Sandy fraud reports prompt call for wider notification to homeowners

With mounting evidence that hundreds of homeowners in New Jersey and New York had their Sandy flood insurance claims denied because engineering reports were doctored, a New Jersey Congressman is calling on FEMA to rectify the situation.

Congressman Frank Pallone (D-NJ 6th District) has written to FEMA Administrator Craig Fugate, requesting that all homeowners who filed claims with the National Flood Insurance Program be made aware that engineering reports have been manipulated and falsified to allow insurance companies to underpay Sandy victims.

"FEMA has to provide some kind of notice for people who have been denied that this exists, so they have some kind of pathway to appeal," Pallone said. "My concern is that we're finding this to be more and more the case, and yet how many people are even aware of it?"

Pallone believes many homeowners simply accepted their insurance claim denials, never even challenging them.

"Some of these insurance companies that were committing this fraud were relying on the fact that people were worn down and weren't going to do anything about it. I really think it's incumbent upon FEMA to send some sort of notice, or to notify people who have been denied that we're now seeing widespread fraud, and that they an opportunity or a pathway to correct it," Pallone said.

The congressman said it's very unfortunate that almost two-and-a-half years after Sandy, there are still many people are waiting for funding to get back into their homes.

"It's just extremely frustrating. As we start to uncover all these efforts to make it more difficult, or in some cases fraud," Pallone said.

The following is Pallone's full letter to FEMA Administrator Craig Fugate:

Dear Administrator Fugate,

I write today regarding reported widespread fraud perpetrated by private insurance companies servicing National Flood Insurance Program (NFIP) claims in response to Superstorm Sandy.  I am deeply troubled by the reports of intentionally altered engineering reports leading to underpayment and even denial of NFIP claims in New Jersey and other Sandy affected states.
As of the end of February, 74,052 NFIP claims have been filed in New Jersey stemming from Sandy damage.

 While over 1,100 Sandy victims are suing their insurance companies for perceived underpayments or denials, the vast majority of those who have filed NFIP claims are likely unaware of the recently uncovered fraud in which engineering reports have been intentionally doctored.

I respectfully request that the Federal Emergency Management Agency (FEMA) provide notification to those who have filed NFIP claims pursuant to Superstorm Sandy detailing the prevalence of fraud with respect to engineering reports.  FEMA must detail for these Sandy victims how they can obtain copies of these engineering reports and also establish a pathway to easily file an appeal if they feel that they have been victims of a fraudulently altered engineering report.  This pathway should be provided for all NFIP claimants regardless of whether they have already settled a claim dispute, as many settled their claims before this fraud was uncovered.

We must ensure that disaster victims get the resources they deserve and need to recover from this historic storm.  Any attempts by private insurance companies to undercut or deny payments to those who rightfully deserve them must be dealt with swiftly and fairly.  I look forward to your prompt reply to this critical issue.
 
Sincerely,
 
FRANK PALLONE, JR.
Member of Congress