The seawater propelled by super-storm Sandy rushed into the basement and the first floor of the 8th Avenue home that Krista Sperber shares with her husband and their two kids.
The floodwaters stayed in their home, yard and in neighboring properties for about a week. The flood and an ongoing dispute with an insurer who insists that the damage revealed by Sandy existed before the storm has kept them out ever since.
Her insurer denied their claim based on a pair of engineering reports that asserted the damage to her foundation was not caused by Sandy, but instead arose from the long-gestating effects of their house settling, which is outside the scope of their flood insurance policy.
Soon, thanks to the fallout from a shocking courtroom revelation, Sperber will learn if that initial engineering report was subverted to deflect the blame away from Sandy and toward a cause not covered by their insurance.
“I’ve been beating this drum for two years ever since we got this (engineering) report so I’m just happy to see this come out,” Sperber said.
A Long Beach, New York couple — locked in litigation with their insurance carrier over a Sandy flood claim — happened into a copy of the original version of an engineering report that was paid for by the insurance company. Courtroom testimony in New York City in October exposed the determination in the first iteration of the report, which was favorable to the homeowner (that the crippling damage to the home was caused by Sandy), had been undermined by another engineer — both were employed by the same firm that looked at Sperber’s home. That second engineer, who had neither discussed the inspection or the changes with the original engineer or visited the home in question, inserted a new finding: The foundation was damaged by the house settling.
Under fire from critics, the Federal Emergency Management Agency, which underwrites nearly all residential flood insurance in flood-prone areas and paid out $8.1 billion in Sandy claims, announced last month a series of changes, including the release to policyholders of all engineering reports that were secretly modified.
A letter from the U.S. Department of Justice, dated Dec. 23, to the U.S. District Court of New Jersey says FEMA has directed its contracted engineering firms to provide FEMA with any draft engineering reports connected to the approximately 1,500 pending civil cases in the region within 21 days. Those drafts will be forwarded to the U.S. Attorney’s offices where they can be turned over to homeowners for use in their lawsuits. The justice department expects insurers that sell FEMA-backed flood policies to follow their lead.
According to that time line, attorneys for homeowners engaged in in flood-insurance lawsuits arising out of Sandy should receive any draft engineering report — if they exist and are turned over — by the middle of this month. That’s not all, according to Chip Merlin, an attorney who specializes in post-hurricane insurance claims on behalf of homeowners.
“Not just reports, but also draft estimates of damage. I anticipate that the estimates of damage were lowered by the insurance companies or their vendors in many instances,” he told the Asbury Park Press.
Sperber’s insurer, Selective Insurance, which didn’t respond to requests for comment, paid them for the contents of the home, but denied most of their claim for structural damage, providing the family with $600 to buy stucco and paint to cover the cracks in a home that is no longer safe to live in.
“I had it for 10 years,” Sperber said of her flood insurance policy. “They had no problems taking my money, but when I make a claim they act like they haven’t heard of me.”
U.S. Forensics, the engineering firm in the middle of that Long Beach case, was retained by Selective to do the review on Sperber’s home. The engineering report they released to her stated that the damage to the foundation mortar was caused by age, not by the rushing floodwaters from Sandy. A second report, prepared by SDII Global for the insurer, wavered a little more, acknowledging some evidence of erosion as a result of Sandy, but concluding that the damage was more attributable to pre-existing conditions.
Sperber hired Schkeeper Professional Engineering to look at her home, and to critique the reports prepared at the behest of Selective. Schkeeper concluded in August 2013 — before the questionable revisions exhibited in the Long Beach case were made public — that “it appears (the U.S. Forensics) report was prepared by someone other than the engineer (of record).”
Schkeeper referred to the U.S. Forensic’s report as “totally unreliable” in the report they wrote for Sperber. They found the damage to her foundation was indeed due to Sandy, whose salty floodwaters had eaten away — and even eight months later were still eating away because of remaining moisture — at the brick mortar. Another firm hired by Sperber, KSI Professional Engineers, reached similar conclusions.
Sperber’s property was assessed by Monmouth County at a value of $223,900 before the storm. Now it’s worth $88,800 less and the family lives in a rental around the block, while still paying the mortgage on their uninhabitable home — a double-whammy on their life savings.
They’re also paying out of pocket for those engineering reports they commissioned to dispute what U.S. Forensic and SDII Global concluded. One-third of whatever the family is able to squeeze out of Selective through the courts — they filed suit in February 2014 — goes to their attorney.
Meanwhile, insurance companies named as defendants in flood-insurance lawsuits have their legal costs reimbursed by FEMA, a fact that caused FEMA head Craig Fugate to write to insurers and urge them to avoid “unnecessary litigation tactics.”
“As a flood insurance policyholder and a tax payer, I am literally paying for attorneys on both sides of the table,” Sperber said. “I am literally paying for the attorneys fighting against me. How can any of this be fair?”
Russ Zimmer, Asbury Park Press
Posted On: January 05, 2015