FEMA has taken the unprecedented step of reopening all Superstorm Sandy flood claims because thousands of homeowners said insurance companies intentionally lowballed damage estimates.
Similar allegations surfaced in 2004 after Hurricane Isabel struck the mid-Atlantic. To answer critics then, FEMA formalized an appeals process.
That appeals process has gone against Sandy victims almost every time, statistics show.
Doug Quinn drove to the post office feeling good. Even though his insurance company gave him half the value of his home in Toms River, N.J., he had proof the insurance company was wrong.
Relieved, he mailed his appeal to FEMA — a couple inches thickness worth of documentation with pictures and engineering reports.
"My government is going to have my back, they are going to look at this objectively," he says.
After five months, a letter arrives: FEMA sided with the insurance company.
"Not only did the government not have my back, the government had put a knife in my back," Quinn says.
In fact, FEMA's appeals process almost never works in favor of homeowners. According to interviews with insurance insiders, FEMA's appeals process is a "joke" and "rigged" in favor of insurance companies.
"The saddest part about it is, it goes back to the same people who turned you down the first time," says David Charles, a public insurance adjuster. For the last 37 years, Charles has moved from disaster to disaster, calculating the damage.
He says when homeowners appeal they think FEMA will be reviewing it, but actually the appeal goes to servicing companies hired by the insurance companies.
"And then they refer them out to the field adjuster who originally handled it for his input," he says.
Charles and others call the appeals process a big circle. In some ways, Sandy victims are lucky because the storm was big enough to incentivize lawyers to fight the lowballed claims.
But for homeowners in flash floods in the West or smaller tropical storms on the East Coast, all they have is FEMA's appeals process.
"There's nothing they can do but continue to argue," Charles says. "And what ends up happening is they roll over and just take it, and their financial lives are destroyed."
FEMA says that roughly 15 percent of the 4,000 appeals since Sandy, homeowners were given additional payouts. But advocates report a lower success rate.
Ann Dibble is director of the storm response unit for the nonprofit New York Legal Assistance Group. She says 92 percent of her appeals were ruled against homeowners and in favor of insurance companies.
"You know, I don't think that we knew in doing all the appeals it was so stacked against our clients," she says. "And to find out as we have over the last few months how seriously dysfunctional this process was and how unfair it's been to our clients has actually been shocking."
Dibble compares the denial of Sandy appeals to the robo-signing of foreclosure documents back during the housing crisis. In some ways, she's right.
Ed Pasterick worked for the federal flood program since its inception until just last year. He says FEMA's rules allow insurance companies to process appeals in bulk based on factors within the damage reports.
"Once you determine that that factor either was in fact valid or not valid then you got a whole set of appeals that can be resolved right there," he says.
Pasterick adds that generally the people who review appeals want to help homeowners, but that they have to follow rules set by FEMA's Claims and Appeals office.
But that was before FEMA struck a tentative deal to overhaul the federal flood program. FEMA spokesman Rafael Lematrie says things are going to be different.
"Including increasing oversight, making sure that people who have doubts about their claim have an avenue to contact us, and leadership changes as well," Lematrie says.
FEMA has offered to reopen every Sandy claim. Lawyers for homeowners say FEMA has been working hard to regain the trust of policy holders. They say, in time, they'll have it.