Allegations of Wrongful Denials in Hurricane Sandy Claims

Two and a half years after Hurricane Sandy's landfall on the East Coast, homeowners and insurers are still working out resolving and paying out flood insurance claims related to the storm's damage.

News recently emerged that among some of these lawsuits, several key engineering reports were wrongfully altered to either deny or reduce claims payments to policyholders who filed them.

In one particular case titled "Deborah Raimey and Larry Raisfeld vs. Wright National Flood Insurance Co," initial engineering reports assessing damage to a house were reversed, resulting in the insurer's refusal to pay for damages under the policyholders' flood insurance coverage. The house in question was located on Long Beach, just a block away from the shoreline, and suffered structural damage ranging from collapsed foundation walls, uneven roof slopes, leaning exterior walls, and uneven floor surfaces after Hurricane Sandy. Wright National Flood Insurance Company, the insurer of the property, retained an engineering firm called U.S. Forensic, to determine the cause of the structural damage. U.S. Forensic initially sent George Hernemar, a licensed engineer, to inspect the property. Hernemar's subsequent report attributed the damages to the "hydrodynamic forces associated with the flood event [referring to Hurricane Sandy]," and deemed that "a repair was not economically viable". However, a cursory peer review of photographs of the property conducted by another engineer, Michael Garove, attributed the damage to soil movement and frame deflection over a long period of time. This second report was ultimately issued to the plaintiffs along with Wright's determination to not pay out the claim. A Long Beach city inspector later issued a conflicting report which attributed the majority of damages to the property to the flooding from Hurricane Sandy. This contradiction formed the basis of the plaintiffs' request for Wright to re-inspect the property, and ultimately the lawsuit.

Along with other cases, this particular lawsuit established a recurring pattern of "gamesmanship" and "unprincipled practices" on the part of engineering firms in these damage reports. As a result, Judge Gary Brown has ordered that all subsequent Hurricane Sandy cases include all drafts and copies of documents prepared related to the damages and properties in question to expedite the litigation process. With this accommodation, it is hoped that homeowners who are still awaiting judgments and payments on their claims can find speedier resolution.

Since Hurricane Sandy hit the Atlantic coast in October of 2012, approximately 1,200 cases have been filed with the United States Court Eastern District of New York related to the storm's damage and destruction of property. The court's jurisdiction primarily includes Long Island, Staten Island, Brooklyn, and Queens, among other territories. Approximately a quarter of these cases have been resolved through an expedited mediation process, but the majority of cases remain.

Ting Pen

Ting is a ValuePenguin Co-Founder. She previously evaluated corporate mergers and acquisitions as a Financial Analyst at Citigroup.

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