Today a multi-plaintiff lawsuit against Homeland Security Undersecretary Michael Brown, FEMA Acting Director David Maurstad, Computer Sciences Corporation President Paul Cofoni, seventeen insurance companies, their vendors and adjusting firms and others was filed in United States District Court, Greenbelt, Maryland alleging that the group conspired to defraud thousands of catastrophe victims who had purchased flood insurance through the National Flood Insurance Program (NFIP).
Washington, DC (PRWEB) June 9, 2005 -- A multi-plaintiff lawsuit against
Homeland Security Undersecretary Michael Brown, FEMA Acting Director David
Maurstad, Computer Sciences Corporation President Paul Cofoni, seventeen
insurance companies, their vendors and adjusting firms and others was filed
Wednesday in United States District Court, Greenbelt, Maryland, alleging that
the group conspired to defraud thousands of catastrophe victims who had
purchased flood insurance through the National Flood Insurance Program
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.
In February 2004, 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, 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.
Recent Congressional testimony 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. 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.”
Wednesday’s lawsuit alleges wrongful conduct, including:
- Officials of FEMA, CSC, Seventeen Insurance carriers and their vendors acted in concert to defraud thousands of flood loss victims.
- FEMA Acting Director Maurstad, a licensed representative of some of the same carriers that he regulates, has attempted to mischaracterize the NFIP as “a form of assistance” rather than the wholly premium funded insurance program that it is.
Senior officials of CSC have knowingly permitted its employees to tell flood victims, and train flood adjusters, that fuel oil contamination can be remediated with what amounts to perfume. Fuel oil is a known toxin, irritant and suspected carcinogen. The conspiracy included a number of low-balling, high pressure tactics designed to force flood victims to settle for pennies on the dollar.
Martin Freeman said that similar actions for victims from a number of states will likely be filed.
The Complaint seeks relief requiring defendants to pay the shortfall, disgorgement of profits, damages for the devastating impact the defendants’ actions have had on the flood victims, and punitive damages to deter the defendants from continuing the unauthorized conduct.
The case number is AW-05-CV-1547.
For related information, go to www.femainfo.us.
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Source : http://www.prweb.com/releases/2005/6/prweb249529.htm