Guest Op-Ed: FEMA chief should resign, hearings convened

By Tom MacArthur | The Save Jersey Blog

Earlier this month the Department of Homeland Security Office of the Inspector General released a report entitled, “FEMA Does Not Provide Adequate Oversight of Its National Flood Insurance Write Your Own Program.” This report summarized a yearlong investigation, prompted by a “60 Minutes” interview in March of 2015, which revealed that thousands of superstorm Sandy victims had been wrongfully denied insurance claims due to corrupt and fraudulent practices.

The Inspector General report concluded that “FEMA lacks the internal controls necessary to manage and mitigate NFIP’s funds, placing them at risk for fraud, waste, abuse, or mismanagement.” For those of us who have been working for the last year to bring accountability to FEMA and the National Flood Insurance Program (NFIP), this report proves what we have long known: the bureaucrats at FEMA are incapable of effectively managing the NFIP program. However, not a single person at FEMA has been held accountable for this.

The people who run FEMA apparently lack the ability or will to properly identify and alleviate the problems within the program that insures 5.5 million families and more than $1.25 trillion in total property values. It seems to me that if someone won’t effectively implement and fix problems within the NFIP Program, that this person should no longer be responsible for doing so. Because of this, I again call on Administrator Craig Fugate to resign and for a new administrator to more actively manage this vital program and eliminate the layers of bureaucracy that plague FEMA and leave federal employees unaccountable for mismanagement of federal resources that are meant to help disaster victims.

During the original “60 Minutes” report, Brad Kieserman, the former FEMA deputy associate administrator for insurance, admitted there were “signals” of these problems in 2013 that FEMA could have acted on. He also stated that he had personally witnessed engineering reports that had been changed. These fraudulent reports were used to justify a heavily reduced payout to innocent families. Kieserman admitted to witnessing this — but nothing changed at FEMA.

As someone who worked in the insurance services industry for nearly 30 years, I think it’s important to follow the money when trying to unravel what happened at FEMA. The NFIP has been under increased financial stress in recent years and is $24 billion in debt after paying the victims of Hurricanes Rita and Katrina. The people of New Jersey know all too well of the recent changes to the program making NFIP policies more expensive in an attempt to bring the program out of the red.

We must continue to insist on straight answers until we know for certain whether NFIP and FEMA executives had a role in directing adjusters and engineers to reduce claims payments, in a misguided effort to improve the NFIP’s financial results. I am renewing my earlier call for congressional hearings to get to the bottom of this scandal.

The clear record of fraud and mismanagement, the failure to correct problems known since 2013 and the absence of accountability all lead me to continue to call on Fugate to resign immediately. This investigation is far from over. I will not rest until the parties responsible for defrauding the people of New Jersey are brought to justice, and until we get every last resident back home and our communities back on their feet again.


5 thoughts on “Guest Op-Ed: FEMA chief should resign, hearings convened


    RE: Official Complaint against FEMA and the Hurricane Sandy Claims Review Process

    We are lodging a formal complaint with your office regarding the damages to our home, and the unprecedented extent of underpayment and fraud following Hurricane Sandy. The National Flood Insurance Program has illegally deprived us insurance payments through the use of improper adjustment practices, fraudulent engineering reports, and the omission of sales tax in damage estimates. We continue to be denied fair payment due to the improper claims handling under the newly implemented Sandy Claims Review Process.

    Almost three years after Sandy, FEMA finally acknowledged that thousands of Hurricane Sandy flood victims were potentially defrauded and underpaid in their initial flood claim adjustment. FEMA attempted to right the wrongs by publicly announcing the creation of the Sandy Claims Review Process, supposedly instituted to re-evaluate 144,000 eligible flood claims of Sandy victims. The Sandy Claims Review Process provided FEMA an opportunity to gain back the broken trust of Sandy victims. However, FEMA-appointed adjusters are relying on the same fraudulent engineering reports and the same discredited arguments and exclusions to deny payments to policyholders. Furthermore, FEMA has appointed the same adjusters and engineers who underpaid Sandy victims immediately after the Storm to re-review claims files. The appallingly low offers and disappointing results of the Sandy Claims Review Process come in stark contrast to the success achieved in resolving hundreds of claims through the court system. Neighbor to neighbor, individuals who settled their claim through the court system have received vastly superior treatment by FEMA compared to those who have had no choice but to seek review through the Sandy Claims Review Process. The result is an unconscionable deprivation of insurance proceeds that Sandy victims are entitled to and is a violation of due process rights.

    The discouragingly low settlement offers, the continual reliance on fraudulent engineering reports and the painstakingly slow pace of the Sandy Claims Review Process adjusters demonstrates the insincerity of FEMA’s public pronouncements to make Sandy victims whole. We are in desperate need of your intervention in the re-review of our Hurricane Sandy claim. Many of your constituents are in financial ruin and have been waiting long enough for a fair and just resolution. Today, almost four years after the storm, thousands of Hurricane Sandy victims remain displaced from their homes and thousands of claims remain unresolved, leaving victims in financial and emotional despair. Additional Congressional oversight and intervention is critically necessary for your constituents and for thousands of policyholders.

  2. Nancy,
    Your reply was very insightful.
    I’m sure you spent many agonizing hours trying to articulate your feelings on this matter.

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