(Bloomberg) -- Federal disaster assistance officials have begun reaching settlements with more than 1,000 Hurricane Sandy victims who allege they were unfairly denied flood insurance claims or paid too little for them.
Lawyers for property owners told federal magistrate judges overseeing lawsuits in Brooklyn and Central Islip in New York in a filing Monday that settlements have already been reached in 160 cases. The accords are the first wave of hundreds more expected after some homeowners complained that companies that help provide flood insurance rejected claims based on fraudulently manipulated engineering reports of storm damage.
An official from the Federal Emergency Management Agency, which ultimately pays flood claims, said last month that the agency would work with insurers to negotiate accords in all outstanding cases. A process is also in the works to provide funds to homeowners who disputed insurance payments without suing, said J. Steve Mostyn, a lawyer for some homeowners.
A three-judge panel overseeing the Hurricane Sandy cases “has worked extremely hard on this and I want to be sure they approve what we are doing in all aspects,” Mostyn said. The “framework” for the settlements will later be presented for their review.
Susan Hendrick, a spokeswoman for FEMA, didn’t immediately respond to an e-mail seeking comment on the settlements.
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.
According to complaints from some homeowners, initial engineering reviews that correctly linked home damage to the surging waters were revised to cast blame on long-standing structural flaws. The alleged scheme came to light after a Long Beach, New York, homeowner discovered that conclusions originally voiced by an engineer were reflected nowhere in his firm’s final report.
The case is In Re: Hurricane Sandy Cases, 1:14-mc-00041, U.S. District Court, Eastern District of New York (Brooklyn).
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