NEW YORK – A couple claiming damage from Hurricane Sandy have filed court papers accusing a Hartford Financial Services Group Inc. unit, an engineering firm and a law firm for the insurer of engaging in racketeering by scheming to use fraudulent reports to deny claims.
Homeowners Stephen and Sarise Dweck alleged in a complaint filed Wednesday in Brooklyn federal court that Hartford Insurance Co. of the Midwest denied most of their claim based on a version of a report which had been altered to remove a description of widespread flood damage.
HiRise Engineering altered the report, and Nielsen Carter & Treas, a law firm that represents flood insurance providers, either directed or participated in the scheme, while Hartford "knew or should have known" about the fraud and "used the falsified report as an excuse" to deny benefits, the Dwecks alleged in the new complaint in their November lawsuit. Others who participated in the claims process are also named as defendants.
The Hartford unit is the second insurer that provides coverage on behalf of the government's National Flood Insurance Program to be accused of relying on fraudulently altered engineering reports to reject or underpay insurance claims after the storm.
Earlier, owners of a storm-battered home in Long Beach, N.Y., filed a racketeering suit against Wright National Flood Insurance Co. alleging that it, too, denied claims based on doctored reports. U.S. Magistrate Judge Gary R. Brown, who discussed the discrepancy between reports for the home in a Nov. 7 ruling, said he feared the practice was "widespread."
Sandy, the largest Atlantic hurricane on record, caused about $60 billion in damage in New Jersey, New York and Connecticut when it struck in October 2012. It killed more than 100 people in the U.S. and triggered the worst flooding in the more than 100-year history of the New York City subway system.
Thomas Hambrick, a spokesman for Connecticut-based Hartford, said the company denies the allegations in the suit and expects to seek its dismissal. He said Hartford asked for a new report by an independent engineer when it was notified of the problem.
Sandy "was a devastating storm for many individuals and small businesses, and our focus as a company is on helping customers recover following a loss," he said in a statement.
