Claims Of Cooked Books Resulting In Low-Ball Payouts Met With Emphatic Denials

LONG BEACH, N.Y. (CBSNewYork) — Homeowners who saw their lives devastated by Superstorm Sandy say they were betrayed after the storm by insurance companies.

A growing number of victims say the companies conspired and cooked the books to reduce payments, CBS2’s Carolyn Gusoff reported Tuesday.

Like so many other victims of Sandy, Marilyn Wellisch of Long Beach got less than half of the money from insurance she believes she was due.

“It came down the block, the ocean, like a mini-tsunami,” Wellisch told Gusoff.

When she hired an attorney to fight he said he discovered that someone changed the original engineering report that found her house damaged by flood waters. The final report blamed long-term problems unrelated to the storm.

“They’re trying to make it seem like it was from soil erosion and had nothing to do with the storm,” Wellisch said.

Attorney Denis Kelly calls it fraud. He represents more than 40 victims of Sandy in a federal racketeering lawsuit. They claim engineering firms hired by insurers doctored reports to low-ball payouts.

“They have sought every way imaginable to avoid paying these people their damages, and to put every obstacle in their way,” Kelly said.

“We are seeing a pattern of the intention to go out of their way to deny our clients’ claims,” Kelly added.

Insurance companies and engineering firms deny wrongdoing. The Insurance Information Institute said in a statement, “Insurers have no financial incentive to underpay these claims. All flood losses are ultimately paid by the National Flood Insurance Program … through FEMA.”

At Touro Law Center’s Disaster Relief Clinic, lawyers said they have suspicions.

“Instances where an engineer goes to the premises, finds coverage … later on an adjuster looks at the report, never goes to the property and then denies coverage,” Touro’s Daniel Straffer said.

And they said this could be just the tip of the iceberg.

“If it is widespread, it would amount to a huge sum of money that policy holders are being robbed of,” Straffer said.

Both FEMA and a federal judge ordered all original drafts of engineering reports handed over. Lawyers examining them for homeowners claim they’ve identified more than 500 altered reports, Gusoff reported.

FEMA and New York State Attorney General Eric Schneiderman are also investigating the allegations.

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