Negotiators for Superstorm Sandy victims in New York and New Jersey said talks with the Federal Emergency Management Agency have stalled.
FEMA manages the National Flood Insurance Program, which allows people to buy flood insurance from the federal government. FEMA contracts with regular insurance companies to process the claims. Homeowners claim engineers hired by insurance companies allegedly falsified damage estimates and that homeowners aren't being repaid for the actual damage that Sandy caused.
Two weeks ago, FEMA vowed to resolve all claims with questionable engineering reports that reduced insurance payouts to homeowners following the 2012 storm.
Last week, lawyers for Sandy victims gave FEMA a settlement package that would repay some 10,000 homeowners the full value of their insurance policies, $250,000 each. The proposal also asked FEMA to increase the amount it paid to all policy holders for building materials to accommodate New York's higher prices. The homeowners' lead lawyer, Steve Mostyn, said all together, he wants FEMA to pay out an additional $3-4 billion, or about half of the $7.7 billion that the flood program has paid out already.
"The concerning thing is, the initial response I got is that they can't reopen that many claims, it's just too many," Mostyn said.
The National Flood Insurance Program is currently $23 billion in debt to the U.S. Treasury.
Meanwhile, elected officials in the region have begun pressuring FEMA to reopen questionable claims and they're asking New York Attorney General Eric Schneiderman to monitor. Assemblyman Phil Goldfeder of Queens wants New York to create its own flood insurance program, overseen by the state Department of Financial Services.
"It's about time we start making decisions for ourselves and not be controlled by a broken FEMA-NFIP system," Goldfeder said.
FEMA declined comment but earlier statements say they want to regain the trust of flood policy holders. Insurance companies and their subcontracted engineering firms have denied all wrongdoing. They said they followed the rules Congress and FEMA established.