A federal judge weighing competing plans to resolve thousands of disputed claims against State Farm Fire and Casualty Co. after Hurricane Katrina heard emotional testimony Wednesday from policyholders who believe they have been shortchanged by the insurer.

In the morning, lawyers for State Farm policyholder Judy Guice urged U.S. District Judge L.T. Senter Jr. to certify a class action against the company for denying claims on homes reduced to slabs by the Aug. 29, 2005, storm.

In the afternoon, State Farm joined plaintiffs’ attorneys in asking Senter to approve a multimillion settlement that calls for the Bloomington, Ill.-based insurer to reopen, review and possibly pay tens of thousands of claims by policyholders who didn’t sue the company.

Senter heard several hours of testimony on both proposals, but he didn’t immediately issue a ruling.

Several policyholders who testified at the hearings called for a speedy resolution to the hundreds of lawsuits that have been filed against State Farm for refusing to cover damage from Katrina’s storm surge.

Sheron Weiss, 50, of Pass Christian, told Senter that she has contemplated suicide in the months since her home was destroyed and State Farm refused to pay for an estimated $300,000 in damage.

Weiss said she recently turned down an offer by State Farm to settle her claim for $77,000. She wasn’t certain if a class action would help her, but she pleaded with Senter to help.

“We’re falling apart at the seams, and myself, I have contemplated suicide more than once,” she said. “It’s taken its toll on us, and we have to do something fast.”

Senter held a separate hearing later Wednesday on the terms of a proposed settlement that calls for State Farm to pay at least $50 million to roughly 36,000 policyholders who didn’t sue the company but could have their claims reopened.

State Farm also has agreed to pay about $80 million to settle with up to 640 policyholders who sued the company. All were represented by attorney Richard “Dickie” Scruggs, who also helped negotiate a multibillion dollar settlement with tobacco companies in the mid-1990s.

Senter said his goal was a settlement that was “fair, reasonable and balanced.”

“This may or may not be possible,” he said.

Senter said he was concerned about forcing policyholders to submit to binding arbitration that they hadn’t signed up for.

The process calls for State Farm to make a new offer to policyholders. If they turn it down, they can have the case heard by an arbitrator whose decision would be binding.

Scruggs defended the deal, noting that policyholders would still be free to sue State Farm.

“We want to help those people who are living their lives in quiet desperation. We have done every single thing we know to do to get them to this point. This is as far as State Farm has ever gone in any similar context,” Scruggs said.

State Farm attorney Scott Welch said policyholders could still opt out of the settlement by giving a written notice and they could then pursue their cases.

“Nobody in this class is being asked to give up anything without agreeing to it,” Welch said. “We want to make this process work. We want it to be easy for everybody.”

Curtis Lee, 71, of Diamondhead, said he wanted to settle his suit against State Farm, but he turned down a $50,000 offer that Scruggs’ legal team presented to him and his wife, Joan. Lee said he already had rejected a more generous settlement offer of $112,000 when a mediator heard his case.

“It was pennies on the dollar,” Lee said of State Farm’s most recent settlement offer.

Mary Sinders, 87, of Waveland, said she may not live long enough to have her disputed claim with State Farm resolved if cases are tried individually.

“It’s much too time-consuming to do it on an individual basis,” said Sinders, a retired attorney whose home was destroyed by Katrina.

Senter opened Wednesday’s hearing by reiterating his support for mediating lawsuits over Katrina damage. He said a court-ordered mediation program had settled 47 of 88 cases heard so far, a 53 percent success rate that Senter said has exceeded his expectations.

“That’s not bad at all considering the multitude and magnitude of the cases,” Senter told a packed federal courtroom in Gulfport.

Senter said he was open to other ideas for resolving cases, including a possible class action. In a class action, a court authorizes a single person or a small group of people to represent the interests of a larger group.

Guice’s attorney, Richard Phillips, said Senter’s recent ruling in the first jury trial for a Katrina insurance case opened the door for a class action. He argued that the facts in each “slab case” against State Farm are essentially the same and should be heard together.

In January, Senter said State Farm acted in a “grossly negligent way” by denying the claim filed by policyholders Norman and Genevieve Broussard, whose Biloxi home was destroyed by Katrina.

Senter ruled State Farm has the burden of proving how much damage resulted from flood water. State Farm and other insurers say their policies cover damage from wind but not rising water, including storm surge.

State Farm attorney Bill Reed said each claim is different and must be heard individually. He downplayed the idea that the Broussard case opened the door to class action.

“There’s no record from which the court could possibly find that those facts are going to be identical in every total destruction case,” Reed said.

Chip Merlin, a Florida-based attorney who represents dozens of Mississippi policyholders with Katrina claims, said cases can be consolidated and managed as a group but still tried separately.

A class action, he added, is “not necessarily the panacea that people are hoping for” because an appeals court could intervene and rule it out. “Then you’re back to square one after years of litigation,” Merlin said.