Steve Mostyn and I were talking last week about the new FEMA investigation and our optimism about flood insurance settlements. A letter he wrote to Federal Judges seems to suggest our optimism is misplaced because the WYO flood carriers want a release from criminal activity. He noted:
I respectfully write this letter to advise this Court of troubling developments after we concluded Tuesday’s conference call. Although I am sensitive not to disclose conversations during the confidential negotiations process with FEMA, I am compelled to report certain conduct by the WYO carriers who were not present during these negotiations. My office understood the purpose of this process was to expeditiously and fairly pay valid claims to ensure the victims of Hurricane Sandy could get the funds they’re owed. Within the spirit of that endeavor, I, along with several of my staff, redirected to Austin where we have been this week working to achieve that goal. On today’s call, the representative for FEMA made representations to this Court that he was referring FEMA’s investigation into the fraud to the Office of the Inspector General. It is obvious that investigations are ongoing into the fraudulent reports as well as other misconduct that occurred with the WYO carriers and their hand-picked vendors.
Shortly after the call the WYO carriers demanded releases in exchange for issuing payments with FEMA’s money (as part of the “Arrangement”). The release presented by the WYO is to release them from any and all criminal liability for their fraudulent acts and impede any investigation related thereto. Specifically, the release demanded by the WYO carriers actually silences the clients from discussing the WYO carriers’ misconduct in a “confidentiality” section that takes up almost an entire page of a ten-page agreement when, typically, it lasts no more than a few lines. What of the Plaintiffs who wish to testify—either in an investigation or before Congress—of the fraud that permeates the WYO Carriers?
As I read this, the WYO carriers want to use FEMA money as consideration to silence the policyholders from a FEMA investigation. I do not think the WYO’s had my mother’s advice that warned: “You cannot have your cake and eat it too.”
Magistrate Judge Craig Brown was also busy on this matter issuing an Order giving WYO attorneys who failed to show up at an evidentiary hearing about their conduct one final chance to explain their involvement in the cover-up. This was the same evidentiary hearing where Jeff Moore and Wright Insurance Company took the Fifth Amendment, as noted in the Order.
Magistrate Judge Brown also noted that all the magistrate judges have made a special point to move the Sandy flood insurance cases along quickly and efficiently. The truth is that we are starting to have resolutions in flood cases. The truth is that I am hopeful that FEMA officials will help spirit a new claims culture with transparency, honesty, and respect for the flood customer who has the courage to challenge the WYO position. The truth is that the flood customer is every bit entitled to that treatment after the loss as when being sold the policy before a loss. The truth is that the customer should not be viewed as the enemy to be beaten at all costs and through any hardball litigation tactics. Amen.
A Positive Thought for the Day
"The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”
– Albert Einstein
