Most readers of this blog are aware of the issues
surrounding altered engineering reports in the wake of Superstorm Sandy. Often
attorneys get a gut feeling about a case and believe that the other side may be
trying to hide the ball. This has been true in many of our Sandy cases. On one
such case, I discovered today that my gut was correct.
As a result of W. Craig Fugate’s December 5, 2014 directive
to the WYO carriers, today I received the draft engineering report on one of my
cases. The draft report states (in part):
1) The physical evidence observed at the property indicated
that the subject building was structurally damaged by hydrodynamic forces,
hydrostatic forces, scour or erosion of the supporting soils, or buoyancy
forces of the floodwaters associated with the flood event of October 29, 2012.
5) The air conditioning unit on the south side of the
building and the heating unit in the crawl space were inundated by flood water
and replacement is required.
6) Plumbing pipe insulation in the crawl space was damaged
by floodwaters.
7) In order to repair the damage to the building caused by
floodwaters associated with the flood event of October 29, 2012, we recommend
that the foundation under the foyer area be replaced. The floor of the foyer
and part of the kitchen floor will need to be removed and replaced to permit
access to repair the broken and damaged floor supports. Approximately 45 linear
feet of foundation wall and 200 square feet of flooring will require
replacement. All repair work shall be performed by qualified contractors and in
accordance with all applicable state and local building codes and standards.
The records indicate that the report was submitted to US
Forensic by the inspecting engineer and was then altered by a different US
Forensic engineer to state:
1) The physical evidence observed at the property indicated
that the subject building and foundation system were not structurally damaged
by hydrodynamic forces, hydrostatic forces, scour or erosion of the supporting
soils, or buoyancy forces of the floodwaters associated with the passage of
Hurricane Sandy on October 29, 2012.
2) The physical evidence observed at the subject property
indicated that the cracks in the interior finishes, leaning foundation walls
and supports posts and the uneven floor surfaces within the building occurred
prior to the subject flood event and were the result of differential movement
of the building and foundation that was caused by long-term differential
movement of the supporting soils at the site and long-term deflection of the
floor framing components.
The second version, as altered by the US Forensic engineer,
became the final version sent to the insured. Until today the insured did not
know there was an initial version of the report which would have
provided coverage under their flood insurance policy.
The moral of the story is, keep digging. I would not
recommend settlement of any flood insurance claims where there are engineering
issues unless and until you can be assured that the report you received has not
been altered in any way.
http://www.propertyinsurancecoveragelaw.com
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http://metroforensics.blogspot.com/2015/02/insurance-executive-with-wright-flood.html
INSURANCE EXECUTIVE
WITH WRIGHT FLOOD PLEADS FIFTH OVER ALTERED REPORTS DURING SUPERSTORM SANDY
LITIGATION HEARING
FEBRUARY 19, 2015
(Bloomberg) -- The Federal Emergency Management Agency is
working to settle lawsuits by 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 in a court hearing
Wednesday over whether an insurer, Wright National Flood Insurance Co.,
concealed from a homeowner the existence of conflicting reports over damages.
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. FEMA may also review settlements with homeowners with
disputed payments who didn’t sue, Kieserman said.
“We are going to consider all of them,” he said.
Separately, state law enforcement agents on Wednesday
executed a search warrant at the Uniondale, New York, office of HiRise
Engineering PC, according to Liz DeBold, a spokeswoman for New York Attorney
General Eric Schneiderman. The firm did work for Hartford Financial Services
Group Inc., which also participated in the FEMA program.
“HiRise has a fifteen-year history of ethical business
practices and supports FEMA’s initiative to resolve all the outstanding
Hurricane Sandy claims,” Joe Celentano, the company’s president and chief
executive officer, said in a statement. “We are cooperating to the fullest
extent possible with all parties in an effort to address and resolve the issues
that have been raised.”
Long Beach
Wednesday’s hearing in federal court in Brooklyn, New York,
centered on allegations by Deborah Ramey, who said a rental property she owned
in Long Beach was severely damaged by the flood yet falsely described as having
had long-term damage by an engineer working on behalf of the Wright Flood.
The engineering firm, U.S. Forensic LLC, produced
conflicting reports about damage to Ramey’s home, according to evidence at an
earlier proceeding. After an initial engineering report found her home was
heavily damaged by the storm, a later report concluded much of the loss was due
to the age of the roughly 80-year-old property.
In November, U.S. Magistrate Judge Gary Brown said he feared
there may be conflicting reports in many other flood insurance cases, and
hundreds of homeowners are now searching for evidence that similar tactics were
used to deny their Sandy-related claims.
In court, Brown is weighing whether to penalize Wright Flood
and a law firm that represented it and other insurers. Representatives from the
Metairie, Louisiana-based firm, Nielsen Carter & Treas LLC, didn’t attend
the hearing, and a phone call wasn’t immediately returned.
Takes The Fifth
During the proceeding, Jeff Moore, who was Wright Flood’s
vice president of claims when Ramey was disputing her claim, refused to answer
questions posed by her lawyers, citing his Fifth Amendment right under the U.S.
Constitution not to incriminate himself.
Dolores Glass, a spokeswoman for St. Petersburg,
Florida-based Wright Flood, declined to comment on Wednesday’s hearing. A call
to U.S. Forensic after regular business hours wasn’t immediately returned.
Other insurers participating in the FEMA program, including
affiliates of Travelers Cos. and Hartford Financial, have also been accused by
homeowners in separate lawsuits of rejecting or underpaying claims based on
falsified reports.
Hartford has denied allegations raised in a homeowner suit
and said it arranged for a new engineering review following accusations that a
report was improperly altered, Thomas Hambrick, a spokesman for the insurer,
said in a statement. The Hartford suspended use of the engineering firm at
issue, he added.
Matt Bordonaro, a spokesman for New York-based Travelers,
declined to comment on settlement talks with FEMA.
Curtail Hearing
Last year, Nielsen Carter was penalized for failing to turn
over a draft report and trying to curtail a hearing on the reports. Ramey’s
lawyers have said they may seek additional sanctions if the firm is found to
have engaged in a cover-up.
Partner Gerald Nielsen argued at a December hearing that the
earlier penalties were unfair, that the insurer did nothing wrong and that the
engineers had engaged in an appropriate “peer review” process to come to the
final conclusion for the report.
“We did not willfully violate this order,” he told U.S.
District Judge Joseph Bianco in an appeal of sanctions issued by Brown. “Wright
Flood did nothing wrong.”
Bianco upheld the sanctions.
Nielsen Carter has stepped down as counsel for insurers and
been replaced in cases pending in federal courts in Brooklyn and in Central
Islip, New York. The firm continues to represent insurers in Hurricane
Sandy-related cases in New Jersey, according to lawyers for the homeowners.
The case is Raimey (Ramey) v. Wright National Flood
Insurance Company, 2:14-cv-00461, in U.S. District Court, Eastern District of
New York (Central Islip).
//__________________________________________________//
INSURANCE EXECUTIVE
PLEADS FIFTH OVER ALTERED REPORTS DURING SUPERSTORM SANDY HEARING
Catastrophes breed controversies. Superstorm Sandy has a
raging one involving altered engineering reports. Yesterday, Jeff Moore, a
flood insurance executive with one of the largest National Flood Insurance
participating insurers, pleaded the Fifth Amendment when asked questions
regarding those altered reports. As reported by Christie Smyth of Bloomberg:
In November, U.S. Magistrate Judge Gary Brown said he feared
there may be conflicting reports in many other flood insurance cases, and
hundreds of homeowners are now searching for evidence that similar tactics were
used to deny their Sandy-related claims.
In court, Brown is weighing whether to penalize Wright Flood
and a law firm that represented it and other insurers. Representatives from the
Metairie, Louisiana-based firm, Nielsen Carter & Treas LLC, didn’t attend
the hearing, and a phone call wasn’t immediately returned.
During the proceeding, Jeff Moore, who was Wright Flood’s
vice president of claims when Ramey was disputing her claim, refused to answer
questions posed by her lawyers, citing his Fifth Amendment right under the U.S.
Constitution not to incriminate himself.
I cannot remember an insurance company vice president of
claims ever pleading the Fifth Amendment regarding insurance claims conduct.
But, the refusal of flood WYO insurers and their attorneys to look into
allegations of altered engineering reports and changed estimates of damage has
been common place in Superstorm Sandy claims disputes.
Louisiana attorney John Houghtaling filed a letter with the New York federal court last week describing how long Jeff Moore and his attorneys refused to turn over the "draft" reports before Federal Magistrate Gary Brown stopped the practice last November:
Louisiana attorney John Houghtaling filed a letter with the New York federal court last week describing how long Jeff Moore and his attorneys refused to turn over the "draft" reports before Federal Magistrate Gary Brown stopped the practice last November:
In August of 2014, Plaintiff Liaison Counsel requested a
meeting with Defense Liaison Counsel, Nielsen Carter & Treas (hereinafter
NCT), to discuss the concern of fraudulent engineering reports in Hurricane
Sandy. A face to face meeting was set on August 11, 2014 between undersigned,
Brian Houghtaling, and NCT partners, John Carter and Bill Treas. At the meeting
undersigned expressed that the expert reports upon which NCT were relying were
produced by the same individuals behind fraudulently changed engineering
reports in Katrina. NCT did not respond to our concerns and on Thursday,
September 25, 2014, the parties entered mediation on the Ramey case. Jeff Moore
attended the mediation and made statements at that mediation. Without
disclosing these statements, the mediation ended with a dispute over
defendant's compliance with the CMO.
WYO insurers are still not being transparent about how they
determined amounts owed to policyholders. They still are not looking into—and
refusing requests for the existence of—altered estimates. Every claim has an
adjuster's estimate. If FEMA really wants to find the extent of shenanigans
going on in its property insurance claims, it should look to see how the claims
estimates were made and finalized. All of us in the property claims business
know this and it does not take a rocket scientist to figure out why WYO insurers
and their attorneys are refusing to look into this aspect of their claims
handling.
If FEMA is serious about claims honesty and transparency,
FEMA's Craig Fugate and Brad Kieserman will immediately require their WYO
insurer to turn over all draft, changed, and altered estimates--with relevant
emails and memos—which may explain the reasons for the alterations. We'll see
if their actions match the words in the letters calling for transparency.
Source: http://www.propertyinsurancecoveragelaw.com