A federal judge in N.Y. is cracking down on an engineering firm that tried to cover up losses caused by Superstorm Sandy, reports Bloomberg Businessweek. U.S. Magistrate Judge Gary Brown was reviewing a dispute over damage suffered by homeowners in Long Beach, N.Y., when he discovered the fraud.
According to Businessweek, Florida-based insurer Wright National Flood Insurance sent an employee from U.S. Forensic, an engineering firm retained by Wright, to the hurricane-damaged house. The employee wrote a report concluding that the home had been damaged beyond repair. After merely reviewing a few photographs, a second engineer for U.S. Forensic rewrote the report to say the home hadn't been damaged at all.
The process, called a "peer review" by U.S. Forensic, was concealed from the homeowners and was only discovered by chance, Brown told Businessweek. Lawyers for Wright indicated the peer review process may have affected hundreds of Sandy claims, the judge adds.
Brown also says the firm's lawyers attempted to prevent the revelation of the fraud in a court hearing last month, violating their obligation to comply with court orders, prolonging the litigation, imposing unnecessary costs on the plaintiffs, and unfairly delaying the payment of a legitimate claim, reports Businessweek.
Judge Brown has ordered Wright to rely only on the initial engineer's report, and ordered its lawyers to reimburse the plaintiffs for their legal expenses related to the concealment. On top of that, Brown is instructing all defendant insurance companies in Sandy cases to provide plaintiffs with all drafts of damage reports.
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