United States Senator Robert Menendez – the senior senator from New Jersey, today issued a letter seeking a full investigation into the fraudulent altering of reports by carrier friendly experts. Followers of our blog know that this has risen to the forefront of Superstorm Sandy flood litigation. Essentially, carriers and their experts are accused of conspiring to alter reports of engineers to deny coverage under the flood insurance policy.
This practice was uncovered and torn apart by United States Magistrate Judge Gary R. Brown sitting in the Eastern District of New York in a case entitled Raimey v. Wright National Flood Insurance Company.1 In Raimey, Judge Brown eviscerated the practice of changing expert reports and ordered all defendants in that district to disclose all instances where reports were changed.
Now, Senator Menendez wants to go a step further, not limiting the disclosure to the Eastern District of New York — he has sent a letter to the head of FEMA, demanding an investigation and a report to Congress on how far reaching this practice goes. Senator Menendez has also requested that FEMA “impose penalties for those companies involved, and that the agency create a plan to stop this practice and counter its root cause — a broken payment structure in the National Flood Insurance Program. FEMA covers all the losses of the NFIP, but private insurers service and write policies.” With any luck, FEMA will respond favorably and present the requested data to Congress.
Many of us who advocate for policyholders have long suspected this practice was thwarting payments to insureds. Now that it has been exposed, we are hopeful that the practice will be ceased or, at the very least, minimized.