Falsified Sandy engineering reports to be released

Allegedly doctored engineering reports that led to flood insurance claim denials after Superstorm Sandy are expected to be released by the middle of this month, according to attorneys working on the case.

“Not just reports, but also draft estimates of damage,” Chip Merlin, an attorney who specializes in post-hurricane insurance claims, clarified to the Asbury Park Press. “I anticipate that the estimates of damage were lowered by the insurance companies or their vendors in many instances.”

The release comes after a Dec. 23 letter from the US Department of Justice to the US District Court of New Jersey, which said FEMA had asked engineering firms contracted with the National Flood Insurance Program to provide it with any draft engineering reports connected to more than 1,500 civil court cases that accuse engineering firms and insurance companies of racketeering.

Plaintiffs in the cases argue engineering reports were falsified to eliminate flooding as the cause of damage to residential and business properties following Superstorm Sandy. Doing so prevented claims payout to home and business owners, and allowed insurance companies to benefit by driving up claims handling expenses.

Insurers including units of Hartford Financial Services Group, Travelers Cos., Wright National Flood Insurance Co. and Selective Insurance have been accused with participating in the scheme.

According to a Bloomberg report, insurers benefit from the National Flood Insurance Program’s reimbursement program, which incentivizes prolonged litigation “in order to charge and collect unnecessary claims handling expenses and attorneys’ fees.”

One plaintiff, Krista Sperber of Long Beach, NY, celebrated the forthcoming release of the reports.

“I’ve been beating this drum for two years ever since we got this [engineering] report, so I’m just happy to see this come out,” she told USA Today.

The release, directed by FEMA, includes all engineering reports found to have been secretly modified. The drafts will be forwarded to the US Attorney’s offices where they will be turned over to homeowners for their use in the lawsuits.

The Justice Department says it expects insurers that sell FEMA-backed flood policies to “follow their lead.”

 

by Insurance Business | Jan 06, 2015

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