Approximately 800 cases involving claims contesting flood-insurance payouts for Superstorm Sandy have been temporarily set aside, according to an order from the U.S. District Court of New Jersey. All Sandy cases currently before the court will be paused for at least 60 days. Consequently, all trials, hearings, mediation or arbitration sessions are indefinitely postponed, but either side may continue to submit documents that could further settlements. Presumably, this exception would allow insurers to continue providing to plaintiffs any version of an engineering report that was changed before it was used to deny a claim.
A prevalent issue in cases involving contested Sandy payouts has been the modifications of certain engineering reports. These reports give determinations on the cause and extent of damage, and are important to the final decision on whether or not a claim is covered. After a New York federal judge wrote an order admonishing the practice of secretly modifying these reports, calling it “reprehensible” and “highly improper,” the Federal Emergency Management Agency (FEMA) became more open to negotiations. These reports were used in nearly 16,000 of New Jersey’s 74,000 flood claims from Sandy, but it is not clear how many were fraudulently modified.