NJ, NY Senators Meet with FEMA Chief; Announce Major Action for Sandy Victims

NJ, NY Senators Meet with FEMA Chief; Announce Major Action for Sandy Victims

Thousands of flood insurance claims filed by Sandy victims not in litigation will be re-opened and reviewed

WASHINGTON, DC – Following a meeting this afternoon with Federal Emergency Management Agency (FEMA) Administrator Craig Fugate, U.S. Senators Bob Menendez and Cory Booker (both D-N.J.) and Charles Schumer and Kirsten Gillibrand (both D-N.Y.) announced that the agency has agreed to reopen and review every flood insurance claim--approximately 144,000--filed by Sandy victims, and not limit corrective action to just the 2,200 currently in litigation. Today’s announcement builds on a series of actions and reforms the Senators have secured to resolve Sandy victims’ claims backed up by evidence of being victimized by the National Flood Insurance Program (NFIP) and to hold the agency accountable for its oversight responsibility. 

"We had a very good meeting today with FEMA Administrator Fugate, who not only reaffirmed that the agency is implementing the comprehensive reforms we have demanded, but that FEMA has begun to set in place a process to reopen and review every flood insurance claim filed by Sandy victims who are not in litigation,” said Sen. Menendez. “This is a significant turnaround for the thousands of Sandy survivors who have been victimized not only by the storm, but by FEMA, insurance companies and their subcontractors who systemically lowballed claims. For months and months, I have been fighting to expose this scandal and make sure Sandy victims get what they’re entitled to and I’m pleased FEMA has admitted there are big problems and has committed to fixing them. I intend to hold their feet to the fire every step of the way to ensure Sandy survivors receive the fair treatment they deserve.”

“Families and businesses in New Jersey and throughout our region deserve nothing short of FEMA’s commitment to right this despicable wrong,” said Sen. Booker. “I am encouraged that FEMA has taken swift, decisive action to fully remedy the denied flood insurance claims and possible fraudulent practices that have now been exposed. The revelations were outrageous and I am committed to working with my colleagues to hold FEMA accountable. This is about transparency, it’s about accountability, and it’s about justice for our constituents.”

“In this meeting, FEMA acknowledged its failure to oversee a flood insurance program that cheated Superstorm Sandy victims out of much-needed funding to rebuild their homes and get their lives back on track,” said Sen. Schumer. “Amongst many necessary reforms, I am particularly pleased that FEMA Administrator Fugate and Brad Kieserman have heard our call and will reopen and review all 144,000 flood insurance claims made by Sandy victims- a critically necessary move. FEMA also made clear that it plans to hold accountable all those who were involved in the program that may have facilitated or fostered this fraudulent behavior. I will continue to work hard, alongside my colleagues, until the National Flood Insurance Program does what it’s supposed to do: fairly pay storm victims, on time and for the damage they suffered.”

"From the moment I saw the evidence of this fraud, my first thought was that someone should go to jail for this, so I called the NY Attorney General to ask him to take a look at it, and raised the issue with Administrator Fugate,” said Sen. Gillibrand. “I am pleased the Attorney General is investigating this very closely and the seriousness the Administrator expressed today in making this right for homeowners and ensuring everyone involved in this fraud is held accountable. There needs to be top to bottom reform so that this can never happen again." 

During the meeting, Admin. Fugate announced they are taking steps to: 

  • Develop a process for all Sandy victims who are non-litigants, but believe their claims were unjustly denied or lowballed, to be reopened and reviewed 
  • Guarantee claimants gain access to all engineering reports 
  • Contact by mail all Sandy claimants to make them aware of the new process and opportunity for review 
  • Commence Sandy Task Force during the week of April 13 to begin evaluation of the program and focus on reforms 
  • Make personnel changes at senior levels of the NFIP

Fugate also discussed a number of issues they have raised concerning the oversight and management of the National Flood Insurance Program (NFIP) and the evidence of fraudulent practices by some contractors of FEMA’s Write Your Own (WYO) insurance carriers.

At the Senators’ insistence, FEMA last week committed to:

  • Create a process that allows people who did not file lawsuits, but were lowballed due to fraud or bad practices, to have their claim objectively reviewed, so filing a lawsuit is not a prerequisite for justice
  • Collect and make available to every policyholder all iterations of engineering reports
  • Prohibit any resolution that includes criminal indemnity for any engineering firms or WYOs found to commit fraud
  • Work to sanction and expel from the NFIP any engineering firm or WYO that was found to commit fraud
  • Work with the Sandy Task Force on short and long term reforms including, the practice of peer-reviewed engineering reports, oversight of the WYOs, claims appeals process and balancing the penalty structure for over and underpayments

These commitments overlap and build upon the reforms that the Senators outlined in letters to FEMA Administrator Fugate last week, specifically that: 

  • Any resolution should be as inclusive as possible to all victims, regardless of what state they live in, because New Jersey victims suffered no less, nor were they spared any of the issues facing New York homeowners
  • Any resolution should not be limited just to those cases currently in litigation, because litigation should not be a prerequisite for fairness nor should arbitrary deadlines or statute of limitations be used to prejudice victims’ legitimate claims, especially considering the highly questionable process
  • Any resolution should not place any limitation or interfere with current or prospective criminal or governmental investigations into allegations of fraud and other related crimes, nor should bad actors be given any type of criminal immunity
  • Any resolution obligate FEMA to build on the steps it has taken to increase transparency by requiring Write Your Own (WYO) insurance companies to release all documents, drafts, and emails in all cases where there are multiple iterations of engineering, adjusters’ reports or estimates of damage

During a July 30, 2014 Senate Banking Subcommittee hearing, Sens. Menendez and Schumer questioned Administrator Fugate about FEMA's unbalanced penalty structure that punishes WYOs for making overpayments far more than it punishes them for making underpayments. As a result of these hearings, as well as several follow-up letters and meetings, FEMA agreed in December to significant reforms, including: conducting its own internal investigation; constituting the Sandy Task Force to realign the unbalanced penalty structure; reopening 270 policyholder appeals; and providing policyholders in litigation with all engineering report permutations.

 Besides the ongoing probe by the Department of Homeland Security (DHS) Office of Inspector General, the New York State Attorney General has launched a criminal investigation into allegations of widespread fraud perpetrated against Sandy victims. Sens. Menendez and Booker have called on the New Jersey State Attorney General to initiate its own investigation