Were Hurricane Sandy damage reports altered to reduce payments to homeowners? Hearing is this week

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A three-judge panel for the Eastern District of New York will hold a hearing on Thursday to review allegations that engineering reports were altered to reduce flood-insurance payments to homeowners.

Lawyers for homeowners say they have identified more than 500 altered reports, the New York Times reports. The lawyers began the review after a federal judge overseeing Sandy litigation in the New York City area ordered production of all drafts of the reports.

The problems came to light after an insurer, Wright National Flood Insurance, told homeowner Deborah Raimey that an engineering report identified soil settling, rather than hurricane flooding, as the cause for damage to her home, the Times says. Raimey asked for another opinion.

The engineering firm, U.S. Forensics, dispatched the original engineer to Raimey’s home, and he said the final report differed substantially from the one he wrote.

A lawyer for U.S. Forensics, Larry Demmons, said the changes weren’t significant. “It is common for law clerks to draft memoranda, orders and opinions for judges,” Demmons wrote in court papers filed on Jan. 23. “No one would ever seriously suggest (and rightfully so) that an opinion originally drafted by a law clerk, but later changed by a judge, was fraudulent or constituted a crime.”

U.S. Forensics isn’t the only engineering firm targeted by plaintiffs’ lawyers. One engineer alleged that HiRise Engineering released a report under his name that differed from his original version, according to a racketeering suit filed by homeowners Stephen and Sarise Dweck.

An email cited in the litigation alleges that a HiRise executive asked engineers to sign a memo of understanding that their earlier reports were not changed. The memo of understanding would be backdated, the executive allegedly said.

Also named as a defendant in the suit against HiRise Engineering is the law firm Nielsen Carter & Treas, which represents flood insurance providers, according to earlier coverage by Bloomberg Business News. The suit claims Nielsen Carter either directed or participated in a scheme to deny claims.

The suit claims another defendant, the Hartford Insurance Co., knew or should have known about the alleged fraud.

HiRise did not respond to a request for comment from the Times or Bloomberg. A Nielsen Carter representative didn’t immediately respond to Bloomberg’s request for comment. Hartford denied the allegations, according to a prior story by the Insurance Journal.

Hartford and Wright provide coverage for the National Flood Insurance Program; any payouts are made by FEMA.

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