WASHINGTON — A former contractor for the Federal Emergency Management Agency said Thursday he was told to deny or underpay claims exceeding certain ranges in deciding compensation for Superstorm Sandy victims.
Those decisions were made as part of FEMA’s Hurricane Sandy Claims Review Process, which was put in place following allegations of fraud in the initial claims process.
Jeff Coolidge, a former manager for OST Inc., said at a news conference he was required to deny or underpay almost all of the roughly 1,000 Sandy claims he handled during the four months he worked as a flood manager supervising a team of case workers on the claims review task force.
“I left the Sandy review process because it is a sham,” he said. “I was literally losing sleep because I didn’t want to be a part of that fraud anymore.”
Coolidge said his supervisors told him not to thoroughly review claims and to tailor his damage estimates to fall within an expected dollar range, dictated by a software program, no matter what. That program gave “artificially low numbers,” he said.
“If I or one of my reviewers recommended that FEMA pay more on a claim than the threshold predicted, FEMA would not approve it and told us to change our estimates,” he said. “FEMA applied this threshold systematically, creating a process designed to underpay the people it insured. I left because I think it’s wrong. It is time to expose this systematic fraud and cynical manipulation that victimizes further the families who are hurting after disasters like Hhurricane Sandy.”
FEMA spokesman Rafael Lemaitre said in a statement that most policyholders who filed claims after Sandy were satisfied with how their claims were handled, but many were underpaid by their insurance companies.
“Survivors always come first, and that is why we’ve set up an unprecedented process to review these claims and pay out every penny owed to policyholders under their policies,” he said. “Already, more than $50 million has gone to policyholders and we’re working as quickly as possible —literally in shifts — to continue to make things right. Even as we do that, we’re continuing to overhaul the Flood Insurance Program to make sure the companies we partner with share our values of putting policyholders and survivors first.”
An OST Inc. representative could not immediately be reached for comment.
The Hurricane Sandy Claims Review process was designed last year to give Sandy victims a second shot at making a flood insurance claim if they believed their original claims had been low-balled or unjustly denied, in some cases because of allegedly fraudulent practices by private insurers or engineering firms.
“The so-called Sandy review process was an effort to justify the error, the mismanagement, the fraud that had already taken place,” MacArthur said. “And people wait out of their homes, living in trailers, living with relatives, while the federal government protects its own reputation. It’s a disaster.”
Augie Matteis, of Weisbrod Matteis & Copley, said “The review itself is just a second round of massive fraud.”
Sandy victims who had hoped for help from the review process say that it’s taking too long and that they’re being treated unfairly all over again. About 100 homeowners from New Jersey and New York traveled to Washington on Thursday to lobby members of Congress and protest outside FEMA.
“Our government is not paying our fair claim,” George Kasimosof Toms River, N.J., founder of Stop FEMA Now, said during the news conference. “If this were a private insurance company, people would be in jail. We need accountability today.”
MacArthur’s office released affidavits from Coolidge and two other whistleblowers who worked for OST and participated in the review process. Their claims were similar to Coolidge’s.
Matteis said his firm and others have been in touch with additional whistleblowers. His clients and the whistleblowers are willing to cooperate with a congressional investigation, he said.
Matteis said none of his 1,300 clients has received a final decision on their claim yet.
“I promised FEMA that when we get that first final decision, if it’s not for every penny owed, we’re going straight to court,” he said. “You might see thousands of claims in a court if they don’t figure this out first.”