FEMA head seeks probe: Are insurance lawyers delaying on flood settlements?

People with the charity group Samaritan's Purse help People with the charity group Samaritan's Purse help homeowners on Michigan Street in Long Beach strip their houses which were destroyed by superstorm Sandy on Nov. 18, 2012. Photo Credit: Newsday / Thomas A. Ferrara

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The federal official who oversees the National Flood Insurance Program called for an inquiry Wednesday into whether lawyers defending against superstorm Sandy claims filed on Long Island and elsewhere are using delaying tactics to pad their legal bills.

Craig Fugate, administrator of the Federal Emergency Management Agency, told a Senate panel he has asked the U.S. Justice Department to investigate whether private attorneys being paid by the federal government are improperly stalling and preventing homeowners from collecting settlements.

"I've asked the departments of the Inspector General to take a look at this," Fugate testified at a housing subcommittee hearing. "We should not just be litigating as a delaying tactic to not pay claims."

Fugate's comments came under questioning from Sen. Charles Schumer (D-N.Y.), who said that FEMA, which oversees the flood insurance program, is forecast to pay a record $25 million in legal bills to defend against lawsuits stemming from the October 2012 storm.

In New York alone, more than 1,000 Sandy victims have filed federal lawsuits, claiming the flood insurance program underpaid their claims. The majority live in Nassau, Suffolk, Queens and Staten Island.

Their cases, which have already dragged on for months, are being opposed by lawyers hired by the private insurance companies that administer the government-backed policies. Many are being handled by a single firm: Nielsen, Carter & Treas of Metairie, Louisiana.

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"It seems that a single law firm . . . is using legal tactics to make tens of millions of dollars on the backs of storm-battered Long Island homeowners," Schumer said.

A spokeswoman for the firm did not return a call seeking comment.

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