For homeowners who find their homes flooded or their roofs demolished after a natural disaster, it isn’t always easy to get insurance companies to pay for repairs. In many instances, that’s because engineering reports have wrongly cited the causation of damage. In fact, engineering reports have been known to use phrasing, such as “pre-existing,” “construction defect,” or “earth movement or ground settlement” to deny claims when it has been clear that the natural disaster caused extraordinary property damage.
Steve Mostyn, a Houston lawyer for Mostyn Law who represents Superstorm Sandy victims, pointed out in a NPR and “Frontline” investigation, “Business of Disaster,” how one engineering report compiled after the storm went one step further—the report was changed after being filed in order to deny the claim. For instance, the first version of the report read, “The physical evidence observed at the property indicated that the subject building was structurally damaged by hydrodynamic forces associated with the flood event of October 29, 2012.” However, a later version of the same report was changed to the following, “The physical evidence observed at the property indicated that the structure building was not structurally damaged by hydrodynamic forces.”
Insurance companies argue in court that they change reports through a standard peer review process. However, in some cases, these discrepancies have amounted to downright fraud, spurring claimants to take legal action. In August, New York Attorney General New York Attorney General Eric Schneiderman announced a 50-count indictment against Uniondale, N.Y.-based HiRise Engineering for denying that homeowners had suffered flood damage after Sandy. HiRise Engineering and its former director, Matthew Pappalardo, were charged with 25 counts of forgery and 25 counts of unauthorized practice of engineering.
The fraudulent engineering reports resulted in the National Flood Insurance Program (NFIP), which is overseen by the Federal Emergency Management Agency (FEMA), undervaluing or denying dozens of legitimate flood claims. “Fraudulently altering engineering reports undermines the integrity of the entire FEMA claims process, which homeowners and families rely upon in a time of crisis,” said Schneiderman in his statement.
John and Gail Mero of East Rockaway, New York, who lost their home due to flooding after Sandy, were among HiRise’s victims. Andrew Braum, the engineer who inspected their home, later said he was asked to cover up the changes made to his reports. The firm changed his report from saying that “hydrodynamic forces, hydrostatic forces due to the flood caused a cracking and shifting throughout the foundation” to saying that “settlement due to consolidation of soil caused the foundation wall to crack,” Braum told “60 Minutes.” About 96 percent of the engineering reports he worked on thereafter were also doctored, Braum said.
Other fraud cases involve engineers who take money from storm victims without completing the job. Joseph D. Coronato, prosecutor for Ocean County, N.J., has issued 49 indictments for fraud related to Superstorm Sandy. Contractor Rick Woodard of Wildwood Builders Construction Co. was arrested in Florida Sept. 21 for walking away from some post-Sandy jobs after accepting payment, though his lawyer claims the neglect may be due to illness. In one case, Mary Lou Mickiewicz, a Sandy victim in South Amboy, N.J. paid Woodard $117,000, and then he disappeared without completing the renovations of her home. “[Woodard] is one of just several contractors we’ve been investigating,” Coronato said. “You’re going to see us bring a series of these people to justice in the near future.”
After a storm, homeowners need to take steps to avoid becoming the victim of engineering fraud. Consider hiring your own engineering firm to assess the damage to your property. Courts can compare these reports against those from contractors hired by an insurance company to determine if fraud has occurred.
Do you research on any engineer that comes out to your home. Ask for their business card and resume either from the engineering firm or from your insurance company if they sent out the engineer on their behalf. Additionally, you can find information, such as licensing, certifications and resumes, online at government websites or engineering websites.
Ask questions and make sure you get the answers you need. If you feel uncomfortable about the engineer’s inspection, make your voice heard. If the insurance company sent out the engineer, make sure to let your insurance company know of any issues and concerns you have before and after the inspection.
Avoid paying contractors, including engineers, for a job in full before they complete the work. It is easier to get questions answered and the information you need before you submit final payment.
Last but not least, do not sign any paperwork from your insurance company or any contractor or engineer without reviewing the terms closely and understanding them.
If you believe you are a victim of engineering fraud, consult law enforcement and a lawyer. Read more from Mostyn Perspectives on how to avoid engineering scams following a disaster.