New York State's attorney general has opened a criminal investigation into the way insurance companies and engineering firms handled claims by homeowners flooded out of their homes by Hurricane Sandy, according to a December 18 report in Long Island's Newsday (see: "State begins criminal probe of claims that Sandy insurance denials were fraudulent," by Joe Ryan).
"The move comes as a growing number of homeowners on Long Island and in Brooklyn has alleged in civil lawsuits that engineering reports were secretly rewritten after the 2012 storm to say houses were damaged by structural defects rather than flooding," Newsday reports. "Those forged reports, homeowners say, were used to deny claims from the National Flood Insurance Program."
Insurance company policies of revising field investigator reports in the back office first came to light when a Federal judge compelled testimony from an engineering firm employee in a lawsuit brought by flooded-out homeowners against their insurance company, as Coastal Connection reported last month (see: "Judge Slaps Insurance Company Lawyers in Sandy Flood Case," Coastal Connection 11/25/14).
That case brought conflicting testimony between the investigating engineer who first inspected the home and a company engineer tasked with "peer review" of the first engineer's report. But now, an engineer in a similar case has alleged that a back-office reviewer, who was not an engineer, not only changed the conclusions of the investigation, but even forged the engineer's signature to a revised report, according to Newsday.
That allegation comes in a lawsuit brought by property owners Stephen and Sarise Dweck against engineering firm GEB HiRise, Newsday reports. "The couple, Stephen and Sarise Dweck, say the engineer who inspected their home drafted a report saying floodwaters damaged the foundation. Yet, a HiRise staffer who is not a licensed engineer and never visited the site rewrote the report, blaming damage on pre-existing defects, according to the suit. The engineer who actually visited the house, Harold Weinberg, declined to comment. But he filed an affidavit as part of the Dwecks' lawsuit saying HiRise faked his signature on the report used to deny the couple's claim." Wrote Weinberg in the affidavit: "The false report issued by HiRise, purportedly in my name, is a forgery."
The Law 360 blog has a more detailed report (see: "Hartford Accused Of Using Faked Sandy Reports," by Emily Field). "Harold Weinberg, a licensed professional engineer, inspected [the Dweck's] home in January 2013, and found that flooding had damaged the cellar and foundation walls, according to [a letter from attorney Steve Mostyn, representing another set of homeowners, to judge Gary Brown]. A storm surge had also washed out the inside of the cellar and the first floor, the letter said. In March 2013, HiRise Engineering changed the report, which Hartford then used to deny the Dwecks' property damage claim, according to the letter. The Dwecks' attorney then told Hartford that he had interviewed the HiRise manager whose name appeared on the allegedly altered report. The manager admitted he never showed Weinberg the changed report and 'merely took Mr. Weinberg's signature block and affixed it to the bottom of the revised report,' according to the Mostyn letter."
The Hartford Courant has picked up on the litigation story (see: "Storm Sandy Insurers Battle Flood Claim Lawsuits," by Matthew Sturdevant) with a summary of developments to this point. The Courant points out that while litigated cases make up a small fraction of the flood claims filed after the storm, the cost of defending cases could end up exceeding the cost of simply paying the flood claims in full.