Continued questions over the veracity of flood claims denials for hundreds of Superstorm Sandy victims has led the US Federal Emergency Management Agency to consider reopening all insurance claims that results from the 2012 storm.
If the agreement is made, FEMA will review roughly 144,000 insurance claims.
“There will be a process set up so that everyone who filed a claim will have an opportunity to go back and have their case reviewed if they feel they did not get every dollar they are legitimately owed,” said FEMA spokesperson Rafael Lemaitre.
The statements follow a Wednesday meeting with FEMA Administrator Craig Fugate and Brad Keisserman, deputy associate administrator for insurance with FIMA. Senators Chuck Schumer and Kristen Gillibrand also attended.
The move comes after months of legal allegations that insurance companies contracted by the National Flood Insurance Program doctored engineering reports to eliminate flooding as the cause of damage from the storm. By doing so, attorneys allege insurance companies collected more claims handling fees from NFIP and participated in a racketeering scheme, alongside the engineering firms.
The allegations have led FEMA to order the release of all engineering reports that were associated with claim denials after Sandy, and are connected to the more than 2,200 civil court cases against insurance companies and engineering firms.
The Justice Department said at the time it expected insurers that sell FEMA-backed flood policies to “follow their lead.”
The controversy has also sparked the resignation of David Miller, head of the flood program. Other NFIP staffers have been moved and another was fired.
Gillibrand reportedly USA Today her first thought in hearing about the allegations was that “someone should go to jail for this.” She also asked New York Attorney General Eric Schneiderman to “investigat[e] this very closely.”
“There needs to be top-to-bottom reform so that this can never happen again,” she said in a statement.
Senator Bob Menendez of New Jersey went further.
“As the [FEMA] administrator has come to realize, they’ve been running it as an insurance industry would run it,” he said. “And of course, an insurance industry is always looking to mitigate claims, not to make people whole.”
