New Jersey Senators Want Sandy Insurer Fraud Probe

New Jersey’s U.S. senators want the state attorney general’s office to investigate possible fraud by insurance companies following Superstorm Sandy.

Sens. Robert Menendez and Cory Booker asked Acting Attorney General John Jay Hoffman to investigate any fraud by insurers looking to reduce flood damage payouts following the October 2012 storm.

They cited an order in November by a federal judge in Long Island that insurers there produce additional information that could help reveal whether engineering contractors edited damage reports in ways that improperly minimized payouts to hundreds or even thousands of storm victims.

New York’s attorney general has opened a probe, and the senators say “very similar circumstances” in New Jersey warrant an investigation here, too. The Department of Homeland Security inspector general also has initiated an investigation.

“If left unaddressed, these practices threaten to stunt our State’s recovery from Superstorm Sandy and leave many families without the ability to rebuild their homes and move on with their lives,” the senators wrote. “The recently exposed actions to limit the proceeds for policyholders reaffirm what Sandy victims have long been telling us.”

The Federal Emergency Management Agency’s penalty structure punishes insurers for making overpayments far more than it punishes them for making underpayments, the senators said.