(Bloomberg) -- The Federal Emergency Management Agency isworking on settling litigation with hundreds of Hurricane Sandyvictims who challenged denials or alleged underpayments of floodinsurance claims.

Brad Kieserman, deputy associate administrator for insurance atFEMA, disclosed the settlement talks during a break at a hearing inBrooklyn, N.Y., federal court Wednesday over whether an insurer,Wright National Flood Insurance Co., concealed from a homeowner theexistence of conflicting reports over damages.

Private insurance companies that work in partnership with FEMA’sNational Flood Insurance Program have come under scrutiny overallegations that they denied or rejected damage claims based onfalsified reports.

About 1,500 cases over flood claims from the 2012 Category 3hurricane remain pending in New York and New Jersey federal courts.Kieserman said the agency may also look at settlements withhomeowners with disputed payments who didn’t sue.

“We are going to consider all of them,” he said.

During the hearing, witnesses testified over the handling of areport for a Long Beach, N.Y. homeowner, Deborah Ramey. Rameyalleged that a rental property she owned was severely damaged bythe flood yet was falsely described as having had long-term damageby an engineer working on behalf of the insurer.

Other Insurers

Other insurance companies that participate in the program,including affiliates of Travelers Cos. and Hartford FinancialServices Group Inc., have also been accused by homeowners ofrejecting or underpaying claims based on falsified reports.

A witness called during Wednesday’s hearing, Jeff Moore, who wasvice president of claims for Wright while Ramey was disputing herclaim, declined to answer any questions from her lawyers, invokinghis Fifth Amendment right under the U.S. Constitution to avoidsaying anything that might incriminate him.

Patrick Linehan, a Travelers spokesman, and Thomas Hambrick, aspokesman for Hartford, didn’t immediately respond to e-mailsseeking comment on the settlement talks. Dolores Glass, aspokeswoman for Wright, declined to comment.

Raimey (Ramey) v. Wright National Flood Insurance Company,2:14-cv-00461, in U.S. District Court, Eastern District of New York(Central Islip).

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