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Lawsuit: Insurance Company Didn't Pay Sales Tax On Superstorm Sandy Claims

AP Photo/Jason DeCrow

Lawyers for Superstorm Sandy victims filed another class-action lawsuit Friday against an insurance company, alleging adjusters miscalculated sales tax and then tried to hide their mistake.

Dozens of insurance companies are already accused of shortchanging Sandy Victims out of billions of dollars through the National Flood Insurance Program.

The Federal Emergency Management Agency (FEMA) runs the program, which allows people to buy flood insurance from the federal government. FEMA contracts private insurance companies to process claims and payouts.

Buried in the software insurance adjusters used after Sandy is an option to calculate sales tax or not. Lawyers for Sandy Victims say in 80% of all Sandy claims, that option was turned off.

"It's just mind-boggling how many different ways homeowners were defrauded in the processing of their flood claims after Sandy," said Bill Kelly, a lawyer representing about 700 Sandy homeowners.

Kelly estimates 115,000 people in New York and New Jersey lost more than $500 million in total.

Kelly said Friday the largest flood insurance company, Wright Flood, knew about the mistake but ignored it. Wright Flood did not immediately return phone calls or emails, but insurance companies have said repeatedly that they have no financial incentive to underpay on flood claims.

FEMA has promised to reopen all Sandy flood claims, but it has not yet said if it would reimburse homeowners for money that may have been lost due to the alleged sales tax miscalculations.

Charles is senior reporter focusing on special projects. He has won numerous awards including an IRE award, three SPJ Public Service Awards, and a National Murrow. He was also a finalist for the Livingston Award for Young Journalists and Third Coast Director’s Choice Award.
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