Is FEMA shortchanging Hurricane Sandy victims?

Jim Hoffer has the exclusive report
February 12, 2014 2:58:43 PM PST
The agency whose mission is to help speed recovery after disastrous storms may in fact be preventing families left homeless by Sandy from rebuilding.

Our investigation has found that on Long Island FEMA appears to be undercutting on insurance claims leaving families no better off than they were days after the 2012 storm.

Nearly a year-and-half after Sandy, Kathy Gullo still lives in a trailer. What was left of her home, she had torn down after 4 different engineering inspectors came to the same conclusion: it should be demolished and rebuilt.

Hoffer: Engineer after engineer, said it is less costly and safer if you rebuild?
Gullo: Than try to fix it.
Hoffer: Everyone except for the insurance company?
Gullo: Except for the insurance company.

Although she had coverage for $300-thousand dollars in flood damage, she only received $138-thousand dollars from FEMA's Flood Insurance Program which pays the vast majority of Sandy flood claims.

"We've been trying to get them to understand that they didn't do the right thing and we're waiting for more money before we can even start," Gullo said.

Hoffer: I can put my hand in this crack. I can see outside.
Peter Mastrandrea: Yeah.

Two engineer reports blame the "flood surge" for cracking Peter Mastrandrea's foundation making his home in Massapequa ''unsafe for habitation," but FEMA's engineer found the cracks were not caused by pre-existing conditions. FEMA agreed to pay Peter $46-thousand.

Mastrandrea: It's criminal.
Hoffer: You thought you were covered?
Mastrandrea: Evidently I wasn't. Neither were thousands of other people.

Christa Higbee of Wantaugh had to use her entire 401k retirement money to fund repairs to her home after FEMA insurance gave her $70-thousand dollars for what was nearly $300-thousand in damages.

Hoffer: You whole floor is ruined?
Higbee: Demolished everything. We won't be retiring forever. I'm sure of it because of this.

These stories and those of many other families we've spoken to suggests FEMA is underpaying on claims on a massive scale. David Charles worked as an adjuster for 36 years. He's now an advocate for homeowners and he says the underpayment on Sandy claims by FEMA is the worst he's ever seen.

"These people have had their rug pulled out from under them by all kinds of tricky techniques to not pay claims. It's just wrong," Charles said.

He's convinced families displaced by Sandy are paying for the sins of Katrina in which lax oversight led to huge waste that has left FEMA's Flood Insurance Program $24 BILLION dollars in the red.

"Real injustice. The financial ruin for many families that just don't deserve it and believed that they had good coverage," he said.

Our investigation has found that the average claim payment by FEMA to New Yorkers for Sandy damages is $64-thousand dollars. That's around the same amount as this couple received from FEMA even though the cost to repair all the damage to their home is estimated at $240-thousand dollars.

"We had a false sense of security that we had homeowners and flood insurance and in the events of something like this they would make good and help us rebuild and instead 15 months later we are homeless," Richard Santeramo of Wantaugh said.


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