This story is reprinted with permission from FC&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
The District of Columbia law firm of Weisbrod Matteis & Copley PLLC (WMC) has filed a complaint (Sandy Complaint) in the U.S. District Court for the District of Columbia seeking to compel disclosure of records relating to the Superstorm Sandy Claims Review (SCR) process that the Federal Emergency Management Agency (FEMA) allegedly has withheld in violation of the federal Freedom of Information Act (FOIA).
Background
After Superstorm Sandy struck the east coast of the United States on Oct. 29, 2012, more than 140,000 insureds submitted claims under the flood insurance policies issued by insurance companies that the insureds had obtained through the National Flood Insurance Program (NFIP), administered by FEMA.
The insurance companies had issued the policies as part of the NFIP's "Write Your Own" (WYO) program.
As WMC stated in the Sandy Complaint, these litigants "uncovered significant evidence of misconduct by FEMA's WYO insurers and others working on the agency's behalf that led to the improper denial or underpayment of many Sandy flood insurance claims."
WMC noted in the Sandy Complaint that FEMA then "took the rare step of allowing all 140,000 policyholders who had submitted NFIP insurance claims after Sandy to reopen their claims" in the SCR process.
The Sandy complaint
WMC asserted in the Sandy Complaint, however, that "FEMA has lied to its policyholders and to all taxpayers." As alleged by WMC, the SCR "has become a boondoggle designed to overpay FEMA's contractors while continuing deliberately to underpay homeowners."
The Sandy Complaint asserted that FEMA's "ongoing misconduct and improprieties" included:
- Retaining SCR staff involved in the original, tainted adjustment of Sandy flood claims despite promising not to do so;
- Engaging in inaccurate and one-sided training of purportedly "neutral" JAMS reviewers;
- Failing to conduct proper, line-by-line assessments of SCR claims to identify the true value of covered flood damage and relying instead on a program developed by McKinsey & Company that proposes unjustifiable low-ball payments;
- Instructing SCR staff categorically to deny payments for certain categories of covered flood damage; and
- Making exorbitant payments to unqualified contractors with ties to FEMA officials to administer the SCR.
Moreover, the Sandy Complaint asserted, contrary to FEMA's promise to resolve all SCR claims fairly in 90 days or less, "the SCR already has dragged on for nearly two years, with no end in sight."
In particular, according to the Sandy Complaint, "fewer than 150 of WMC's 1,200 clients have resolved their claims, and far fewer actually have received payment from FEMA."
The Sandy Complaint asserted, upon information and belief, that "FEMA's combination of delay and deliberate underpayment has resulted in aggregated payments of more than $500 million to federal contractors while homeowners received less than $200 million during the same period."
The FOIA requests
The Sandy Complaint asserted that WMC had submitted FOIA requests on Jan. 6 and Feb. 9, 2016, "to unearth documents concerning these troubling aspects of the SCR." These requests, according to the Sandy Complaint, sought various documents concerning the SCR program, including records pertaining to FEMA's organization of the review process, the instructions and guidelines governing the review of insurance claims, and FEMA's relationships with its SCR contractors.
According to the Sandy Complaint, FEMA "has failed to respond or even to acknowledge these requests for more than a year, violating its obligations under FOIA and the public policies and interests underlying that statute."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.