MARCH 12, 2015
The Federal Emergency Management Agency has agreed to review
every flood insurance claim filed by homeowners affected by Hurricane Sandy,
amid accusations that damage assessment reports were fraudulently altered to
minimize claims.
The agency’s administrator, W. Craig Fugate, also revealed
in a letter to members of the New York and New Jersey congressional delegations
that David Miller, who was in charge of FEMA’s embattled National Flood
Insurance Program, has resigned and one of his top deputies has retired.
The actions by the agency were announced on Wednesday by
Senators Robert Menendez and Cory A. Booker of New Jersey, and Charles E.
Schumer and Kirsten E. Gillibrand of New York, all Democrats, after a meeting
with Mr. Fugate in Washington.
Even though the four senators and others have questioned for
months whether doctored engineering reports led to minimizing or even denying
insurance payments after the 2012 hurricane, the latest developments show just
how quickly things have changed in the wake of recent law enforcement inquiries
and reports in The New York Times and on the CBS News program “60 Minutes.”
The New York State attorney general, Eric T. Schneiderman, a
Democrat, has been conducting a criminal inquiry since at least December. Last
month, his office raided a Long Island engineering firm, shortly after The
Times cited new email correspondence suggesting that it had sought to backdate
some of the reports.
On Thursday, Assemblyman Vince Mazzeo, a Democrat from
Atlantic County, citing The Times’s report, asked New Jersey’s acting attorney
general, John J. Hoffman, a Republican, to open a similar criminal
investigation.
FEMA is conducting its own internal inquiry as well. Last
month, the agency named Brad J. Kieserman as the point person to review the
flood insurance program, and he told “60 Minutes” that he had seen evidence of
possible criminal activity by unlicensed engineers.
At the same time, FEMA has intensified its efforts to reach
a settlement framework with some 2,200 homeowners who have filed lawsuits over
their insurance payouts, according to lawyers and lawmakers. Those talks are
continuing and are separate from the new review announced on Wednesday, which
will reopen all 144,000 claims filed by people affected by the storm.
Insurance and engineering firms have denied any wrongdoing.
They have noted that there is little financial incentive to cheat: Many
insurers are paid a percentage fee based on total damages and, under federal
rules, the money that is paid out ultimately comes from FEMA, not the insurance
companies.
But if the agency determines that homeowners deserve more,
they will be eligible for their maximum coverage, as set by the federal
program, of $250,000 in property damage and $100,000 for the contents of their
home.
Steve Mostyn of Houston, the lead lawyer representing the
homeowners, praised the agency for “negotiating in good faith” in recent weeks.
But he also voiced caution.
“We are happy that FEMA now agrees to reopen all Sandy
claims,” he said in an email. “However, that process has not been worked out
and the details of that process will determine if it is real or just window
dressing.”
Federal officials will convene a task force in April in
hopes of revamping the flood insurance program, which penalizes insurers for
overpaying claims but not for underpaying them.
Ms. Gillibrand, in a statement, said she was pleased with
the new developments, but wanted to ensure that “everyone involved in this
fraud is held accountable.”
“There needs to be top to bottom reform,” she said, “so that
this can never happen again.”