FEMA settles first wave of NY, NJ Sandy insurance litigation
BY LAILA KEARNEY
Tue Mar 3, 2015 4:59pm EST
(Reuters) – Federal disaster relief officials have settled with a first swath of Hurricane Sandy victims who were denied insurance claims or underpaid for property damage caused by the historic 2012 storm, attorneys said on Tuesday.
New York and New Jersey residents have launched about 1,500 court cases over Sandy flood claims, accusing private insurance companies partnered with the Federal Emergency Management Agency of intentionally and improperly denying their claims.
FEMA has tentatively settled 160 of the lawsuits and another 90 settlements were imminent, plaintiffs’ attorney Steve Mostyn said.
“The process is just getting going,” Mostyn said, adding that 1,000 or so lawsuits are expected to be settled in the coming weeks.
The cases include a mix of allegations, including claims that insurers falsified engineering reports and that reports were intentionally left incomplete, Mostyn said.
A FEMA spokeswoman confirmed that the agency was in settlement negotiations but declined to comment further.
FEMA leaves it to private insurers to assess damage to homes and administer individual flood insurance payments. But it is ultimately federal money controlled by FEMA that pays for damaged homes covered by flood insurance.
Last month, FEMA said it would seek to meet privately with Sandy plaintiffs and the insurance companies named in the lawsuits to settle out of court. As a result, a hearing over the claims was indefinitely suspended.
In November, allegations that reports were falsified led to a federal court judge in Brooklyn to order draft engineering reports be turned over in hundreds of separate Sandy-related lawsuits, writing that the practice could be “widespread.”
In addition to the lawsuits, the New York State attorney general’s office has opened a criminal investigation into what it calls “insurance issues” related to damage caused by Sandy.
FEMA has launched its own investigation into the issue of Sandy insurance claims.
The 2012 hurricane damaged more than 100,000 homes in New York, according to FEMA.
(Reporting by Laila Kearney; Editing by Ellen Wulfhorst and Leslie Adler)