(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 InsuranceCo., 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. A call to HiRise wasn’t immediately returned.

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).

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