Lawyer Warns of Insurance Problems After Texas Flooding

June 12, 2015

Lawyer Warns of Insurance Problems After Texas Flooding

Posted: 7:03 p.m. Thursday, June 11, 2015

Original Story:

By Tim Eaton – American-Statesman Staff

One of Texas’ most well-known trial lawyers has warned elected officials in Washington that flood victims in Texas appear to be facing the same kind of bad behavior from insurers that occurred in the Northeast after Superstorm Sandy.

Houston-based attorney Steve Mostyn says he is seeing troubling trends in Texas since the recent flooding and has been hired by Joan Jenkins, whose house in Wimberley flooded. Jenkins, whose claim is still open, hired Mostyn to make sure she would be treated fairly after she felt her insurance company might try to underpay her.

When the Blanco River flooded last month, it filled the house with several feet of muck and debris. It was the first time that the home, previously valued at $279,900, had flooded in the 40 years that her family has owned it.

“My entire house is gone, essentially,” said Jenkins, who added that the administrator of her policy was initially unwilling to accept assessments from a contractor and members of a licensed cleanup crew who deemed the house to be irreparable.

Mostyn’s firm has represented thousands of clients in New York and New Jersey after Hurricane Sandy slammed into the East Coast in 2012, and he has sued the Federal Emergency Management Agency and the National Flood Insurance Program, which carries all of the federal government’s flood policies, for improperly handling claims. He also took on the private carriers that administered flood policies for the federal government.

Now, Mostyn has sent letters warning about the possibility of a repeat of post-Sandy events to U.S. Sens. John Cornyn and Ted Cruz, both Texas Republicans, among other elected officials.

“Unfortunately, it appears that FEMA and the NFIP may be failing Texas policy holders the same way they failed New York and New Jersey policy holders,” Mostyn wrote.

The recovery after Hurricane Sandy prompted lawsuits and a congressional investigation as thousands of homeowners complained of wrongfully denied and underpaid claims, as well as instances of altered or forged engineering reports and adjusters’ reports. The disaster led to congressional investigations and a criminal probe by New York’s attorney general.

FEMA officials said the agency and the flood insurance program have undergone substantial reforms since Hurricane Sandy to make sure bad actors won’t be able to negatively affect victims of disaster. Officials recently ordered that all outstanding claims in New York and New Jersey be settled, and all previously settled claims can be reopened at the customer’s request, FEMA spokesman Rafael Lemaitre said.

“Over the past several weeks, we’ve taken aggressive action to make sure insurance companies we partner with to provide flood insurance share our values of putting survivors first. Our job is to make sure policyholders are paid every dollar they’re owed under their policies,” Lemaitre said in an email to the Statesman.

Additionally, there have been leadership changes at National Flood Insurance Program, and the federal government is increasing oversight of the private companies that administer its policies, Lemaitre added.

“We told them that we will be watching them like a hawk,” Lemaitre said. “We will take aggressive steps to make sure what happened after Hurricane Sandy will not happen again.”

Lemaitre didn’t talk about any specific cases in Texas, but, broadly, he said that agency officials “have not seen any evidence of fraudulent engineering reports or systematic underpayments of claims as a result of the most recent flooding in Texas.”

In the coming days, FEMA will debut a new way for policyholders to contact FEMA directly if they have any concerns about their claims or if they suspect fraud is taking place, Lemaitre said.