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Md. families sue FEMA over Isabel
The $2 billion lawsuit alleges that officials fraudulently low-balled insurance claims.


Published June 10, 2005

Dozens of Maryland families whose homes were damaged or destroyed when Tropical Storm Isabel lashed the state in September 2003 filed a $2 billion lawsuit this week alleging that federal flood officials deliberately and fraudulently low-balled their insurance claims.

It's likely that Isabel victims in Virginia will seek similar legal action soon, said Martin H. Freeman, the attorney who filed the Maryland lawsuit.

"There is a lot of activity in Virginia, particularly in the Tidewater area," Freeman said. "I think it's a safe bet that another lawsuit will be filed in the near future."

The Maryland lawsuit, filed in U.S. District Court in Greenbelt, claims widespread abuses by the National Flood Insurance Program, which the families say was supposed to make them whole after flood waters soaked their houses.

As a result of inadequate reimbursements, the claim says, the families have been forced to raid their savings to rebuild, live in cramped government-supplied trailers or subsist in homes contaminated by sewage and mold.

"They believe that they have been financially and emotionally raped," said Freeman, whose law firm represents the 141 plaintiffs from 71 families. "They also believe that the people who have done this to them are invulnerable and are going to get away with this. They're so trampled down it makes me heartsick."

The Maryland lawsuit names the Federal Emergency Management Agency, NFIP subcontractor Computer Sciences Corp., and various insurance companies and adjusters among 57 defendants. It singles out Homeland Security Undersecretary Michael D. Brown and acting federal insurance administrator David Maurstad, among others.

Georgette Stelyn, whose home in Seaford was damaged by the storm, said she has heard about the Maryland lawsuit and would like to file one against FEMA in Virginia. Stelyn, who testified at a Congressional hearing in April, said she only received a portion of the money due to her under her flood insurance policy.

"What I see them doing claim-to-claim is taking a little bit off the top of everybody," said Stelyn, adding that four days after she testified to Congress, the government offered to give her more insurance money. "There is fraud left and right with FEMA."

The Maryland suit seeks compensatory and punitive damages for each plaintiff.

Spokesmen for both FEMA and for CSC said they had not seen the suit and could not comment.

In testimony before Congress in April, Maurstad said "there is a fundamental misunderstanding" of the National Flood Insurance Program, which was "never intended to restore policyholders to pre-flood condition. It was designed to help them recover."

Maurstad's statements are misleading, said Steve Kanstoroom, who manages an Internet site, http://www.femainfo.us/, that catalogues complaints against FEMA.

"Regardless of FEMA's current interpretation of its regulations, they continue to train sales agents to tell victims they will be restored to their pre-flood condition, while simultaneously training and directing claims adjusters to allow for only narrowly defined coverage in limited amounts," he said.

Kanstoroom lauded Rep. Jo Ann Davis, R-Gloucester, whose concerns about FEMA's handling of hurricane victims were cited in the Maryland lawsuit.

Families in the lawsuit allege that defendants worked to violate their due process rights and deprive them "of their health and homes" by selling policies under a promise that full payment would be made if disaster struck while training adjusters to authorize far less.

FEMA officials knew what was happening but did nothing to fix the problems, according to the lawsuit.

It also alleges two forms of conspiracy to commit fraud, as well as contract interference and breach of contract.

Freeman said his clients' struggle to regain what they lost has led to broken marriages, illnesses and financial devastation.

As of Wednesday, 85 Maryland families still were living in trailers, according to FEMA. As of today, FEMA projected that 49 families in Virginia were still living in trailers.

Daily Press reporter Dave Schleck and the Associated Press contributed to this report.

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