It has been has been a year since Hurricane Sandy swept through the region, but New York lawyers are still helping storm victims wade through legal problems that are growing ever more complex.
In the initial days and weeks after the Oct. 29 storm, hundreds of lawyers from the private firms and nonprofit legal services agencies confronted immediate issues such as securing temporary housing, unemployment benefits and emergency food stamps.
The next phase of the post-flood legal recovery period involved documenting the damage inflicted by the storm for residents’ and business owners’ flood and property insurance and Federal Emergency Management Agency (FEMA) claims.
Since insurance law is not a typical area of expertise for civil legal services groups, the private bar stepped in to provide training and answer questions.
Now, lawyers working on Sandy cases say they’re gearing up for legal battles that could take years to resolve. In the most common, homeowners who are already in deep personal debt are still fighting FEMA and their insurers over what they regard as unjustified underpayments or denials of storm damage claims.
Another pervasive issue is contractor fraud—hundreds of people paid for repair work that was performed poorly or not at all. Finally, many civil legal services groups report recent upticks in clients facing foreclosure, particularly in Long Island and Staten Island.
“Nobody actually feels like they’ve been made whole,” said Lynn Kelly, executive director of the City Bar Justice Center, the nonprofit arm of the New York City Bar, which trains lawyers to provide pro bono help to low-income New Yorkers. “It’s a sobering experience to see a disaster like this and realize, at the end of the day, how little help there is for people.”
New York attorneys have helped thousands of Sandy clients pro bono. Hundreds of those cases are still active, many could turn into lawsuits as statute of limitations deadlines near.
Meanwhile, lawyers described clients who are growing exasperated and starting to give up hope of ever getting back into their homes.
In the past year, the New York Legal Assistance Group has provided direct civil legal help to more than 5,876 Sandy victims and has 2,145 active cases, 200 of which it just opened this month. The organization has a 25-member storm response unit, most of them new hires.
Keiko Cervantes-Ospina, a supervising attorney with NYLAG’s storm response unit focusing on housing matters, said some of her clients have received diagnoses of post-traumatic stress disorder and depression.
“They feel harassed by all these different organizations they’re trying to get help from,” she said. “They feel betrayed by their insurance companies and they feel attacked by their mortgage companies and think that their homes are going to be taken from them. It’s the pile-on of issues. People are very resilient but a year later they’re worn down.”
Above, Keiko Cervantes-Ospina, supervising attorney at the Storm Response Unit of the New York Legal Assistance Group. Staff attorney Jordan Ballard works behind her (NYLJ/Rick Kopstein). Below, Nassau County Bar Association Past President Peter Levy, who coordinates the bar’s off-site Sandy clinics, gives advice at a Long Beach session on Oct. 21 (Nassau County Bar Association).
The Legal Aid Society has provided counsel to more than 5,800 Sandy victims and has 300 open cases. Legal Services NYC has helped more than 3,000, and MFY Legal Services has given assistance to more than 1,000. The Nassau County Bar Association has helped 1,200 storm victims through 21 Sandy-specific free walk-in legal clinics. All continue to get calls from potential clients to the Sandy relief hotlines they set up in the days after the storm.
Some smaller legal services groups, however, are limiting intake as they reach the end of their Sandy grants. For example, the Nassau/Suffolk Law Services Committee’s funding for Sandy-specific work will run out at the end of November. The group has a handful of cases it is trying to wind down and is funneling new callers to groups like NYLAG and disaster recovery clinics at the Touro College Jacob D. Fuchsberg Law Center and the Maurice A. Deane School of Law at Hofstra University.
Civil legal services groups were already stretched thin before the storm. But the influx of Sandy cases on top of their regular work has strained their limited resources.
The Legal Aid Society received $630,000 for its Sandy legal recovery efforts from a mix of sources including the Robin Hood Foundation, the Center for New York City Neighborhoods and private donors. It has brought a federal class-action suit in the Southern District, Toney-Dick v. Doar, 12 Civ. 9162, on behalf of low-income storm victims, which claims the city unlawfully denied them food stamps. Gibson, Dunn & Crutcher is co-counsel.
That lawsuit and another action to challenge the end of an emergency shelter program at area hotels are a way to bring relief to large groups of people at once, Legal Aid’s Attorney-in-Chief Steven Banks said. But that still leaves many potential clients unable to get help because the group does not have enough staff attorneys to handle the volume.
“Before the storm, we were forced to turn away one of every nine New Yorkers who were seeking legal help,” Banks said. “Since the storm hit, the situation has become even more extreme.”
“In an instant, these families and individuals were rendered in desperate need of our help, and their problems aren’t short-term, they’re long-term,” he added.
Earlier this month, Huan Qiang Lin, an immigrant from China, testified at a hearing on the need for civil services called by Chief Judge Jonathan Lippman.
Weeping as he spoke in his native Cantonese, Lin described how he has spent the past several months living apart from his wife and two daughters as they face $219,000 in repair costs to their Coney Island home. Months after the storm, the Legal Aid Society took on his case and helped him obtain $7,000 in emergency rental assistance from FEMA.
“Without their help I wouldn’t know what to do,” Lin said through a translator. “My family would’ve been sleeping on the street.”
Lin has received nothing from his home insurer because they classified his unit as a basement and therefore ineligible for coverage. He has gotten $40,000 from his flood insurer. But he has not been able to start repairs because the flood claim check was written out jointly to Lin and his mortgage servicer, JPMorgan Chase & Co. The bank will not release most of the funds.
Attorneys at Weil, Gotshal & Manges handled the appeal to FEMA, while Reed Smith worked on an appeal to his home insurer. All together, Lin’s lawyers have devoted more than 100 pro bono hours to his case, said Tashi Lhewa, his Legal Aid attorney.
“He’s always paid his insurance premiums on time, year in and year out,” Lhewa said. “And when it’s time for them to pay out, they’re backing away. He’s not asking for anything more than what he’s entitled to.”
Sandy has affected a far greater number of people, homes and businesses than any natural disaster in recent memory. But because so many of New York’s biggest law firms represent insurance companies, most are conflicted out of providing the level of pro bono help they’ve given in past events, such as the Sept. 11, 2001 terrorist attacks.
“We’ve pretty much just stopped asking because there’s so many conflicts,” said Raun Rasmussen, executive director of Legal Services NYC.
Private attorneys from the largest firms were able to help in the earliest stages, providing general advice to storm victims on FEMA, landlord-tenant, food stamps and other matters. But for the most part they have not been able to do the more in-depth follow-up work, some of which could soon enter the litigation stages. That has fallen to the legal services groups.
“It’s not due to a lack of willingness of the firms to help,” said Ann Dibble, director of NYLAG’s storm response unit. “But the fact is, they cannot take a position adverse to the companies they represent. There’s a broad swath of cases they cannot help on. It’s a very real problem.”
A handful of firms—such as Reed Smith, Orrick, Herrington & Sutcliffe, and Dickstein Shapiro—work on behalf of insurance claimants. They have provided trainings for lawyers without experience in that area.
“We’re kind of on the flipside of a lot of firms in New York—we sue insurance companies, and we’re always on the side of the policyholders,” said Ann Kramer, an insurance recovery partner at Reed Smith, which has answered frequent questions for NYLAG on insurance issues. “So we’re happy to be able to fill that void.”
Many firms with insurance clients still found ways to get involved. Weil Gotshal, for example, represents some of the world’s largest insurance and reinsurance companies. But it wrote pro bono appeals letters on behalf of 40 storm victims, including Lin, who were denied emergency aid from FEMA, an area where it had no conflicts.
“We did what we could, and as it happened that turned out to be quite a lot,” said Weil’s pro bono coordinator, Miriam Buhl.
Earlier this year, the firm also helped the Legal Aid Society bring a class-action suit against the city when it moved to evacuate about 1,000 displaced storm victims living in hotels through a temporary shelter program. The city had been reimbursed for the program by FEMA but did not have the funds to continue it on its own.
Manhattan Supreme Court Justice Margaret Chan issued a preliminary injunction in Sapp v. City of New York, 450677-2013, in May that extended the program through last month (NYLJ, May 16).
“The resources, talent, the kind of co-counsel expertise that is so valuable to an organization like Legal Aid—that’s something only a law firm can do,” Buhl said.
With a shortage of pro bono lawyers and civil legal services groups stretched thin, some storm victims are turning to plaintiffs law firms that focus their practices around property and casualty insurance. Such firms typically charge clients about one-third of their recovery.
Not many such firms existed in the area before Sandy. Sensing a business opportunity, at least three firms with roots in Florida and Texas set up shop within months of the storm, and the volume of Sandy work is so great they have no plans to leave.
Complaints About Insurance
Most homeowners’ insurance policies do not cover flood damage. Rather, residents must make their claims through the National Flood Insurance Program, which is run by FEMA. Almost 60,000 New Yorkers have filed flood claims.
According to the New York state Department of Financial Services, private property and casualty insurance companies have received approximately 500,000 Sandy-related claims, and 97 percent have been processed. The majority are residential property claims. In total, about $5 billion has been paid out to Sandy victims.
The state has received approximately 5,600 consumer complaints about insurance carriers—indicating that lawyers helping storm victims have their work cut out for them. But the New York Insurance Association, a trade group that represents the property and casualty insurance industry, points out that only about 1 percent of all Sandy claims have resulted in a formal complaint.
“The private insurance market performed admirably and served consumers well,” said Cassandra Anderson, the group’s vice president. “Having a strong and vibrant private insurance market made it possible for New York to withstand Sandy’s blows and begin rebuilding.”
In February, Governor Andrew Cuomo announced a voluntary mediation process for homeowners disputing their insurance companies’ low offers or claim denials. Only about 2,500 homeowners have chosen to participate, even though the program requires insurers to pay for the mediator.
Homeowners who complain they are having trouble getting enough money from their insurance carriers to rebuild their homes also are being squeezed by rising flood insurance rates. The Biggert-Waters Flood Insurance Reform Act, part of which went into effect Oct. 1, 2013, ends federal subsidies for the National Flood Insurance Program and phases in increased flood insurance rates for homes in flood zones.
As a result, residents in parts of Staten Island and Long Island are seeing their premiums skyrocket. Some homes that paid $600 to $1,200 in annual flood insurance could soon be paying $10,000 to $15,000, said Margaret Becker, director of the disaster recovery unit at Staten Island Legal Services.
“It’s forcing widespread displacement of middle-income homeowners, and that’s what many communities are terrified of,” Becker said.
Homeowners who want to stay in their homes often turn to attorneys to advise them on how to moderate the flood insurance bite, which includes taking mitigation measures like elevating their houses several feet.
Clients who want to sell their homes usually cannot do so without first repairing them. And even then, their mortgages, taken out in stronger economic times, often exceed the value of their homes.
At any rate, said Becker, “You can’t sell a $200,000 to $300,000 home that carries a $10,000 flood insurance policy. So people are kind of locked in a trap with no clear way out.”
@|Tania Karas can be contacted at email@example.com.