Hearings opened today aimed at uncovering how fraud occurred post-Sandy and how the federal flood insurance program might be reformed. NJTV News Correspondent Michael Hill’s been monitoring the proceedings in D.C.
Fraud in this case is a word a FEMA official said be careful throwing around. First, this task force includes all four senators from New Jersey and New York. They heard how about how the low payouts are slowing the recovery.
“There seems to be a widespread, systematic problem with underpayments to policy holders on the flood insurance claims. This leads to a homeowner with a fraction of what they thought they were going to have in order to rebuild. So we have a devastating disaster event, a major policy change and a systematic underpayment of flood insurance claims, which, when combined, creates a perfect storm of challenges and hardships that have stymied the recovery for thousands of Sandy victims,” said Susan Marticek, director of Ocean County Long Term Recovery Group.
FEMA has agreed to review more than 100,000 cases of flood insurance policy holders who were likely underpaid for their damage. FEMA says it knows some of their receipts are gone.
“I’ve got to have some evidence but we are three years past the event. We completely understand and we are very well informed … about what’s realistic in execution,” said Brad Kieserman, deputy associate administrator for FEMA.
New York Sen. Chuck Schumer wanted to know about a “neutral person” in the process.
“I was very glad to hear that we’re gonna have Brad, a neutral, as you call it. That means an independent arbitrator. It means someone not from FEMA. You can’t say oh they’re from another division,” he said.
“Absolutely. And I can specify that the person who, or the organization that does this is going to have no prior contact in FEMA that we can’t discount,” Kieserman said.
“So it’s a true independent arm?” Schumer asked.
“That’s the goal,” Kieserman said.
Despite all that’s been reported about engineering companies defrauding policy holders, a FEMA official said this in an exchange with New York Sen. Kirsten Gillibrand:
“The amount of fraud, the level of fraud, these are crimes. Crimes against New Yorkers and people who live in New Jersey. There’s no accountability for the fraud. I’m furious that we still have money going to these fraudulent organizations. And so last meeting we talked a lot about this and I want to know where we are. … Are we still paying these people?” Gillibrand asked.
“Senator, I am no longer allowing any funding to go to any of the engineering companies that have been accused of the suspected fraud,” Kieserman said.
Gillibrand said some of the companies may ask for reimbursement of legal fees. “In early March I asked for the potential of recouping some of these fees and you said you’ll get a legal opinion in the next month or so. Have you received that opinion and what does it say?” she asked.
“I have not received a legal opinion but I do have an answer for you,” Kieserman said. “There’s no evidence that’s been produced yet that I have seen that the insurance company has committed fraud.”
The practices of the engineering firms are under review, Kieserman said, so there may be some criminality here. He says he’s not going to use the word fraud, but they’re under review by prosecutors.
Next, Kieserman says FEMA’s going to send out letters to policy holders next week for the review process. Sen. Bob Menendez says he wants to make sure residents have full access to all their files. All that everyone today asked for is that the process be simple and fair.
Related: NJ Lawmakers Want Answers About Fraudulent Activity Post-Sandy