Catastrophes breed controversies. Superstorm Sandy has a raging one involving altered engineering reports. Yesterday, Jeff Moore, a flood insurance executive with one of the largest National Flood Insurance participating insurers, pleaded the Fifth Amendment when asked questions regarding those altered reports. As reported by Christie Smyth of Bloomberg:
In November, U.S. Magistrate Judge Gary Brown said he feared there may be conflicting reports in many other flood insurance cases, and hundreds of homeowners are now searching for evidence that similar tactics were used to deny their Sandy-related claims.
In court, Brown is weighing whether to penalize Wright Flood and a law firm that represented it and other insurers. Representatives from the Metairie, Louisiana-based firm, Nielsen Carter & Treas LLC, didn’t attend the hearing, and a phone call wasn’t immediately returned.
During the proceeding, Jeff Moore, who was Wright Flood’s vice president of claims when Ramey was disputing her claim, refused to answer questions posed by her lawyers, citing his Fifth Amendment right under the U.S. Constitution not to incriminate himself.
I cannot remember an insurance company vice president of claims ever pleading the Fifth Amendment regarding insurance claims conduct. But, the refusal of flood WYO insurers and their attorneys to look into allegations of altered engineering reports and changed estimates of damage has been common place in Superstorm Sandy claims disputes.
Louisiana attorney John Houghtaling filed a letter with the New York federal court last week describing how long Jeff Moore and his attorneys refused to turn over the "draft" reports before Federal Magistrate Gary Brown stopped the practice last November:
In August of 2014, Plaintiff Liaison Counsel requested a meeting with Defense Liaison Counsel, Nielsen Carter & Treas (hereinafter NCT), to discuss the concern of fraudulent engineering reports in Hurricane Sandy. A face to face meeting was set on August 11, 2014 between undersigned, Brian Houghtaling, and NCT partners, John Carter and Bill Treas. At the meeting undersigned expressed that the expert reports upon which NCT were relying were produced by the same individuals behind fraudulently changed engineering reports in Katrina. NCT did not respond to our concerns and on Thursday, September 25, 2014, the parties entered mediation on the Ramey case. Jeff Moore attended the mediation and made statements at that mediation. Without disclosing these statements, the mediation ended with a dispute over defendant’s compliance with the CMO.
WYO insurers are still not being transparent about how they determined amounts owed to policyholders. They still are not looking into—and refusing requests for the existence of—altered estimates. Every claim has an adjuster’s estimate. If FEMA really wants to find the extent of shenanigans going on in its property insurance claims, it should look to see how the claims estimates were made and finalized. All of us in the property claims business know this and it does not take a rocket scientist to figure out why WYO insurers and their attorneys are refusing to look into this aspect of their claims handling.
If FEMA is serious about claims honesty and transparency, FEMA’s Craig Fugate and Brad Kieserman will immediately require their WYO insurer to turn over all draft, changed, and altered estimates–with relevant emails and memos—which may explain the reasons for the alterations. We’ll see if their actions match the words in the letters calling for transparency.