Isabel still being felt more than a year later

The disaster continues for some hurricane victims who say the federal government short-changed them on insurance claims.

BY DAVE SCHLECK
247-7430

November 14 2004

For Debora Pointer, Hurricane Isabel is still raging.

Her first nightmare came Sept. 18, 2003, when windswept floodwaters crashed into her Gloucester County home.

"It jolted this house so bad that toilets moved across the bathrooms," she said.

The second nightmare has been nearly every day since then as she watches mold overtake her home while she pleads with federal flood adjusters for a fair insurance settlement.

"Every day there's something new," she said during a recent walk through her moldy home. "The whole thing is shifting. I'm losing everything."

Pointer is one of a handful of local hurricane victims who are fighting with the federal government to get enough money to rebuild or replace their flood-damaged homes. Several government agencies continue to investigate how the Federal Emergency Management Administration handled Hurricane Isabel claims, while 174 Virginia households head into the winter still living in FEMA trailers because their homes are unlivable.

Pointer and about 15 other local victims have hired an independent claims adjuster named Dan Montgomery, who travels around the country to work for people who say they deserve larger settlements than their insurance company or the federal government is willing to offer. He charges his clients a percentage of any additional insurance money they receive.

FEMA oversees a national pot of money that comes from flood insurance premiums paid by homeowners who have policies through private companies. The companies get to keep a percentage of the flood insurance premiums.

Normally, the homeowner's insurance agency responds first to flood claims. If consumers are not satisfied with their settlements, they can ask FEMA to send adjusters to review the claims. Adjusters use computer software and knowledge about building materials to recommend to FEMA or insurance companies how much storm repairs should cost.

Montgomery says claims adjusters hired by the federal government were negotiating with him until Hurricane Charley hit Florida on Aug. 13. At that point, he says, the adjusters headed south to Florida and left behind administrators who were unwilling to budge on insurance claims.

Montgomery intends to keep fighting until his clients get a fair settlement. "But what about the rest who got screwed over who didn't have a Dan Montgomery?" he asks.

Butch Kinerney, a FEMA spokesman, said the agency doesn't hire heavy guns to try to lowball people on flood damage.

"That's not what we do," he said. "However, there are certain laws we want to abide by."

One point of contention is whether federal laws require flood insurance payments to return hurricane victims' homes to their pre-storm condition.

"According to the law as signed by Congress, the language that says flood insurance makes you whole was taken out," Kinerney said. "FEMA has to abide by that legislation."

But the federal government, through a contractor called Computer Sciences Corp., is training insurance agents to tell prospective buyers that their flood insurance will restore their homes to pre-storm condition, said Steve Kanstoroom, a Maryland victims advocate. Kanstoroom has a Web site, http://www.femainfo.us/, that tracks FEMA complaints.

Although sales agents tell customers that their coverage will restore damaged homes, the claims adjusters - the people who help decide how much money victims get after a flood - are trained to settle as quickly and cheaply as possible, he said.

"I would describe it as a bait-and-switch," said Kanstoroom, who recently attended a training session for agents.

After a flood of complaints from Isabel victims, Congress told FEMA in March to take the unusual step of reviewing each hurricane claim to make sure the settlement was fair.

FEMA contracts its adjusting work - as it does its training work - to Computer Sciences Corp. The company did $17.2 billion in business in the 2004 fiscal year, with 43 percent of its revenue coming from the federal government. Computer Sciences Corp. does information technology work, outsourcing and consulting for customers that range from the Defense Department to chemical companies to banking firms.

Montgomery said some claims adjusters were misusing the computer software that estimates the cost of the damage. Instead of estimating repair costs, the software estimated construction cost. It is generally cheaper to build a new home than to repair an existing one.

Kinerney said FEMA and Computer Sciences Corp. have worked hard to improve training.

"There were some problems with the first set of claims," he said.

Adjusters come from across the United States, but they need to learn about pricing differences that vary from ZIP code to ZIP code. To attract the most qualified people, FEMA offered more pay to prospective flood adjusters to make sure it was offering competitive salaries.

In March, Computer Sciences Corp. sent out 23,700 letters - one to everyone who had filed a flood insurance claim after Hurricane Isabel. It heard back from 2,185 people who wanted their claims reviewed. Out of that number, 951, or 44 percent, received additional payments totaling $8.2 million, said Kinerney, the FEMA spokesman.

FEMA says only 20 unsettled claims from Hurricane Isabel remain, but FEMA considers a case settled when it makes its final offer. Many storm victims who received a final settlement letter from FEMA are still pleading with the agency.

U.S. Sens. Barbara Mikulski and Paul Sarbanes of Maryland have asked the inspector general and U.S. Attorney General John Ashcroft to look into the matter.

Last month, they wrote a letter to Tom Ridge, secretary of the Department of Homeland Security, which includes FEMA. The senators said they were "deeply concerned" that FEMA's director halted an independent review of the Isabel complaints.

So far, no one from the Virginia delegation has asked for an investigation.

U.S. Rep. Jo Ann Davis, R-Gloucester, met recently with Montgomery and Kanstoroom, said Chris Connelly, Davis' chief of staff.

"Certainly she is concerned by this," Connelly said. Davis plans to address Montgomery's and Kanstoroom's concerns next week, after she returns from a trip to the Middle East.

Kinerney said FEMA wants to settle claims as fairly as possible.

"We don't want to stall things more than necessary," he said. "We don't want any mean wishes for anyone."

But Jeff and Loretta MacDonald's home on Little Florida Road in Poquoson sure looks and smells like a bad dream. A scented candle didn't cover up the musty mold smell while the couple recently talked about the flood damage they say insurance has not covered.

Their flood insurance policy paid about $30,000, but Montgomery estimates it would cost at least twice that to fix the damaged floors, foundation and walls. He contends FEMA did not send an engineer to determine structural damage to the home until August, nearly a year after Isabel hit. Afterward, based on the engineer's report, the couple said, they got an additional $1,970 to fix damaged piers and beams in their home's foundation.

It's not nearly enough, Montgomery and the MacDonalds contend.

"We are going to have to go into debt deeper than we should have," said Jeff MacDonald, a self-employed landscaper.

A trailer is parked in their front yard, but they don't use it. They feel it's safe for their two sons, ages 11 and 6, to sleep in the upstairs bedrooms. The parents sleep in their first-floor bedroom, even though the ruined floor has bowed under their bed's weight. Wood floors throughout the house are warped and springy to the step, and some boards have been replaced with outdoor deck planks.

The couple hired Montgomery in May after one of Loretta's coworkers on the night shift at Farm Fresh told them Montgomery had helped others get more from their insurers.

"We've paid our premiums, and it seems like the insurance company hasn't wanted to hold up their end of the deal," Jeff MacDonald said. "I feel like I had a contract with them."

Deborah Pointer in Gloucester said her adjuster came soon after the storm, but the results weren't much better.

"They're still trying to go by the original adjuster who was out two days after the flood at 10 p.m. with a flashlight because there was no electricity," Pointer said. That was before the mold grew, before the house resettled - cracking walls and sagging floors.

After a month of waiting for some repair money, the Pointers broke down and bought a trailer. They trucked their belongings to storage. Three months after the hurricane, the Pointers got her first insurance money - an advance of $5,000 around Christmas.

Part of the nightmare was trying to find a contractor. They were in high demand after the storm. And with little or no insurance settlement, no contractors seemed interested in helping Pointer.

As the new year approached, she gave up on her insurance company and went to FEMA's National Flood Insurance Program. "I can't tell you how many times I called FEMA and said, 'Just help me,' " she said.

The largest insurance offer she received at that point was about $38,000, plus $30,000 to help her raise her home above the flood level. Over the winter, Pointer was looking for more help and heard that Poquoson residents had stories similar to hers. She called a disaster recovery volunteer in Poquoson, who referred her to Montgomery.

This past summer, Pointer said, the National Flood Insurance Program offered her a $166,000 settlement. She paid $1,700 for another engineering estimate while Montgomery fought for the $200,000 maximum settlement allowed under her policy.

In July, Pointer left for Europe to visit family, thinking that everything would be taken care of.

"You get hope," she said. "You move forward, and it never works out."

While Pointer was away, the National Flood Insurance Program told Montgomery it was denying all of his remaining claims.

"I never dreamed that they would deny the whole claim again," he said. "You have no idea the pain I go through in telling a client something like this."

In an attempt to document FEMA's change of heart, Montgomery points to two letters sent from FEMA to one of his clients in Poquoson. A letter dated Aug. 4 states: "It has been determined than an adjustment to your claim total may be allowed under the terms and conditions of your flood insurance policy."

A subsequent letter from FEMA, dated Sept. 13, states: "Based upon our review it has been determined that there are no additional items eligible for payment under your policy and that no further reimbursement is due."

Kinerney said the notifications are form letters sent before and after FEMA reviews a case. The first letter does not promise payment, it merely says that a payment "may" be justified, he said.

In a letter sent to Montgomery in September, Ramsey Gray, task force examiner for the Federal Emergency Management Agency, defended the government's decision to deny the requests for additional money, saying an engineer's survey of the damage determined that more money wasn't justified. Montgomery said the denial has more to do with the exodus of adjusters to Florida after the back-to-back hurricanes.

He offers Ginger Stelyn of Seaford as an example.

Stelyn said her insurance company gave her $110,000 for $225,000 worth of flood damage to her home in York County on the Chesapeake Bay. Montgomery said Stelyn is one of the cases where adjusters used construction cost instead of repair cost. Stelyn and her husband have gone $60,000 in debt trying to get their house livable during the past year. They rented a home until they could move back into their house at the end of July.

Stelyn said she didn't find out until August that FEMA was offering to review Hurricane Isabel claims. When she called FEMA's hot line, Stelyn said, the FEMA representative told her: "We're going to be shutting down our office and heading down to Florida. I don't think you'll get any more money."

Kinerney said Stelyn got wrong information. To this day, FEMA is willing to review claims from Hurricane Isabel victims, he said.

"That's incorrect information and whoever gave her that information was incorrect," Kinerney said.

Montgomery said a Computer Sciences Corp. adjuster recently reconsidered eight of his cases, but he's not optimistic about the outcome. He said FEMA has failed to follow through with his clients' insurance companies. He also says there's so much turnover with FEMA that he has trouble finding someone to work with on a consistent basis.

"They very often keep you going in circles and hope that you will give up," Montgomery said.

David Maurstad, the new acting administrator for the National Flood Insurance Program, has repeatedly declined to set a deadline for reviewing Hurricane Isabel claims because he wants to make sure everyone gets a chance to have the government take a second look at their case, Kinerney said.

The number of case examiners for Hurricane Isabel did dwindle from 49 to zero over the course of the year, but that wasn't because of hurricanes in Florida, he said.

"The number did shrink," he said. "But it shrunk external to the hurricanes hitting. The claims got wrapped up."

People unsatisfied with their settlement have the option to sue for more money. But some people won't be satisfied with FEMA until they get the maximum amount of money that their coverage allows, which is up to $250,000, Kinerney said.

"In some cases, it's just not within the limits of the flood insurance program to do that," he said. "Those are kind of the tough decisions we're making in the last six months."

Copyright 2004, Daily Press