The Federal Emergency Management Agency is working on settling litigation with hundreds of Hurricane Sandy victims who challenged denials or alleged underpayments of flood insurance claims.

Brad Kieserman, deputy associate administrator for insurance at FEMA, disclosed the settlement talks during a break at a hearing in Brooklyn, New York, federal court Wednesday over whether an insurer, Wright National Flood Insurance Co., concealed from a homeowner the existence of conflicting reports over damages.

Private insurance companies that work in partnership with FEMA’s National Flood InsuranceProgram have come under scrutiny over allegations that they denied or rejected damage claims based on falsified reports.

About 1,500 cases over flood claims from the 2012 Category 3 hurricane remain pending in New York and New Jersey federal courts. Kieserman said the agency may also look at settlements with homeowners with disputed payments who didn’t sue.

“We are going to consider all of them,” he said.

During the hearing, witnesses testified over the handling of a report for a Long Beach, New York, homeowner, Deborah Ramey. Ramey alleged that a rental property she owned was severely damaged by the flood yet was falsely described as having had long-term damage by an engineer working on behalf of the insurer.

Other Insurers

Other insurance companies that participate in the program, including affiliates of Travelers Cos. and Hartford Financial Services Group Inc., have also been accused by homeowners of rejecting or underpaying claims based on falsified reports.

A witness called during Wednesday’s hearing, Jeff Moore, who was vice president of claims for Wright while Ramey was disputing her claim, declined to answer any questions from her lawyers, invoking his Fifth Amendment right under the U.S. Constitution to avoid saying anything that might incriminate him.

Patrick Linehan, a Travelers spokesman, and Thomas Hambrick, a spokesman for Hartford, didn’t immediately respond to e-mails seeking comment on the settlement talks. Dolores Glass, a spokeswoman for Wright, declined to comment.

Raimey (Ramey) v. Wright National Flood Insurance Company, 2:14-cv-00461, in U.S. District Court, Eastern District of New York (Central Islip).