinion in early December, he said that it was "apparent" that the Rigsby sisters and Mr. Scruggs were "now engaged in a cooperative effort" to use the papers to sue State Farm. He then issued an injunction, demanding that everyone except law enforcement officials return their documents to Renfroe attorneys -- who themselves were under court order not to share them with Renfroe or State Farm.

That should have been the end of it. Instead, within days of Judge Acker's injunction, Mr. Hood's office had sent a letter to Mr. Scruggs suggesting that, instead of giving his documents back to Renfroe, Mr. Scruggs give them to the AG -- where they'd be beyond the reach of the injunction. The letter also promised to give the papers back to Mr. Scruggs later in the game. Mr. Scruggs did so, and the injunction went unfulfilled, all the way up until after the January day that State Farm agreed to settle with both the lawyer and the prosecutor. Only then did Mr. Hood's office send Mr. Scruggs's documents to Renfroe attorneys, as the court had ordered.

Judge Acker wasn't thrilled that an officer of the court (Mr. Scruggs) and a state law enforcement official (Mr. Hood) would so brazenly flout the law. He has since invited Mr. Scruggs and his law firm to explain why he should not be held in contempt of court, and on March 21 will hold a contempt hearing. Don't expect it to be pretty.

Then again, Mr. Scruggs and Mr. Hood have already got what they wanted. Mr. Scruggs helped Mr. Hood get internal State Farm documents for his criminal probe. Mr. Scruggs has used those documents in his litigation, and by his own admission has given them to other trial lawyers. Working together, the trial lawyer and AG ensured that State Farm wouldn't see what had been stolen, and thus never know how well it could defend itself. That made it easier for both men to pressure the company into a $130-million-plus settlement, rather than risk going to court.

Meanwhile, other disturbing aspects of this tale have leaked out. According to documents in the Alabama case, Mr. Scruggs also threatened to turn up the heat on State Farm unless the company agreed to pressure Renfroe into dropping its litigation against Mr. Scruggs's clients, the Rigsby sisters. How convenient. We're also told that Mr. Hood exerted pressure on State Farm to settle not just with the state, but also with Mr. Scruggs, who stands to make millions in contingency fees from the State Farm settlement. Look for some of that cash to make it back to Mr. Hood in the form of campaign contributions.
* * *

Whatever else this is, we wouldn't call it "justice." Attorneys general are immensely powerful and are supposed to enforce the law fairly and without playing favorites. Instead, many of them have essentially become business partners with the trial bar to shake down companies for cash and political gain. In an earlier day, this would have been known as absolute power corrupting absolutely.

Richard 'Dickie' Scruggs

Age: 61 Birthplace: Brookhaven, Miss.

Family status: Married for 36 years to Diane, the younger sister of the wife of U.S. Sen. Trent Lott (R-Miss.). They are the parents of two adult children: Zachary, a partner in his firm, and Claire.

Education: B.A. degree, 1969, and law degree, 1977, both from the University of Mississippi.

Previous jobs: Fighter pilot with U.S. Navy, flying A-6 Intruders, 1969-1974; after completing law school, worked for two Jackson, Miss., defense law firms before starting his own plaintiff's law practice in Pascagoula, Miss., in the early 1980s.

Attorney Richard Scruggs Disputes Alabama AG’s Actions
Date Posted: Monday, August 23, 2004 at 11:00 AM CST

Contact: Richard Scruggs
(682) 281-1212

Attorney Richard Scruggs Disputes Alabama AG’s Actions

Oxford, MS—August 20, 2004—Richard F. Scruggs issued the following statement today in response to Alabama Attorney General Troy R. King’s statement and petition to appear as amicus curiae in a class action lawsuit against Alabama’s Baptist Health System for price-gouging its uninsured patients.

“The lawsuit against Baptist Health System cannot, nor does it seek to, change the tax-exempt status of Baptist. These lawsuits aim to hold hospitals accountable to the provision of charitable non-profit healthcare in Alabama and other states, which has been abused by the management of hospitals and the AHA to the point where uninsured patients are being grossly overcharged for healthcare.

“We welcome Attorney Generals’ participation in the lawsuits to fulfill their duty to protect their citizens. Attorney Generals in Mississippi, Illinois, Minnesota and Connecticut have all taken positive legal steps towards protecting their citizens against hospital abuses. It is indeed disappointing that Mr. King, predecessor to Attorney General Bill Pryor, is out of step with the nations’ Attorney Generals. However, it is not surprising. Upon Mr. King’s advice, Mr. Pryor took the side of the tobacco industry until the tobacco settlement was announced and then tried to take credit for the settlement. Now, in the lawsuits against abusive nonprofit hospital practices, Mr. King appears to be taking the side of wealthy hospital administrators instead of his uninsured constituents. Based on his record, it appears that Mr. King has never met a lawsuit against a private citizen that he did not love and has never met a lawsuit against a moneyed corporation that he did not hate.

“Contrary to General King’s statement yet consistent with the rating agencies comments on the North Mississippi settlement, reforming nonprofit hospital practices for the benefit of uninsured patients can be a win-win for both patients and the hospitals without impairing the hospital’s financial viability.”

For more information on the nonprofit hospital litigation, go to www.nfplitigation.cm

Jackson 06/16/07
Attorney Richard Scruggs Challenged

By Cheryl Lasseter
cheryl@wlbt.net

The tables have turned slightly against Gulf Coast Attorney Richard Scruggs. He's suing State Farm Insurance on behalf of hundreds of Hurricane Katrina victims who say they were wronged by the insurance giant.

But now a U.S. District Judge is claiming Scruggs willfully violated an injunctive order. Federal Judge William Acker, Jr. of Alabama wants Scruggs and his law firm to be held in criminal contempt. Acker refers to December 8, 2006 preliminary injunction that required Scruggs to deliver all documents about State Farm that whistleblowers Cori and Kerri Rigsby secretly copied after the hurricane. The Rigsby sisters are former claims processors for state farm.

Judge Acker says, instead of complying, Scruggs sent the documents to Attorney General Jim Hood's office for "The calculated purpose of ensuring noncompliance with, or avoiding, the injunction."

Scruggs points out that the injunction includes an exception for law enforcement. Scruggs says "The injunction itself... authorizes us and the Rigsbys to cooperate with law enforcement, at law enforcement's request." He claims law enforcement includes the FBI, the U.S. Attorney's Office, the Department of Justice, and the Attorney General's office.

Scruggs adds "We're delighted (Judge Acker) is giving us the opportunity to make these documents available to the general public when, up until now, we could only give them to law enforcement."

The attorney also points out to a letter from a Special Assistant Attorney General, dated four days after the injunction. The letter requests the Scruggs law firm to provide the Attorney General's office with a copy of the documents duplicated by the Rigsbys.

Judge Acker counters by calling Scruggs' interpretation of the injunction's language "A strained construction... contrary to the injunction's clear terms."

Judge Acker says if the Federal Prosecutor in Birmingham declines the court's request, he will appoint another attorney to prosecute.

FBI Raids Scruggs Law Firm

Posted: Nov 28, 2007 06:09 AM

An attorney confirms that FBI agents executed a search warrant Tuesday in the Oxford law firm of Richard "Dickie" Scruggs. Joey Langston, who is representing the Scruggs firm but is not an employee there, said FBI agents and federal prosecutors began searching the office in downtown Oxford at about 10:30 a.m. Tuesday and were still there about 3 p.m. Langston told The Associated Press that the agents were looking for a single document that "might be ancillary to something pertaining to Katrina litigation," but is not directly involved in any of those cases.

Langston declined to elaborate but said he is confident that authorities will not find the document in question at the office. "We're as confident as we can be that this is nothing more than the federal authorities acting on information that will prove to be inaccurate and untrue," Langston said. Scruggs and his son and law partner, Zach Scruggs, were surprised by the search but are "cooperating 100 percent," Langston said. The FBI said in a statement from its Jackson office that warrant was issued "in furtherance of an ongoing investigation," but it did not elaborate. Langston said the search warrant was issued out of the northern Mississippi district of U.S. District Court and doesn't appear to be linked to criminal contempt allegations that Scruggs and his firm already face in Alabama.

In June, U.S. District Judge William M. Acker in Birmingham, Ala., ruled that Scruggs willfully violated a court order to return all of the documents given to him by two sisters who helped State Farm Insurance Cos. adjust claims on Mississippi's Gulf Coast after Katrina. After U.S. Attorney Alice Martin declined to prosecute Richard Scruggs, Acker appointed special prosecutors to handle the case. However, all of the federal judges in northern Alabama have agreed to disqualify themselves from hearing the case because they are Acker's colleagues. An appeals court in Atlanta is expected to appoint a new judge to handle the case.

Scruggs is a high-profile attorney who has represented policyholders in lawsuits with State Farm Fire and Casualty Co. over Hurricane Katrina damage. State Farm is based in Bloomington, Ill. Scruggs, who used to live in Pascagoula, has made millions of dollars in tobacco and asbestos litigation. He was one of the private attorneys who represented Mississippi when the state sued tobacco companies during the 1990s.

Tobacco-Deal Lawyer Indicted in Mississippi
By MICHAEL KUNZELMAN
Associated Press Writer

Posted: Nov. 29, 2007

NEW ORLEANS — An attorney who helped negotiate a multibillion-dollar settlement against tobacco companies in the 1990s and has sued insurers over unpaid Hurricane Katrina claims was indicted Wednesday in a suspected scheme to bribe a Mississippi judge.

The indictment accuses Richard "Dickie" Scruggs of conspiring to pay the judge $50,000 to rule in his favor in a lawsuit brought by other attorneys who sought fees for work on Katrina insurance litigation.

Circuit Court Judge Henry Lackey reported the "bribery overture" to federal authorities and agreed to assist investigators in an "undercover capacity," according to the indictment.

Scruggs was indicted along with three other attorneys, including his son, who is his law partner, and a former Mississippi auditor. They face charges including one count of defrauding the federal government and two counts of wire fraud.

"I'm convinced that these guys did not do what they're accused of doing," said Joey Langston, a lawyer for Scruggs' firm.

Also named as defendants in the indictment are Zach Scruggs; Sidney Backstrom, a lawyer in Scruggs' firm; Timothy Balducci, a New Albany, Mississippi-based lawyer; and former state auditor Steven Patterson, who works with Balducci.

Patterson resigned as auditor in 1996 after he was accused of lying on state documents to avoid paying taxes on a car tag.

Scruggs turned himself in to authorities Wednesday afternoon at a federal building in Oxford, Mississippi, where the grand jury handed up the indictments earlier in the day, Langston said.

After their arraignment Wednesday, Richard Scruggs was released on $100,000 bail, while Zach Scruggs and Patterson each were freed on $50,000 bail. Langston said Backstrom is expected to be arraigned Thursday, but he couldn't say when Balducci is expected to appear in court.

Langston said it was too early for him to comment on the details of the allegations.

"Right now, we've just got to get our arms around it," he said.

Richard Scruggs, whose brother-in-law is Sen. Trent Lott, R-Mississippi, earned millions from asbestos litigation and from his role in brokering a multibillion-dollar settlement with tobacco companies in the mid-1990s.

His case against the tobacco companies was portrayed in the 1999 movie "The Insider," starring Al Pacino and Russell Crowe.

After Katrina hit on August 29, 2005, the Gulf Coast native sued insurers on behalf of hundreds of policyholders whose claims were denied after the storm.

On Tuesday, FBI agents searched Scruggs law offices and left with copies of computer hard drives, Langston said.

The alleged bribery scheme stems from a lawsuit filed in March against Scruggs by a Jackson, Mississippi, law firm, Jones, Funderburg, Sessums, Peterson & Lee in a dispute over $26.5 million in attorneys' fees.

Scruggs created a legal team called the Scruggs Katrina Group to represent policyholders who sued their insurers after the hurricane.

In January, Scruggs' legal team reached a mass settlement of suits with State Farm Insurance Cos. that involved more than $26 million in lawyers' fees.

The lawsuit accuses Scruggs of trying to "freeze out" lawyers from the Jackson law firm, including senior partner John G. Jones, and pay it a "ridiculously low figure" for its "substantial" work.

After the suit was filed, Balducci is accused of having several meetings and conversations with Lackey in which Balducci agreed to pay the judge for ruling in favor of Scruggs in the case, according to the indictment.

Scruggs allegedly tried to cover up the scheme by falsely creating documents that showed he hired Balducci to work on an unrelated case, when he was actually reimbursing him for the cash bribes, the indictment said.

The indictment includes excerpts of telephone conversations between Balducci and the judge that were presumably recorded by federal authorities.

Plaintiff's attorney from Mississippi, head negotiator and top lawyer in the Medicaid cases; Scruggs and Michael Moore have been lead negotiators for the national settlement. After Moore suggested the idea of the Medicaid cases, Scruggs became Moore's partner and together they gathered all the elements necessary to bring Big Tobacco to the negotiating table. Scruggs also brought famous trial attorney Ron Motley into the team, so they would be ready to go to trial if necessary.

Scruggs' brother-in-law is the Senate Majority Leader Trent Lott, who provided some of the key national connections. Scruggs' and Moore have been spending a great deal of time in Washington, DC convincing lawmakers to legislate the settlement into law.
Scruggs first became successful in national class action suits against the asbestos industry.

He brought that experience to bear on the tobacco industry, "making the stakes so high that neither side can afford to lose." He had the guts to protect two whistleblowers -- Jeff Wigand and Merrell Williams -- who no one else would touch. And he helped convince Bennett LeBow to defect from the tobacco industry's united front and turn state's evidence.Under normal contingency fee agreements, Scruggs would stand to make over $1 billion dollars on the tobacco cases. He defused this issue by agreeing to have his fees decided by a national panel of judges.

It seems Judge Henry L. Lackey, a deacon at First Baptist Church and a member of a state commission charged with ensuring judicial integrity, should be among the last people one would consider offering a bribe.

But an indictment handed down last week alleges high-profile attorney Richard "Dickie" Scruggs and four others were part of a conspiracy to offer Lackey $50,000 in exchange for a favorable ruling in a dispute between Scruggs' firm and another over $26.5 million in attorneys' fees for work on Hurricane Katrina-related claims.

After the bribe was allegedly offered in March, Lackey decided to report it, and he agreed to go undercover for the FBI. The judge listened to propositions by attorney Timothy Balducci on behalf of the group, authorities said. Working under cover Sept. 21, Lackey agreed to accept the money for the ruling and took $20,000 of it in cash less than a week later, the indictment said.

For his work, investigators called Lackey a hero.

The case has made national news and much of the state has been abuzz. In the small towns scattered across Lackey's expansive 3rd Circuit Court District, which encompasses Lafayette, Marshall, Calhoun and Chickasaw counties, among others, those who know the judge said his actions are typical of him.

"It didn't surprise me that he would take the position that he did," said Lucy Carpenter, Marshall County Circuit Clerk. "I have a great deal of admiration for him and I wouldn't have expected him to act any different than he did. I'm surprised that those attorneys thought that he was someone you could bribe."

The judge, who took the bench in 1993, on Friday night had little comment about the case, saying he didn't want to jeopardize the trial. He said he was shocked when he was allegedly offered the bribe, but declined to elaborate.

Lackey last week told The Wall Street Journal he knew Balducci but had met Scruggs only once. He also said he was looking forward to testifying. The defendants now face a maximum of 75 years in prison, $1.5 million in fines, and 18 years of supervised release, among other penalties.

Steve Patterson

Tim Balducci

In a Wall Street Journal Web blog, Scruggs' attorney, John Keker, said he believed the interviews with national media might suggest Lackey was out for notoriety rather than justice.

The judge told the Sun Herald on Friday some of his remarks were misinterpreted.

Lackey made headlines earlier this year when he reversed a decision by the state Democratic Party Executive Committee and allowed eight-term state Insurance Commissioner George Dale to be on the ballot as a Democrat. Dale was later defeated.

Judge Henry L. Lackey

He is a legendary trial lawyer, and one of the richest men in Mississippi. His name graces the music building at his alma mater, Ole Miss. He is the brother-in-law of Republican Sen. Trent Lott, and a friend of the Democratic state attorney general.

Attorney Richard F. "Dickie" Scruggs once vowed to use his expertise, stature and money to fight the insurance industry's alleged mishandling of homeowners' claims after Hurricane Katrina.

But now he may be fighting for his freedom.

This week, the lawyer was indicted by a federal grand jury, accused of attempting to bribe a state judge presiding over a lawsuit involving millions of dollars in legal fees. He and four other defendants, including his lawyer son, could face up to 75 years in prison if convicted.

The news is sending shock waves throughout the legal community -- and the state.

On the Mississippi coast, some of Scruggs' clients were wondering what the news would mean for the scores of pending cases that his law group brought against their insurance carriers.

"I feel like I'm sitting on top of a barbed-wire fence," said Lyman Cumbest, a neighbor and client of Scruggs who is suing State Farm Insurance. "I don't know if our lawsuit will continue to be pushed through the court or not."

Meanwhile, Scruggs' fellow lawyers were wondering why a man of such wealth would allegedly risk so much for a quibble over a few million dollars.

"It just boggles the mind," said Jack Denton, a trial attorney in Biloxi, Miss. "Here is a man who has had an enormous amount of success, who reached a level very few attorneys, if any, have reached. Why would he risk everything over a legal dispute over attorneys' fees?"

The case was even reverberating in the realm of national politics: The Associated Press reported Thursday that a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) scheduled for Dec. 15 at Scruggs' Oxford, Miss., home had been canceled by her presidential campaign. Former President Clinton had been slated to appear.

Scruggs, 61, could not be reached for comment Thursday. Nor could his defense attorney, John W. Keker. The San Francisco lawyer is storied in his own right. He successfully prosecuted Oliver L. North in the Iran-Contra scandal, and defended Chief Financial Officer Andrew S. Fastow in his Enron trial.

Scruggs originally hired Keker to defend him in another criminal case, in which he has been charged with contempt for allegedly defying the orders of a federal judge. An arraignment date in that case has not been set.

On Thursday, Scruggs wrote a letter to the judges overseeing his Katrina litigation with State Farm, claiming that he "did not intend to let down or hinder any of the families" he was representing.

But Don Barrett -- a lawyer and co-founder of the Scruggs Katrina Group, the attorneys representing policyholders in the storm-related litigation -- filed a separate letter. He said that "in light of all that has happened," the remaining firms would end their association with Scruggs and form another group to prosecute cases.

Scruggs grew up in a modest home in Pascagoula. After graduating from the University of Mississippi's law school, his first significant case was representing shipyard workers who had been exposed to asbestos.

In the 1990s, he came to national attention when he spearheaded the assault on the tobacco companies, winning nearly $250 billion from the industry. Colm Feore portrayed Scruggs in the 1999 Hollywood courtroom drama "The Insider."

His aggressive assault on big industries, often on behalf of people of modest means, has earned him respect, fear and criticism. After he helped bring numerous lawsuits against nonprofit hospitals in 2004, hospital officials said that defending themselves was distracting them from the job of treating uninsured patients. Scruggs said it was the uninsured patients he was standing up for. His lawsuits alleged that the hospitals were overcharging uninsured patients for medical services.

The indictment, filed in federal court in Oxford, alleges that Scruggs; his son and law partner, David Z. Scruggs; and three other lawyers conspired to bribe Mississippi Circuit Judge Henry L. Lackey with at least $40,000 cash. In exchange, they allegedly hoped for a favorable ruling in the case over $26.5 million in disputed legal fees. The money was part of an $80-million settlement the Scruggs group won on behalf of hundreds of homeowners.

Each defendant has been charged with defrauding the federal government and wire fraud.

According to the indictment, one of the accused lawyers, Timothy R. Balducci, visited the judge, who was cooperating with federal authorities, on numerous occasions. He brought the money in three separate trips.

On May 9, the indictment says, Balducci allegedly said to the judge: "The only person in the world outside of me and you that has discussed this is me and Dick [Scruggs]. . . . We, uh, like I say, it ain't but three people in the world that know anything about this . . . for over the last five or six years there, there are bodies buried that, that you know, that he and I know where. . . . "

David Rossmiller, an Oregon attorney who has been following the complicated cascade of post-Katrina litigation on his website, insurancecoverageblog.com, said Scruggs is "a brilliant man -- he's a master of fact, a master of law, a master of psychology."

But now, Rossmiller wondered whether people would begin reevaluating "how this amazingly successful man got to be so amazingly successful."

FRONTLINE interviewed Scruggs several times in late 1997 and early 1998.

Q. Did you ever think you would be sitting at a table and deciding that you were going to walk away from $250 billion dollars and what did that feel like?
Scruggs: It wasn't that we were going to walk away from $250 billion. It was that the far-reaching health care reforms and tobacco control reforms that we had negotiated might be lost. I am still concerned that if Congress doesn't act that... [the] opportunity will be lost to reform the tobacco industry.

The money was an important public health tool. It was important to reimburse the states for their health care expenditures and to create a pool of money to fund the enforcement actions of the FDA. Other than that, it was the regulatory mechanisms that we were trying to put into place.
The restrictions on marketing of this product to children. To sort of, to try to reverse the trend in the proliferation of tobacco.
Q. You want people to believe, people who are looking at you as a personal injury lawyer, a pirate in the courtrooms of America, that you really just care about the public health? The money didn't matter.
Scruggs: The money mattered. It didn't matter as much as the public health. It is not often in life that you have a chance to make a mark on humanity. And we all got caught up in the opportunity that this presented to us.
Q. You got into the asbestos litigation. What did you learn about the value of representing masses of people?
Scruggs: It is a unique, it is unique type of law practice. On the one hand, you are not able to develop the unique lawyer/client relationship with your clients when you represent thousands of people. You can't spend the time you would like to spend with your client on an individual basis with each one of them. You have got to sort of organize the thing so that you can get them all to the doctor, get them all diagnosed, get them...the ones who have the disease. And you have to screen for exposures and that sort of thing. And then you have to get their cases filed and managed so it requires a great deal of organization to get that done properly.
Q. But it raises the stakes, right, in terms of what you can go after. I mean you can actually show up at the defendant corporation's door, in this case, and say I don't want just a hundred thousand, I want ten million.
Scruggs: It raises the stakes only if you have a judicial system that permits the aggregation or consolidation of a large number of cases at one time such that if they lose one case, they are losing, essentially, 4,000 cases.
And the costs are prohibitive. You have raised the stakes to the point where they really can't afford to go to trial and lose. We were able to, to convince the judge in our county to, to consolidate some 7,000 cases. Pick a representative sample of those cases to go to trial. And let that verdict be binding on all the rest.
Q. And that leads to a quote that I saw from you that says, "I like to get the stakes so high that neither side can afford to lose." Now what does that mean?
Scruggs: That means that ordinarily in mass tort cases there is no way to, to try any individual case because the defendant has the advantage. He can beat you one at a time or, even if you beat them one at a time, you have not put them in mortal danger.
When you raise the stakes through consolidations or bringing large numbers of claims together, you have... You have given them an incentive to settle what would not otherwise be present. And usually a good settlement is far superior to trench warfare, trial-by-trial litigation. Because then only a few clients get paid and the rest have to wait in line.
Q. So, when you and Motley appear on the scene in the tobacco litigation, you are already veterans of the asbestos situation.
Scruggs: The idea of the tobacco suit came up in the midst of the four month trial, asbestos trial in 1993. And we pretty much had that case in hand after about three months. We thought we were going to win it. We were mostly mopping up. The defendants were putting on their case and we were pretty much mopping up in the case. And I remember, one day in court when I mentioned to Motley that Mike Moore was interested in bringing a suit on behalf of the poor people of Mississippi, or the taxpayers of Mississippi, to collect, recover against the tobacco industry the cost to the state for treating poor people.
I thought I was going to have to put a seat belt on Motley. He was about to blast off.
He wanted to try the case right then. And we weren't even through with the asbestos trial. He was inspired, to say the least.
And Motley is a quick study and the idea of doing something on that scale inspired him. I mean, he was, he needed sedation after I told him about it.
Q. We think of Ole' Miss and, I mean I am old enough to remember the riots and what went on. And we don't think of Ole Miss as a bunch of lawyers who are going to get together, veterans of Ole Miss, and sue the pants off major industries in the United States. Is that just a Yankee stereotype?
Scruggs: It may be. I don't know that there is anything unique about Ole Miss or about Mississippi in this particular area. It turned out to be a coincidence, I think, more than anything else, that we took advantage of.
The coincidence being that Mike Moore was the Attorney General. He was our classmate and our friend. We had represented Mike in previous litigation against the asbestos industry, very successfully. The partnership had worked well.
We had gotten involved in tobacco legislation. We had money in our pockets as a result of the asbestos litigation, so all of these...all of these elements, by chance, came together. And I think that almost simultaneously we realized the potential we had there. With a war chest, with legal talent, with an Attorney General, a state official who was willing to do it. Is enthusiastic about doing it. And some bright legal ideas about how to get it done.
Q. And you did some thinking about what court to file it in, right?
Scruggs: We did, we did.
Q. With a judge who was another Ole Miss graduate?
Scruggs: That's right. Not our classmate again. And not a judge that we knew very well or had any prior dealings with to speak of. But, in fact, we didn't know for sure what judge we would end up with in the case. We went through two judges before we ended up with the judge that actually tried the case.
But the type of lawsuit that we filed, was dictated, really, by two things. We hired Dick Morris to do an in depth public opinion survey of Mississippians.
Q. Dick Morris of recent Clinton fame?
Scruggs: That is right, that is right.
Q. And how did you get to him? Through Trent Lott, right?
Scruggs: I had met Dick several years earlier through Trent. I think back in 1989. I asked Trent... I was representing the state, again Mike Moore, in a suit against the asbestos industry on behalf of the state.
Q. So you needed him to do what? To poll?
Scruggs: To poll the state. To poll public attitudes about asbestos companies. This is back in 1989 and Trent said, "Well look, Dick Morris is a guy who can do that for you, use him." So I called Dick, hired him, used him. And when we were anticipating the tobacco litigation, I did the same thing.
Q. And what did his polling show?
Scruggs: It showed that it would be very problematic to win the case. It identified the demographic groups who would be most like to be for us and against us. The poll results were fairly discouraging.
Q. Why would you guys want to take on tobacco? I mean, at that point, you also knew that there was a lot of down sides to tobacco. They weren't the asbestos industry. They could wipe you out.
Scruggs: This was an industry that had never been beaten. That had fortified itself for decades against litigation. Had prepared and covered every conceivable litigation angle. It was sort of like the challenge of climbing Mount Everest the first time. It had never been done. Uh, in theory you could do it. But nobody had ever done it.
Q. So, you went into the trenches and thought about it, and schemed, and came up with this unique plan.
Scruggs: Yeah, that's right. And we did it, I think initially, uh, just out of a professional, uh, inspiration to try to do something that had never been done before, to try to take on this industry that had literally defied the judicial system and the regulatory system for decades. And yet, was killing millions of people. Uh, you know, it was just a challenge that cried out for somebody to do it.
Q. You got a lawsuit, but you know that you're going to have discovery problems, you always do with this industry. They'll fight you to the Supreme Court. Then comes Merrell Williams. Who was Merrell Williams?
Scruggs: Merrell Williams was a former paralegal at a law firm in Kentucky that was hired by Brown & Williamson Tobacco Company to review all of its, uh, dirty linen, all of its documents. And Merrell Williams decided, uh, some time well prior to the time we knew about him, to photocopy and secrete away those documents, the ones that were explosive. And, uh, go about somehow making them public.
Q. Well, he went through a number of machinations, but these documents as I understand it, were so hot that before you ever met Merrell Williams, a variety of people backed off.
Scruggs: I'm just now learning about that. .... When he came to us, he initially came to Don Barrett, I spoke of him earlier. And, uh, asked for a meeting. We had a meeting with him, uh, in a restaurant in Jackson, Mississippi.
The old time deli in Jackson, Mississippi. And Don and I and another lawyer that worked for Don named Cindy Langston met with Merrell. He looked like warmed over death. He looked unkempt. Not quite like he'd been sleeping under a bridge but close to it. He was obviously very ill, very nervous, had been drinking.
Q. He thought you were an FBI agent apparently.
Scruggs: He did. I guess because I have short hair and out of town, he asked me two or three times if I were with the FBI. And I reassured him that I was not. But he was very apprehensive.
Q. He's nervous because he's got stolen documents.
Scruggs: We knew about a little of his background from press clips at that time. But he never admitted at the time that he had any documents. He talked in circles. I think he was basically taking our measure to see if we were likely to be people who would back him up or people who would turn him in.
Q. Now, eventually he does trust you. You. . . he says to you let's go to Orlando.
Scruggs: That's right. After some discussions with him over the coming, over the following two or three months in early 1994, uh, he, uh, confided to me and to Don that he had indeed had documents that were very explosive.
Q. In sum, when you looked through these documents, what was your reaction?
Scruggs: I looked at Merrell, and I said, "These guys are toast." We've got them. And it turned out that that was one of the more explosive documents in the group.
Q. Now, you've got a pile of stolen documents which Brown and Williamson knows are out there, right.
Scruggs: No, I don't think they knew they were out there.
Q. Well, they knew Merrell had something.
Scruggs: But they were not sure that he had not turned over all the documents he had. He had been ordered by a court up there to turn them all back over to Brown & Williamson and they didn't know for sure whether he had or not at this time.
Q. But you and Mike Moore, decide that the only way you can use the documents is to get them out there.
Scruggs: No, actually, it was on our mind at the time to use the documents in litigation. After reading those documents that day, I think it was a Saturday. I called Mike Moore who's in Jackson. I said, you've got to see these documents. Flew up about night down, had a couple of other lawyers on the team including Don Barrett, uh, look at the documents as well. Uh, and it was pretty clear that these documents were clear evidence that the testimony that the CEOs of the industry had just given to Congress a month earlier.
Q. That's where they go, we believe that nicotine is not addictive.
Scruggs: Well, they all seven raise their right hands and swore that in their opinion nicotine was not addictive and swore to other things. That it was clear that they had either lied, deceived, or misled Congress in that testimony. And that these documents showed that. Our view then, was that these documents, evidenced a fraud. And that we should take them to the people who were investigating the tobacco industry. That is the very Congressmen who are asking those questions. The congressional subcommittee that was at the time chaired by Congressman Henry Waxman. So, about ten days later, we got an appointment with Congressman Waxman. And we. . . Mike Moore and I flew up there. And personally hand carried those documents to him. It was about that time, uh, that or shortly thereafter that the documents appeared in the press.
Q. Stop for a second here. You walk into Congressman Waxman's office. This is his, in a sense, life work to get the tobacco industry.
Scruggs: Right.
Q. And you put on his desk 4,000 pages of files.
Scruggs: Right. Two huge boxes.
Q. And say to him, what?
Scruggs: We have documents that would indicate that the testimony that was, given before your community last month was a lie. And we felt that you were the person who should have these documents. You're the congressional oversight committee. And we don't know what else to do with them. We're certainly not going to give them back to the industry without making them known to some agency of the Federal government or someone who is in a position to do something about this.
Q. Did you tell him that they were basically stolen documents?
Scruggs: Yes. I think that we didn't tell him so much that they were stolen documents but that we had received them through a whistle blower. I think that it was implied that they were stolen documents.
Q. Well, you didn't have a subpoena, you didn't get them by subpoena. But they didn't give them to you.
Scruggs: No, they didn't. I don't think we ever used the word that these are stolen documents.
Q. You came by them through some fortuitous means.
Scruggs: Sure, through whistle blower action, that we got these documents. And clearly, uh, we were not supposed to have them. And I think, uh, Congressman Waxman was a little ambivalent.
Q. He didn't dive into the box.
Scruggs: No, he didn't. Not, right in front of us, he didn't.
Q. Did he step back?
Scruggs: He did. It was almost as if it was radioactive. He wanted to embrace them, but at the same time, he was afraid of them. It was like, almost a physical reaction. But, after some initial discussion about the documents and our characterization of what they were and why we had. . . how we had come into possession of them. And why we were bringing to them. Then asked us to meet with his staff. And his staff then proceeded to go through them like a hungry lion. They were just. . . they were amazed at the documents.
Q. Now, at the same time contemporaneously, a set of these documents we know wound up at the FDA.
Scruggs: That's right.
Q. And then shortly thereafter someone from the FDA apparently supplied them to The New York Times.
Scruggs: You know, I never did know how The New York Times obtained them. But I would imagine that the genesis of all that was through Waxman's office.
Q. According to Stan Glantz, then a Mr. Butts sends him a set of documents.
Scruggs: That's right.
Q. Are you Mr. Butts' father.
Scruggs: No, I'm not. I'm not Mr. Butts. Nor is Mike Moore. I may be subject to a paternity suit. But I am not Mr. Butts. Did not, uh. . . The only agency that we gave those documents to were - were the Congress -- Congressman Waxman. Later we gave copies to the Justice Department.
Q. And the FDA.
Scruggs: And the FDA.
Q. Why were these documents so important?
Scruggs: Because they showed the depth of the tobacco industries research to the pharmacological effects of nicotine. They showed the elaborate system that the tobacco industry's lawyers had set up to shield these documents from public view, abusing the attorney client privilege. They showed that the tobacco industry itself considered nicotine to be an addictive drug and that they were in the business of selling nicotine an addictive drug through the very words of one of their principle scientists and attorneys back in 1963. Those sorts of revelations, uh, were especially important to the Food and Drug Administration because the tobacco industry had denied that nicotine was. . . that cigarettes were being sold for the nicotine content. They were claiming, of course, if you remember, that nicotine was just a component of taste. And that it was just simply something that went along with the cigarette. When in fact, these documents showed the depths to which they had researched the pharmacological effects of nicotine.
Q. So, now you're at first what many people called hopeless lawsuit, had a documentary base.
Scruggs: That's right. Now, the documents, you'll recall. We didn't file the lawsuit until about a month later. But at the time we got the documents.
Q. And somehow through your delivering them to Washington, they go to Stan Glantz and they wind up on the Internet.
Scruggs: That's right. That's right.
Q. And eventually, they do become admissible.
Scruggs: Well, we were not sorry to see that happen.
Q. Now, fast forward a little over a year, and you wind up with a live witness to go with the documents. Who was the witness, and why was he so important?
Scruggs: The witness was, Dr. Jeffrey Wigand who was the vice president in charge of research and development for the same company for Brown & Williamson Tobacco Company. Uh, we had searched in vain for about a year or more, even longer than that because we first met Jeff Wigand, I think, in October 1996, 1995.
Q. 1995.
Scruggs: Prior to that the litigation had been going on for a year and a half at that time. And we had been researching it for probably two and a half years. We had searched in vain for a tobacco industry mole. Someone who was in the know, in tobacco, who would tell us what really went on inside that industry. There was no one out there who could speak from an insider's perspective. We had no one. There wasn't anyone that would do it.
He was the one person who had come forward, who - who came forward and talked about what really went on inside tobacco.
Q. What makes Wigand so important?
Scruggs: Jeff Wigand was able to bring the documents to life.
He could tell things that were not in the documents. The genesis of the documents. What led to various studies. Strangely enough, many of the documents he had not ever seen before and was amazed himself when he saw them.
As the Director of Research, the Vice President in charge of Brown & Williamson's research, many of these documents had been secreted even from him. So he was amazed himself when he saw some of the research that had gone on in the company that he was not even allowed to look at. Or not made privy to.
He also, of course, knew about things that had gone in Brown & Williamson subsequent to the date of most of these documents. These documents ended sometime, I think, in the late 1980s. Wigand was there up through about 1993.
So things that went on under Wigand's purview, international conferences he attended of other tobacco scientists within his company add greatly to the information we learned from the documents. Especially about nicotine and nicotine pharmacology.
Q. You bought Merrell Williams a boat. You bought him a house. Jeffrey Wigand, you paid his expenses, flew him around in your plane. Got him a lawyer. Sounds like you are on the edge there, ethically.
Scruggs: Some have said that, but I disagree. I think what we did was to grant a safe harbor for those who were willing to risk whatever they were risking. Intimidation and threats from the tobacco industry. We were willing to grant a safe harbor for those who were willing to step up and tell the truth about the industry.
I helped Merrell Williams. I didn't buy him these things. These were, in essence, loans that I made to him and he has, at the time, agreed to repay me one day for that. And I hope that he will. I trust that he will. I can understand how it might look like it was some sort of a payoff, but it wasn't.
Q. Wigand?
Scruggs: We both represented Jeff Wigand in defending him against Brown & Williamson and we found lawyers in Kentucky and paid them to defend him against Brown & Williamson.
Q. I guess the question is, with Merrell Williams, you knew that he did not come by these documents through a legal process. He walked out the door with the documents.
Scruggs: I disagree with that.
Q. Well it made a whole bunch of other people real nervous. I mean people who are dedicated anti-tobacco activists wouldn't even go near him.
Scruggs: That is true. I don't think you have a right to conspire against the public health and then cry foul when someone takes the documents that show that you have done that and make them public. Especially when you turn them over to law enforcement officials or the Congress of the United States.
I don't see... I think you almost have an obligation to do that. To, when you catch someone in the process of committing a crime or a fraud on the public health and you don't make that public, I think that is the crime. And so that what Merrell Williams did, regardless of whatever his motives were, and what we did was, in our minds then and now, a civic duty. A civic responsibility.
Q. But you had some great risk involved in there. Once the tobacco industry, once Brown & Williamson found out, they sued you.
Scruggs: They did.
Q. They had investigators after you.
Scruggs: They did. They followed us, they followed me. They put me under surveillance, did the same to my family. Sued us in federal court. Sued me. Sued Merrell. Sued any other lawyer, had a long list of John Doe defendants who had seen or had participated in turning these documents over. Presumably Mike Moore. And unleashed more or less a smear campaign of their own that we were paying for stolen documents is the way they spun that. Even though we turned the documents over, as we were compelled to do, to the proper enforcement authorities.
Q. And once you facilitated, let's put it that way, Jeffrey Wigand giving testimony in your case.
Scruggs: That is right.
Q. What... He did that at some risk.
Scruggs: At great risk to Jeff. They sued him, of course. They sued a number of news organizations in connection with Williams and threatened to in Wigand's case, to try to intimidate everyone into being silent.
It was great risk to Jeff. He was, he was a school teacher at a public high school in Louisville, Kentucky, having gone from making hundreds of thousands of dollars a year to making what a school teacher makes in a public school system. They unleashed an unprecedented smear campaign against him. They hired investigative firms in the world to go into every aspect of his past. Drag out every, every piece of paper or transaction that Jeff Wigand had ever conducted to try to put a false light on it and on him.
They tried to show that he was a mental case, that he was a wife beater, that he was a shoplifter. I mean they came in with all sorts of allegations to actually smear him.
Q. Let me take you back to, let's say, November of 1995 when Jeff Wigand testifies. He is under possible threat of arrest in Kentucky.
Scruggs: Yes.
Q. And you are being sued. Did you ever worry about that was going on?
Scruggs: Sure. But when you are in the middle of combat like that with people like we were fighting, all your thoughts are to whip--to beating them. We were going to beat them, no matter what the cost.
I mean it was one of these things that becomes a cause, a crusade. You are inspired to do it, regardless of the risk. You feel that there is so much justice in the cause that you are willing to take those sorts of risks to get what you consider to be a proper result.
Obviously Jeff Wigand felt that. Obviously Merrell Williams felt it. And all of the lawyers an the Attorney General felt that that's what, we were on a crusade.
Q. Didn't your wife, didn't your brother-in-law, didn't somebody come to you and say, what are you doing?
Scruggs: No. My wife was incredibly supportive throughout this. My brother-in-law had nothing to say or do about this. We didn't discuss it.
Q. But he did encourage you, at one point, to get into discussions with the tobacco industry.
Scruggs: Actually that is, it was the other way around. After the first Liggett settlement, this would have been in April of 1996, I read in the newspaper where the, where Steve Goldstone from. the CEO of R. J. Reynolds, when asked would R. J. Reynolds ever settle, like Liggett just did, responded, "We would be interested in a comprehensive resolution but not a piecemeal series of settlements."
It dawned on me then that there may be room to open up a dialogue to resolve these issues.
Q. Were the stakes now high enough so neither side could afford to lose.
Scruggs: The stakes were getting up to the point where neither side could afford to lose. And this was the first signal, or overture from the industry proper, not just a dissident like LeBow, but from a mainstream large tobacco industry, R. J. Reynolds, one of the target defendants in the case, that they were willing to consider a compromise.
I called Mike Moore. I said, "Mike I have got an idea that if, that I'd like to call Trent and see if he would be willing to try to broker a meeting with the industry, based on what Feldstone had said in the press." Mike said, "Okay, give it a try."
So I called Trent and I said, "Trent, you haven't been involved in any of this. You are probably considered to be tobacco friendly by the tobacco industry. You are someone that they would probably trust. You are someone that I would trust. Would you like to... Would you consider trying to set up a meeting to see if anything can be worked out on a national basis?"
Q. You are claiming that your main motivation here was the public health, doing something good and through all of this your brother-in-law is the majority leader of the Senate, one of the most powerful Republicans in the United States. And you never went to him? You never talked to him. And he never talked to you? You are in the headlines every day, you are killing his political party.
Scruggs: At the time, in early 1996, he was not the majority leader. In fact I think at the time he was not even the assistant majority leader. He was just a United States Senator. Not that I am belittling being a United States Senator.
Q. There were risks involved here that weren't normal to a regular law suit. This wasn't just a risk to the overhead of your law office by putting too much money into a case. What were the risks to you back then?
Scruggs: There was a risk of, I think, public humiliation was the worst one. If you are unsuccessful after taking on a task like this. Financial ruin. Discreditation, professionally. The wear and tear it puts on your family to read unfavorable things in the newspaper every day when you are not used to--not only not used to publicity, you are not used to national adverse publicity. Those sorts of things.

One of the more unlikely figures to have emerged out of the saga unfolding in the deep South involving Dickie Scruggs is an insurance lawyer in Portland, Oregon.

His name is David Rossmiller, and he plies his trade at a firm in Portland called Dunn Carney Allen Higgins & Tongue. Somehow, in between his day job as a law-firm partner and his night job as a husband and father to three young children, Rossmiller blogs about insurance coverage. The blog, called, appropriately enough, the Insurance Coverage Blog, began early last year as a repository for lots of Rossmiller’s thoughts on the insurance industry.

Earlier this year, he says, he delved into the coverage battles involving State Farm and Katrina victims, which he found “absolutely fascinating.” For now, the blog is one of the best places to go on the situation. And Rossmiller says that though he’s no criminal lawyer, he could no more not cover the recent Scruggs indictment than “ignore a growth on my mother’s neck.” (Yes, that’s an actual quote, though Rossmiller confirms that his mother’s neck is growth-free).

We caught up with Rossmiller earlier this week, to ask him about the case, his career and what makes insurance law so darn interesting.

Hi Dave. Thanks for taking the time. Congrats on the blog. We see on your bio that you’ve got a background in journalism. We’re not surprised. How’d it come about?

Well, I think I learned at an early age that all I can do in this world is read, write and talk. I was never going to make it in sports and I’m not strong enough to be a stevedore. That leaves law, journalism and politics. I’ve done two of them.

Anyway, a couple years after I graduated from college (Minot State — Go Beavers!), I was still up in North Dakota when a friend I knew just up and moved to Phoenix. I figured why not? I took my car and $500 and moved down there. I got a job with the Phoenix Gazette, which was an afternoon daily, and worked my way up. I stayed until 1994.

And then law school? You chucked a good career in journalism for law?

I did. I was actually looking for something a bit more intellectually challenging, so I applied to law school and went to the best one I got into, which was Michigan. I graduated in 1998.

Okay. We’ll try not to take that as a slight! But insurance law? How’d that come about?

Well, after school, I moved out to Portland. My wife’s family was from Oregon and Portland felt in a lot of ways like a bigger version of Wildrose [North Dakota], where I grew up. I was working at a firm called Tonkon Torp when a friend of mine did a little internal presentation on his practice, which was insurance law. It was the strangest thing. While he was talking, it just hit me. It hit me like the thunderbolt that Michael talks about in the Godfather. Insurance law was what I wanted to do.

Come on. Really? Insurance?

Really. There seemed to be an intellectual puzzle to insurance law that just instantly grabbed me. It had its own language and its own complexities. I thought this is it. I can get paid to do something that’s really fun, really challenging, and help clients along the way.

Okay. And the blog?

Well, I guess there’s still a little of the journalist in me. But it started by my just wanting to explore some areas that I found interesting in insurance law. I really had very modest goals, but before I knew it, I had a little following. I was as shocked as anyone.

But you’ve really made your biggest splash with the Katrina/State Farm situation. What about it interested you?

It was in January [’07] when I got into Katrina. I was fascinated by these anti-concurrent-cause clauses that everyone was talking about. It’s an area that one doesn’t come across very often, and I found out that what everyone was saying about them was wrong.

Help us out with that. What’s an anti-concurrent cause clause?

It’s a clause in property insurance contracts which excludes coverage when an excluded cause of loss was a but for cause of the damage. In other words, say you’ve got a house with rot in the framing and rot isn’t covered by the policy, but wind is. Let’s say a wind storm comes up and the house falls down, partly because of the rot. That’s a concurrent loss and an insurer is probably going to invoke the clause.

A lot of policyholders’ lawyers said that State Farm was invoking this in justifying their denial of coverage after Hurricane Katrina. But that’s not what the insurers were doing at all. All that was just spin by the policyholders’ lawyers. What the insurers were really relying on was an absence of evidence of damage from wind. In other words, that the homeowner was unable to show the damage was attributable to wind.

The episode caused a lot of people to accuse me of being pro-insurer, but I’m really not. On the blog, it’s different than representing a client, I’m not shilling for any particular point of view, I’m just trying to call it like I see it.

How’d you react to the criticisms?

Well, I just kept on plugging away. During the day, I’d do my day job, and at night, I’d go on PACER and write about the latest court decision. Whether people agreed with me or not, I think people started to see that I was acting in good faith.

What do you make of the Scruggs indictment?

It’s so strange, because I’m familiar with all the players. I don’t know Scruggs personally, but I’ve come to respect him as a creative and brilliant lawyer. He’s an absolute legal force.

But on the indictment, I really didn’t see it coming. When someone told me, I practically dropped my coffee mug. I’m trying hard not to come to any early judgments on this, but in my opinion, it’s really shaping up to be one of the most fascinating legal dramas in history.

OXFORD, Miss. — On Saturday night, a red-and-green bus built to look like a trolley car ferried guests from a parking lot near the University of Mississippi through a wrought-iron gate to a new white mansion on a wooded hilltop nearby.

Inside, one of the most-prominent trial lawyers in the country, Richard “Dickie” Scruggs, welcomed friends and acquaintances to a lavish Christmas party. As about 200 guests filed through the front door of the white-columned house, Mr. Scruggs and his wife, Diane, appeared unruffled by an event that had rocked their world days earlier: the super-lawyer’s indictment for allegedly conspiring to bribe a Mississippi state-court judge, in a dispute over millions of dollars in legal fees from insurance settlements of Hurricane Katrina claims.

200 guests? We love it. Turns out that through the years, Scruggs has embraced Oxford, and the town has hugged him back. Scruggs moved to Oxford four years ago from the Gulf Coast town of Pascagoula. The home he kept in Pascagoula was destroyed in Hurricane Katrina, along with the home of his brother-in-law, former Senate Republican leader Trent Lott, who is retiring from the Senate.

It wasn’t Scruggs’s first stint in Oxford. He graduated from the “Ole Miss” law school. And in 1998 the couple pledged $25 million to help raise salaries of liberal-arts professors. A music building at the university bears the names of Dickie and Diane.

In return, Oxford showed up for Scruggs. On Saturday, “the town really did turn out for them,” said Robert Khayat, a longtime friend and the chancellor of the university.

“People appreciate him for his support of the community, and we’re all willing to stand by and support him,” added Oxford’s mayor, Richard Howorth.

As for the man considered Mr. Scruggs’s chief accuser — the considerably less-well known Tim Balducci — many people in these parts are contemptuous. “He has some sort of complex,” said Deborah Patterson, the wife of Steven Patterson, Balducci’s business partner, who was also indicted in the case.

Meanwhile, yesterday, at Balducci’s office down the road in New Albany, Beau Buse, listed on the firm’s Web site as an investigator, wouldn’t open the front door to speak. Through the glass window he said, “We’re going through a lot of issues right now.”

Richard "Dickie" Scruggs

Sunday, June 29, 2008

Dickie Scruggs gets 5 years

Wednesday, December 5, 2007

" An Industry Hit "

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