RICO CLASS ACTION ALLEGES POST-SANDY SCHEME TO MANIPULATE FEMA PROGRAM; U.S. FORENSIC ALLEGEDLY CONSPIRED WITH WYO INSURERS TO REDUCE FLOOD DAMAGE PAYMENTS TO VICTIMS TO ENSURE MORE FUTURE WORK FROM FEMA
BROOKLYN, N.Y. – A prominent Texas attorney is
representing two victims of Hurricane Sandy in a recently filed class action
lawsuit against an insurance company and several associates, claiming they
schemed to manipulate a Federal Emergency Management Agency (FEMA) program for
profit.
The lawsuit, filed by attorney Steve Mostyn on Nov. 21
in the U.S. District Court for the Eastern District of New York on behalf of
Deborah Ramsey and Robert Kaible, alleges that Florida-based Wright National
Flood Insurance profited by denying claims to the National Flood Insurance
Program (NFIP), which is managed by FEMA.
The other defendants – which include Louisiana-based
U.S. Forensic LLC, Florida-based Colonial Claims Corporation and individual
employees and contractors – are alleged to have gone along with the scheme to
ensure continued work provided by Wright National Flood Insurance.
Other defendants listed include U.S. Forensic partners
Gary L. Bell and Michael P. Garove, engineer Harry George Hernemar and
individual adjuster David Maxime.
The lawsuit claims the defendants violated the Racketeer
Influenced and Corrupt Organizations (RICO) Act.
Wright National Flood Insurance allegedly profited by
increasing claim handling expenses – including amounts paid to U.S. Forensic
and Colonial Claims – and in turn received more money from FEMA and the NFIP
for administering the program.
Ramsey and Kaible, owners of a rental property in Long Beach,
N.Y., claim that Maxime inspected their property on Nov. 17, 2012, and
found it unsafe to live in because of damage suffered during Hurricane Sandy.
Maxime allegedly observed uneven flooring, five-inch differentials in ceiling
height and out-of-line foundation framing in the home during his inspection.
Rather than authorize payment of the full policy benefit
purchased, Maxime instead requested an engineering analysis in conjunction with
his employer – Colonial Claims – to satisfy the desire of Wright National Flood
Insurance to reduce payments on covered losses, the suit says. Not doing so,
the suit claims, would result in a loss of future claims assignments.
The suit further claims that U.S. Forensic altered those
engineering reports, which are relied on to process insurance payments under
NFIP, and that Colonial Claims and Maxime accepted U.S. Forensic’s altered
reports. Wright National Flood Insurance either encouraged the fraud or looked
the other way, the lawsuit alleges.
As a result, the plaintiffs received only $80,000 of
their $250,000 insurance coverage and were unable to continue renting the
property, they claim. With no rental income, the plaintiffs sold the property
for the price of the lot, and the home was condemned and demolished by the city
of Long Beach.
The class action suit is open to individuals insured by
Wright National Flood Insurance whose claims were denied in whole or part based
on an allegedly altered engineering report by U.S. Forensic after the
inspecting engineer’s report was submitted to U.S. Forensic for review.
Mostyn, of the Mostyn Law Firm in Houston, and Denis G.
Kelly, of Denis G. Kelly & Associates, are representing the plaintiffs.
Mostyn’s principal offices are in Houston and Beaumont.
U.S. District Court for the Eastern District of New York
case number 2:14-cv-06861.
