New York homeowners filed a lawsuit on November 21st in a New York federal court against Wright National Flood Insurance Company and U.S. Forensic LLC, an engineering firm. They claim that the companies conspired to manipulate reports and avoid paying for damages caused by Hurricane Sandy in 2012.
Wright National Flood Insurance Company provides coverage on behalf of the government's National Flood Insurance Program. The homeowners claim that they "systematically sought to underpay legitimate claims" through the use of "fraudulent engineering and claims handling analysis" by U.S. Forensic and other firms. By denying or underpaying claims, Wright was able to mitigate its risk of facing a government audit and financial penalties for overpayment.
On November 7, a U.S. Magistrate Judge Gary Brown found that an engineering report for a Long Beach house was potentially fraudulent, having been rewritten to say the problems were due to long-term deterioration after inspectors initially found it was damaged beyond repair by the storm. These "unprincipled practices may be widespread" and may have affected hundreds of Hurricane Sandy flood insurance claims or more. The judge ordered that draft reports be disclosed to plaintiffs in as many as 1,000 cases.
Federal Emergency Management Agency, which administers the National Flood Insurance Program, has asked the judge to reconsider his order. They allege that it is burdensome and "unjustly applies to the conduct of one engineering firm to suggest systemic misconduct by all engineering firms."
The case is Ramey v. U.S. Forensic LLC, 2:14-cv-06861, U.S. District Court, Eastern District of New York (Central Islip).