Riegel: The Louisiana connection to the Superstorm Sandy litigation

    In the wake of Louisiana’s historic August flood, there has been a renewed interest locally in the plight of flood victims of Superstorm Sandy, which ravaged the East Coast in 2012, writes Business Report Editor Stephanie Riegel in her latest column.

    Some four years later, she explains, thousands of homeowners there have yet to complete repairs to their property, and tens of millions of dollars have been spent on litigation that has brought to light evidence not only of mismanagement but of fraud and corruption within the FEMA-administered National Flood Insurance Program.

    One of the key players in that high stakes drama is a New Orleans-area lawyer named John Houghtaling II, a wildly successful attorney who’s represented some 800 plaintiffs in Sandy litigation, Riegel writes, adding that he has some words of caution for local flood victims: “It is absolutely going to happen again.”

    Houghtaling, she says, learned his profession from the late Wendell Gauthier, who successfully led the class action lawsuit against Big Tobacco in the 1990s. The case resulted in a landmark $246 billion settlement, and was one of the original partners in New Orleans’ land-based casino.

    “Like his mentor, Houghtaling lives large. But he puts in long hours and digs deep. His experience in litigation against FEMA and the NFIP dates back to Hurricane Katrina, when he argued on behalf of property owners that the flooding from Katrina in New Orleans was a manmade disaster—the U.S. Army Corps of Engineers’ levee failures—not a natural one,” Riegel writes.

    Houghtaling went on to represent more than 1,000 victims after Hurricane Ike in 2008 and took to traveling around the country, giving speeches and CLE seminars on how to fight FEMA and the insurance companies, she says.

    In the aftermath of Sandy, he started getting calls from attorneys in the Northeast, whose clients were getting ripped off by the private insurance companies that work in partnership with FEMA to administer the NFIP, Riegel writes.

    “Unlike the recent flood in south Louisiana, in which the vast majority of affected property owners did not have flood insurance, most Sandy victims did. But when they filed claims with the NFIP they weren’t being made whole. Not even close,” she writes. “Over the next two years, Houghtaling would amass a legal team of more than 40 attorneys and help uncover startling information about how the insurance companies and engineering firms they retained to investigate properties for structural damage intentionally low-balled damage estimates by about 70% on average.”

    Houghtaling and his team accused certain engineering firms of falsifying reports, going back and changing the findings of initial field inspectors under the guise of “peer review,” to lower the cost of damage estimates, Riegel says. In many instances the companies classified the structural damage of a flooded property as “pre-existing” and chalked it up to age.

    And Houghtaling wasn’t the only Louisianan wrapped up in the high-profile litigation. Riegel says one of the engineering firms accused of defrauding Sandy victims was U.S. Forensics of Metairie, while Houghtaling’s chief legal adversary, the attorney representing the insurance companies, was Metairie attorney Gerald Nielsen.

    “You had two lawyers from Metairie heading up all this litigation in New York, and it was awful,” Houghtaling says. “It was one of the most contentious, ugly bouts of litigation I’ve ever been involved in.”

    Read the full column. Send your comments to editors@businessreport.com.

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