New York’s senators are pressuring the U.S. Department of Homeland Security’s inspector general to speed up its investigation into the National Flood Insurance Program after allegations of mismanagement, poor oversight and potential fraud surfaced in the wake of superstorm Sandy in 2012.
In a letter sent Friday to Inspector General John Roth, Democratic Sens. Chuck Schumer and Kirsten Gillibrand asked when the probe would be over and a report issued about payouts related to the storm, which struck four years ago Saturday.
“Our constituents deserve to know that an investigation is moving forward and that there will be accountability for those who were involved with carrying out or enabling the intentional underpayment of flood insurance claims,” the letter said.
The Federal Emergency Management Agency, which is part of Homeland Security, underwrites flood insurance but hires private companies to execute policies and adjust claims.
More than 144,000 flood insurance claims were filed after the 2012 storm. Within a year, policy holders began complaining about altered damage reports that reduced payments and nearly 1,700 people filed lawsuits, settling in early 2015 for $164.3 million.
FEMA then opened up a claims-review process to re-examine other cases. More than 19,000 files were reopened and an additional $112.6 million has been paid as of Friday.
In addition, FEMA and New York State opened investigations in 2014. That summer, FEMA Administrator W. Craig Fugate asked the inspector general to take a look.
Schumer said enough time has passed.
“The bottom line is we’re getting really angry,” Schumer said in an interview with Newsday. “It’s been 27 months. There’s serious allegations of fraud.”
The inspector general’s office confirmed an investigation but declined to say when it began. “We cannot provide any details about the ongoing investigation,” spokeswoman Arlen Morales said in an email.
Gillibrand said the families affected deserve accountability.
“They managed to make it through a powerful, devastating storm, only to then become victims of a grossly unethical insurance fraud scheme after all of their property was destroyed — and the one government agency that is supposed to help these families recover hasn’t been doing its job,” she said in a statement.
The letter also said FEMA adjusters have signed affidavits saying they were told to reduce payments.
The correspondence also said it was the senators “understanding” that FEMA or its contractors hired people to review reopened Sandy claims who had previously been employed by engineering firms that did the initial reports. That includes HiRise Engineering of Uniondale, which was barred temporarily in August from federal contracts after the state Attorney General charged the firm in connection with falsified flood insurance damage reports. The case is pending.
“There’s a lot of, I’d say, questionable things that have happened,” said Melissa H. Luckman, director of Touro Law Center’s Disaster Relief Clinic.
Luckman recognized the name of a HiRise employee working with FEMA on the claims-review team and alerted the agency.
Since the allegations surfaced, FEMA removed top leadership, made it easier to change regulations and added oversight regarding engineering reports and fees. “We have undergone a significant effort to overhaul the program regardless of any results of an investigation,” FEMA spokesman Rafael Lemaitre said.
But Long Beach attorney Denis Kelly, who was part of settlement negotiations in the early flood insurance cases and has clients who reopened their claims, said FEMA is only evaluating adjusters’ calculations and not looking at engineering reports, which are at the heart of many fraud claims.
“FEMA has chosen to ignore that whole line of thinking,” he said. “FEMA feels like they’re an entity unto itself that is completely immune.”
He also said nothing is in place to ensure claims are paid properly because the law limits policy holders to litigating only for as much money as their policy is worth, not additional damages for fraud or distress.
“I think there’s got to be congressional hearings,” Kelly said, “not just for Congress to vent but to ask ‘How do we make this better?’ ”