FEMA faces suit over insurance dispute relating to losses from two hurricanes

By Jon Campisi | Sep 12, 2013

A Montgomery County business has filed a civil complaint against the Federal Emergency Management Agency that accuses the governmental body of failing to inspect the plaintiff’s premises immediately after a flood occurred, resulting in additional monetary losses.

Psychiatric Solutions Inc., which is based in Fort Washington, filed suit in U.S. District Court on Sept. 9 over claims that FEMA inspectors failed to timely inspect items that were damaged during a flood on Aug. 28, 2011, caused by Hurricane Irene.

The plaintiff, which has a valid flood insurance policy with FEMA, notified the agency of the damages the following day, although FEMA’s adjuster didn’t inspect the premises until Sept. 12, 2011.

Meanwhile, a second inclement weather pattern, Hurricane Lee, swept through the region on Sept. 8, causing certain items in the Aug. 28 flood to be destroyed or removed before the inspection by FEMA’s adjuster, the lawsuit states.

In late January of the following year, the suit says, FEMA’s adjuster sent the plaintiff’s adjuster a proof of loss for the loss in the amount of $170,368.80 for the net amount payable for the loss under the plaintiff’s insurance policy after the company’s deductible.

The proof of loss included many of the items that FEMA’s adjuster hadn’t seen because the defendant delayed its inspection for two weeks.

The losses, however, were inventoried and inspected by the plaintiff and its excess insurance carriers, the complaint shows.

On Jan. 30 of that year, the last adjuster for FEMA sent the plaintiff’s adjuster a proof of loss in the amount of $134,276.03 for the net amount payable for the loss under the insurance policy after the deductible, which the plaintiff executed as claiming the undisputed amount of the loss, according to the lawsuit.

Some items were missing from that list, however, many of which were items that FEMA’s original adjuster had not seen because of the defendant’s delay in inspecting the premises before the hurricane hit.

At issue is whether or not some of the items from the first storm should have been claimed as losses in that storm or in the successive Hurricane Lee, the suit states.

The FEMA adjuster questioned the apparent discrepancy, but an adjuster for the plaintiff assured the defendant’s adjuster that the business had separated the claims for the two storms.

To date, the record shows, FEMA has paid the plaintiff $134.276.03.

Psychiatric Solutions seeks the additional $36.093.77 it maintains it is owed as a result of the flooding losses.

“Federal Emergency, despite demand for the benefits due under the insurance policy, has refused, without legal justification or cause, and continues to refuse, to pay to Psychiatric the amount of the unpaid items which were accepted as covered under Federal Emergency’s policy in the first proof of loss,” the lawsuit states. “Federal Emergency has never denied liability for the unpaid items despite Psychiatric’s continued requests for payment of the same and has made no response to Psychiatric’s claim for the same.”

Psychiatric Solutions seeks judgment against FEMA in the amount of $36,093.77 plus interest and litigation costs.

The suit was filed by Philadelphia attorney Harry P. Begier, Jr.

The federal case number is 2:13-cv-05237-LFR.

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