Hurricane Sandy relief efforts in Seaside Heights, N.J. (Photo: U.S. Navy photo by Mass Communication Specialist 1st Class Martin Cuaron/Released.)
Lawyers who represent victims of Superstorm Sandy hailed the March 11 announcement that the Federal Emergency Management Agency will reopen 144,000 flood insurance claims.
The corrective action is good news for property owners who feel their claims got short shrift, and good for law firms, since some of those claimants are likely to need legal representation, according to lawyers familiar with FEMA’s plans.
FEMA Administrator Craig Fugate agreed to reopen and review every flood insurance claim—around 144,000, filed by Sandy victims—and not limit corrective action to the 2,200 currently in litigation, according to a statement on the website of U.S. Sen. Robert Menendez. The agreement was made in a meeting that Fugate held with Menendez and U.S. Senators Cory Booker (D-NJ), Charles Schumer (D-NY) and Kirsten Gillibrand (D-NY), the statement said.
The announcement comes amid allegations in recent weeks that some insurance companies denied thousands of claims after fraudulently altering engineering reports, as well as complaints that insurance companies systematically underpay on claims because they fear a backlash from FEMA.
FEMA’s announcement will provide unhappy claimants a means for redress without going to court, but going it alone may be tricky, said one lawyer representing flood insurance claimants, Charles Mathis IV of Merlin Law Group in Red Bank, New Jersey, a firm that specialized in representing policyholders in insurance claims.
“While FEMA is trying to be transparent and make things right, I don’t anticipate them handing over the claim,” Mathis said. “Part of the problem is two and a half years have passed and it’s going to be very difficult to determine the extent of the damage if people have made repairs. I do think there will be some folks that will need some additional assistance going through the process.”
C. Glen Ged of Ellis, Ged & Bodden in Point Pleasant Beach, New Jersey, added, “It’s important for people to get legal guidance if [FEMA is] kind enough to open the window again.”
But Eugene Killian Jr., of the Killian Firm in Iselin, New Jersey, said the details of the program, as yet unannounced, would determine whether it would offer significant opportunities for lawyers. While the limit of flood insurance claims is $250,000 for the home and another $250,000 for its contents, a more common claim would be for $20,000, he said. A lawyer who takes one-third in such cases would have to have a high-volume practice to make it worthwhile, he said.
According to Menendez’s statement, FEMA has agreed to develop a process for Sandy victims who are non-litigants, but believe their claims were unjustly denied or that they received an insufficient payout, to reopen their cases. FEMA has also agreed to guarantee claimants access to all engineering reports, and to contact all Sandy claimants by mail to make them aware of the new process and opportunity for review. Under the agreement, FEMA is required to convene a Sandy Task Force on April 13 to begin evaluation of the program and focus on reforms, the statement said. And the agency said it will hold accountable any parties who facilitated or fostered fraudulent activity.
FEMA administrator Fugate also pledged to make unspecified “personnel changes at senior levels” of the National Flood Insurance Program, the statement said.
The announcement by FEMA that its own personnel will review the reopened claims, rather than delegate that job to the private insurance companies participating in the agency’s federal flood insurance program, is good news for policyholders, Mathis said. Recently, the agency has also been getting involved more closely in resolving flood insurance disputes now in litigation, he said.
Bodden said he’s hopeful FEMA’s Sandy Task Force will deliver meaningful reform, but warns that problems with the flood insurance program are complex.
“I think we all learned a lot from this storm because of the nature of the storm—this was a flood event and a wind event. What was happening is the flood [insurance carrier] was blaming the wind and the wind was blaming the flood,” he said.