Federal disaster assistance officials have begun reaching settlements with more than 1,000 Hurricane Sandy victims who allege they were unfairly denied flood insurance claims or were compensated too little.
Lawyers for property owners told federal magistrate judges overseeing lawsuits in Brooklyn and Central Islip in New York in a filing Monday that settlements have already been reached in 160 cases. The accords are the first wave of hundreds more expected after some homeowners complained that companies that help provide flood insurance rejected claims based on fraudulently manipulated engineering reports of storm damage.
An official from the Federal Emergency Management Agency, which ultimately pays flood claims, said last month that it would work with insurers to negotiate accords in all outstanding cases. A process is also in the works to compensate those who disputed insurance payments without suing, said J. Steve Mostyn, a lawyer for some homeowners.
A three-judge panel overseeing the Hurricane Sandy cases “has worked extremely hard on this, and I want to be sure they approve what we are doing in all aspects,” Mostyn said. The “framework” for the settlements will later be presented for their review.
Rafael Lemaitre, a spokesman for FEMA, declined to comment on the settlements.
Private insurers working in partnership with FEMA’s National Flood Insurance Program have come under scrutiny over allegations they denied or rejected damage claims based on falsified reports. About 1,500 cases over flood claims from the devastating 2012 hurricane are pending in New York and New Jersey courts.
According to complaints from some homeowners, initial engineering reviews that correctly linked home damage to the surging waters were revised to cast blame on longstanding structural flaws. The alleged scheme came to light after a Long Beach, N.Y., homeowner discovered that conclusions originally voiced by an engineer were reflected nowhere in his firm’s final report.
Investigators working on behalf of New York Attorney General Eric Schneiderman executed a search warrant at the Uniondale, N.Y., office of HiRise Engineering PC last month as part of a criminal probe. The engineering firm has been accused by homeowners of manipulating reports.
In a statement Tuesday, HiRise President and Chief Executive Officer Joe Celentano said the company “continues to support the efforts of FEMA to settle the Sandy claims and respects the processes of the attorney general’s office.”
The company is cooperating with the efforts and is “working very hard to address” issues raised regarding the reports, he said.
FEMA insurance official Brad Kieserman told “60 Minutes” in an interview which aired Sunday that he has seen evidence of fraudulent reports used in Sandy claims. He said he has referred information about those activities to the agency’s inspector general.
Lemaitre, of FEMA, declined to comment further on Kieserman’s comments.
The case is In Re: Hurricane Sandy Cases, 1:14-mc-00041, U.S. District Court, Eastern District of New York (Brooklyn).