Wildfire insert in flood bill could burn Louisiana senators

David Hammer speaks with Sen. John Kennedy (R-La) on the bill to reauthorize the National Flood Insurance Program.

WASHINGTON D.C. - Bipartisan efforts to add homeowner protections and other reforms to the federal flood insurance program have hit a snag in a congressional committee, where the chairman has turned part of the critical legislation into a funding mechanism for combating wildfires.

Sen. Mike Crapo, R-Idaho, chairman of the Senate Banking Committee, is offering a bill to reauthorize the National Flood Insurance Program before it expires Sept. 30, but without fixing problems that have caused thousands of flood victims to challenge alleged underpayments.

The bill sponsored by Crapo and the committee’s ranking Democrat, Sherrod Brown of Ohio, is called the ‘‘National Flood Insurance Program Reauthorization Act of 2017,” but more than a quarter of it is dedicated to the wildfires that threaten Crapo’s home state and have nothing to do with the flood program. That section of the bill proposes to take $1.4 billion from the federal Disaster Relief Fund, which was established to help victims of all types of natural disasters, and use it instead to fight western wildfires.

“The bill introduced by Senators Crapo and Brown several weeks ago represents the areas where we found agreement, and we are continuing to work with all members to address outstanding issues,” Mandy Critchfield, Crapo’s communications director, said in an email to WWL-TV.

But the Crapo-Brown bill includes none of the significant flood insurance reforms offered by Louisiana’s two Republican senators, Bill Cassidy and John Kennedy, in separate bills with Democratic co-sponsors. They had been looking forward to opportunities to add amendments to the “skinny bill” in sessions scheduled two weeks ago and then again last week, but those have now been delayed indefinitely.

With the Senate’s attention tied up in health care for several weeks and now moving to defense spending and the debt ceiling, there is fear in Louisiana and other flood-prone states that the NFIP’s problems will not be addressed at all.

“It expires September 30, we need to renew it, we need a bipartisan approach coming out of committee,” said Kennedy, a member of Crapo’s Banking Committee. “The chairman has asked me to work on that and I intend to do that and I hope I succeed.”

After FEMA leaders accused insurance consultants of fraud in handling Hurricane Sandy claims, WWL-TV found one of those companies continuing to work on claims in Louisiana this year. Kennedy then grilled FEMA’s head of the National Flood Insurance Program in a March hearing on Capitol Hill. He joined New Jersey Democrat Robert Menendez, who also sits on the Banking Committee, to propose giving FEMA more power to disbar companies accused of fraud.

Cassidy’s bill with New York Democrat Kirsten Gillibrand goes even further, clarifying that insurance companies and their contractors should not enjoy the federal government’s immunity from civil fraud lawsuits.

Federal judges have thrown out several civil fraud cases brought by Hurricane Sandy claimants, including one against a New York engineering firm that was found guilty in a state criminal case of knowingly falsifying reports in Sandy claims.

That consultant, HiRise Engineering, was thrown out of the federal flood insurance program, which uses federal funds to pay claims and to cover the costs and profits of the private insurance companies that administer the program.

FEMA’s former NFIP director Brad Kieserman promised to kick out a Metairie-based engineering company, U.S. Forensic, when a federal judge in New York found the firm “secretly rewrote a report” to deny a Sandy flood claim. But Kieserman’s successor at FEMA, Roy Wright, later said he could not remove U.S. Forensic from the program if it had not been found guilty of a crime.

The same federal judge who blasted U.S. Forensic also fined the insurance company that hired U.S. Forensic, Wright National Flood Insurance, more than $1 million for failing to turn over records when ordered to do so.

The judge had choice words for Wright National’s attorney in that case, Gerald Nielsen, who is also from Metairie. Nielsen has defended about 90 percent of the claims against flood insurance companies over the last 30 years. In May, Nielsen spoke at the National Flood Conference in Washington, D.C., and blasted Cassidy’s reauthorization bill.

“It says that hereafter nobody can say that any federal law bars the claim of fraud arising out of NFIP claims-handling against anybody,” Nielsen said. “If that passes, then everything we've done for 30 years is gone, because all plaintiffs' attorneys are going to feel obligated, in virtually every NFIP lawsuit, to include a claim of fraud….”

Nielsen said the NFIP is already “perfect” in terms of its legal framework and blamed Kieserman for having “trashed the NFIP brand” without reason. Nielsen repeatedly ridiculed Kieserman as “the Iceberg Man.” Kieserman called NFIP a “melting iceberg” and said insurance companies were “increasingly disconnected from real customers, flood survivors” when he resigned from FEMA in 2015.

Nielsen called on the audience of insurance industry leaders to fight the efforts of “my Louisiana delegation” to reform the NFIP. He particularly focused on proposals from both Cassidy and Kennedy that would prevent insurance companies from denying flood claims if they determine the damage was caused by shifting of the soils below a flood-struck property, something called the “earth movement exclusion.”

“If the NFIP repeals the earth movement exclusion, New Orleans will throw a second Mardi Gras,” Nielsen said, drawing laughter from the conference attendees. “It will be an economic stimulus package, OK?”

With insurance lobbyists opposing the Kennedy and Cassidy reforms, some are calling the wildfire suppression section of Crapo’s bill a “poison pill,” inserted into the NFIP bill to undercut it and force a basic renewal of the current program. Insurance companies’ political action committees gave Crapo more than $800,000 from 2011 to 2016, by far the most his campaigns received from the PACs of any single industry, according to opensecrets.org.

© 2017 WWL-TV


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