Senator Kennedy had pointed questions for Roy Wright, FEMA’s flood insurance chief, at a Senate hearing in Washington this week. He wanted to know why two Metairie, LA firms were allowed to serve as consultants to insurance companies and get paid with federal money even after their conduct was criticized by a federal judge.
“You can’t pick up the phone and call these companies and go, ‘Hey, we’ve got some problems here?’” Kennedy asked Wright.
Kennedy was talking about engineering company U.S. Forensic and attorney Gerald Nielsen. They were both blasted by a federal judge in New York after U.S. Forensic altered a report to deny a Hurricane Sandy flood claim, and then the insurance company Nielsen represented failed to disclose it.
“It’s bad enough that they flooded,” Kennedy said. “But to have a taxpayer-funded consultant making it impossible to collect on their insurance when they paid the premiums and they’re due the money. By God, that’s wrong.”
Magistrate Judge Gary Brown questioned U.S. Forensic’s practice of “peer review,” in which engineers who never go to a property can change the findings of an engineer who actually saw the damaged property. Brown found U.S. Forensic engaged in “reprehensible gamesmanship” when they took a report that said Hurricane Sandy caused structural damage to a home in New York and changed it to say there was no evidence of structural damage.
U.S. Forensic’s founder and managing partner, Gary Bell, stands by the peer review process and said Kennedy doesn’t fully understand the issue.
“Despite the language used in Judge Brown’s opinion, it has never been determined that U.S. Forensic ever issued an incorrect report,” Bell said. “Rather, Judge Brown criticized the engineering process in which U.S. Forensic arrived at its final conclusion – without any concern at all regarding whether that final conclusion was correct.”
Wright’s predecessor at FEMA, Brad Kieserman, accused U.S. Forensic of fraud and promised senators in 2015 that he would remove any company alleged of wrongdoing. But since taking over at the end of 2015, Wright has backed off that position, saying he could only debar one engineering firm, HiRise Engineering, which was convicted of a crime for altering reports without their engineer’s knowledge.
“As Mr. Wright indicated, after several years, no one has found any evidence of anything improper done by U.S. Forensic,” Bell said.
FEMA paid $60 million for insurance companies’ litigation costs to fight Sandy claimants in court. Nielsen, the leading flood insurance defense lawyer in the country, represented the insurance company that hired U.S. Forensic in the case that went before Judge Brown. Brown imposed sanctions against the insurance company and Nielsen for failing to disclose the original engineering report when ordered to do so by the court.
“I don’t know the gentleman, but he’s got some explaining to do when a United States District Court Judge, a federal judge, fines your client $1 million because of your conduct,” Kennedy said about Nielsen. “That’s a tough one to explain.”
Nielsen said his FEMA-funded litigation work for 17 insurance companies was necessary to prevent massive overpayments by FEMA. When he was shut out of that process in what was called the Sandy Review, Nielsen said FEMA caved to political pressure and spent an extra $1 billion settling disputed Sandy claims.
Nielsen said he would be sending a letter to Kennedy and U.S. Rep. Steve Scalise, the House Majority Whip from Metairie, offering to sit down with them this week and provide them with what he called a “treasure trove of information about what really went on in New York.”
Kennedy vowed to give FEMA the authority to hire and fire individual adjusters, engineers and lawyers. “It wouldn’t surprise me to see an amendment offered on some bills in the United State Senate to give (FEMA) the authority (to hire and fire consultants) if they think they don’t have it,” Kennedy said.
He also said he would work to save the endangered federal flood insurance program. Only a few coastal states, primarily Florida and Louisiana, pay premiums to fund the program, and massive claims payouts for Hurricanes Katrina and Sandy and the August 2016 flooding in Louisiana have pushed the unfunded liability to $25 billion.
That’s why a lot of members of Congress from low-risk states are reticent to re-authorize the program.
“We’re gonna get it renewed,” Kennedy said. “Now, it’s not gonna be easy and it’s gonna be a fight and there’s gonna be opposition. But we don’t have a choice, we gotta get it renewed.”
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