Some damaged homes in Garden City after superstorm Sandy on...

Some damaged homes in Garden City after superstorm Sandy on Oct. 29, 2013. Credit: Newsday / Audrey C. Tiernan

Lawyers for superstorm Sandy victims presented previously undisclosed documents during a federal court hearing in Brooklyn Wednesday, saying they provide further evidence that reports were altered to minimize flood insurance settlements to homeowners.

The evidence included a 2012 email from Gary Bell, the founder of a Metairie, Louisiana, engineering firm, instructing an employee to rewrite a damage report to conclude that a house in Breezy Point, Queens, could be fixed, rather than determining it was beyond repair.

"Can you revise the report and resubmit please," wrote Bell, who is not an engineer and never visited the home.

Saying the house did not need to be rebuilt from scratch allowed a subsidiary of Travelers Insurance Companies to avoid paying a full settlement of $250,000 on the homeowner's flood insurance policy, lawyers said. Instead, the company paid roughly $150,000.

A lawyer for Bell declined to comment. A representative from his company, U.S. Forensic, is scheduled to testify Thursday.

The emails from Bell were among hundreds of documents that the Travelers subsidiary, Standard Fire Insurance Co., turned over to lawyers for homeowners May 8 -- more than six months after the deadline set by a federal judge.

An in-house lawyer for Travelers, Barbara Frederick, testified that the documents had been misplaced by a law firm hired by the insurer to defend claims arising from Sandy. The company, she said, has every intention of paying homeowners fairly.

U.S. Magistrate Judge Cheryl L. Pollak called Wednesday's hearing to examine evidence of fraud alleged in nine lawsuits filed against Travelers by Sandy victims.

Those and other allegations have led to a criminal probe and the departure of two top officials at the National Flood Insurance Program.

While Washington underwrites flood insurance, the program hires Travelers and other private insurers to sell policies and calculate how much the government should pay for damages after a storm hits.

Yet lawyers for homeowners say those private companies routinely lowball estimates. That is primarily, they say, because the government penalizes any companies caught inflating claims. Plus, attorneys say the private insurance companies want to avoid setting precedent for larger payouts for their own wind and fire claims.

During Wednesday's hearing, a vice president for Travelers, David Powell, said the company exercises little control over flood insurance settlements. Instead, the insurer subcontracts the job to National Flood Services, a Kalispell, Montana-based company that services more than 3 million policies.

"They have the authority to handle all our cases," Powell said.

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