Gulf Coast Hurricane Victims See More FEMA Problems Headed Their Way With News of Camper Evictions

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Victims of Hurricane Isabel attempt to block FEMA from evicting them from their campers. Victims allege FEMA has singled them out in retaliation for seeking fair flood insurance claim settlements. FEMA oversees the insurance companies responsible for settling the claims. The Maryland Insurance Commissioner told ABCNEWS in September, “FEMA adjusters systematically low-balled the losses of thousands of Maryland victims.”

A petition for a temporary restraining order and preliminary injunction was filed earlier this week to halt evictions of hurricane flood victims from their FEMA trailers (8:05-cv-1547). According to court documents, victims who brought claims against FEMA and its business partners for low-balling their flood insurance claims were unfairly singled out.

The action was filed in a multi-plaintiff lawsuit against former Homeland Security Undersecretary Michael Brown, FEMA Acting Director David Maurstad, former Computer Sciences Corporation President Paul Cofoni, seventeen insurance companies, their vendors and adjusting firms and others in United States District Court, Greenbelt, Maryland. The suit was originally filed in June 2005 and has been winding its way through the court. It alleges that the group conspired to defraud thousands of catastrophe victims who had purchased flood insurance through the National Flood Insurance Program (NFIP). It also alleges as a result, many family units were destroyed – left to live in campers without indoor plumbing when temperatures dropped below freezing, with no place for children to study or play.

FEMA supplied the trailers, which are actually campers designed for intermittent use, as long-term housing when the victims’ homes were flooded. This week’s action claims that FEMA caused the victims’ flood insurance claims to be low-balled, leaving them unable to rebuild their homes, and in a Catch-22 situation. Next, FEMA sent the victims eviction letters claiming that they had failed to comply with their lease terms by not doing all that they could to seek permanent housing.

Pattern recognition and fraud detection expert Mr. Steven Kanstoroom found that many insurance adjusters were using software programs that relied upon new construction pricing rather than far costlier repair and renovation pricing. The following month the Senate Banking Committee directed FEMA to reevaluate 24,000 victims’ claims – the largest such event in FEMA’s history. Rather than conduct an independent review, the suit alleges FEMA and CSC assembled a Task Force comprised of the identical management and many of the same adjusters or adjusting firms that low-balled the victims in the first place.

Congressional testimony has since revealed that CSC was training sales agents to tell policyholders they would be restored to their pre-flood condition, while simultaneously training flood loss adjusters to allow for only narrowly defined coverage in limited amounts. CSC transacts billions of dollars of business with its insurance company clients.

Government and insurance industry whistleblowers leaked the rational for the low-balling claiming the insurance industry was concerned that if they fairly paid the flood claims it would set a precedent for their non-flood claims. Former federal insurance administrator J. Robert Hunter wrote to Mr. Kanstoroom “History seems to be repeating itself. Similar to your findings, in the early 1970s I found private insurance carriers refusing to pay legitimate claims out of concern for setting precedent related to similar language in their homeowners insurance policies. In fact, they told me so point blank.”

The case number is 8:05-cv-1547

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Steve Kanstoroom

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