An engineering firm has produced an alleged fraudulent report of an engineer’s opinion in a Superstorm Sandy flood lawsuit. Outcome oriented vendor firms providing outcome oriented reports is a big problem for consumers of insurance after a loss occurs. Reports can be altered and language changed which can be disastrous for insurance customers and save millions for insurers. This recent filing demonstrates that this may be ongoing with Superstorm Sandy flood lawsuits:

[T]he Nielsen firm has failed to provide us with an original report of its New York Licensed Professional Engineer George Hernemar. This engineer told our client that he issued a report that determined that the damage to the foundation was caused by the hydrostatic pressures from Sandy flood water. This finding compels coverage. We asked that the Nielsen firm contact Mr. Hernemar to obtain his original report because we believed we were not provided a correct copy of the original report. The Nielsen firm refused, indicating that they sent us all reports, are currently "not in possession" of any other report, and have "no knowledge" of any other reports and they are under no further obligation to comply. Instead, the Nielsen stood by the firm position that they sent us a true copy of the original report… This copy of U.S. Forensic Report . . . .sent to us indicates that the home foundation was NOT damaged by hydrostatic forces from Sandy. . . .

But the engineer indicated he authored a different report:

Mr. Hernemar personally told our client that he did not author a report that disclaimed causation from Sandy. He told our clients he had in fact authored U.S. Forensic Report No. 12.22.1304, but the conclusion of U.S. Forensic Report No. 12.22.1304 confirmed the foundation was broken by hydrostatic forces from Sandy. He indicated he was not authorized to provide a copy of the report, but he allowed our client to read the report on his computer screen. While reading the report, our client took a cell phone image of the computer screen showing the cover page of U.S. Forensic Report No. 12.22.1304 and the causation paragraph of the report. While the copy of the actual report has been denied, and we have been unable to get a copy, we have attached the image from our client’s cell phone. The image shows the cover page of U.S. Forensic Report No. 12.22.1304 and the causation paragraph which is the exact opposite of the Metairie office copy:

(1) The physical evidence observed at the property indicated that the subject building was structural [sic] damaged by hydrodynamic forces associated with the flood event of October 29, 2012. The hydrodynamic forces appear to have caused the foundation walls around the south-west corner of the building to collapse.

Obviously, the original report and opinion was altered. It impacts how much is owed. The question is “who did it and why?”

If a policyholder did this to get more money, criminal authorities would be properly called in to investigate insurance fraud. Why shouldn’t those same authorities be called in now when customers appear to be “ripped off” by those lowering claims payments?

Positive Thought for the Day:

There is no god higher than truth 
     – Mahatma Gandhi

  • Metro Forensics

    Unfortunately, what you wrote is true. Although the field engineer may write and say one thing, the reviewers (who also happen to be the contact person with the adjuster or the insurer) change the findings to insure that no coverage is provided. This happens a lot with US Forensic and other firms.

    The problem is that the burden is with the insured to obtain his own engineer to prepare an insured’s forensic report. Screaming and yelling and claiming fraud is not the way to do it. You just have to educate the public to spend the money and hire their own consultants. Very few of them do it, however- that is why they lose.

  • scott prato

    Anyone involved in Hurricane Sandy knows that there were numerous Fraudulent Adjusters and Engineering firms involved in lying about the structural damages of properties because they were paid off by the Major Insurance carriers to lie about the damage. Lowballing and illegal bad faith were the Norm with these experts who lied for pay. There is no government oversight concerning defrauding flood insurance policy holders so they were defrauded.

  • LennardB

    The Engineer “allowed our client to read the report on his computer screen. While reading the report, our client took a cell phone image of the computer screen showing the cover page of U.S. Forensic Report No. 12.22.1304 and the causation paragraph of the report.”

    It makes no sense that an independent Engineer would invite a homeowner to his or her office to read a report and allow a photo to be taken of his or her computer screen.

  • LennardB, The engineer did not invite the homeowners back to his office to read the report, he was at the subject property for a re-inspection where he first learned about the altered report when presented by the homeowners.

    Metro Forensics, Many homeowners did hire their own engineers that concluded damages caused by flood waters, namely hydrostatic pressure, hydrodynamic forces, scouring and wave action. Those reports (authored by properly licensed engineers) were ignored by the adjusters and the WYO’s. They stood firm on the engineering report that concluded in their favor without additional consideration. In fact, the defending attorneys representing FEMA and the WYO’s stood by their engineer reports during mediations offering no consideration to alternate reports.

    I have been in the P&C industry for over 22 years and have seen my share of reports weighted towards the hand that feed the authors. As any bad practice is allowed to survive or thrive, it will only get worse. As we all get used to the way it is, we forget that it is wrong and accept the bad practice as the norm.

    This series of events born out of SuperstormSandy has exposed the extent of an industry that has been going wrong for years. With public exposure, new political support and steadfast lawyers like the ones at the Merlin Group and others, the scale may just be leveled for a bit.

  • W. Chiang

    I assume that the person who inspected the property, Mr. Hernemar, was the EOR of the report. How could any licensed professional even allow this to happen? If the report bears my name and stamp on it, it must indicate the opinions that I agree with. Did he not discuss the disagreement with the reviewer before issuing the report? If he did have the discussion, but still willing to put his stamp on it, then it’s all him – he can’t excuse himself by saying he had a different report version.

    But if the company issued the report that he disagreed with, and used his stamp without his approval, then it’s a felony. He should draw a clear line in the sand that the report is invalid and his credential was stolen.

    I’ve had many successful litigation as a forensic structural engineer. I was successful because I stuck to the facts that no one could argue. These kind of incidents really give our industry a bad name.