Leaning On Insurers

Michael Homan's house has been dangerously off-kilter since Hurricane Katrina, but his insurance company has left him twisting in the wind. So he's fighting back.
Sunday, July 15, 2007
By Rebecca Mowbray

Standing in Michael Homan's Mid-City home brings about a slightly queasy feeling of vertigo.

Floors slope sharply to the left, doors quickly slam shut under the pull of gravity and boards that should be at right angles aren't.

The house has been leaning dangerously since Hurricane Katrina, when the Xavier University theology professor felt the house twisting in the wind like a boat in rough seas before one strong gust sent it lurching to the left.

"During the storm it was windy, windy, windy and all of a sudden it got hammered in these big gusts," said Homan, who escaped with his two dogs and the help of some firefighters from Phoenix. He walked most of the way to LaPlace after the levee breaches filled his elevated home with about 3 feet of water.

Homan and his wife Therese Fitzpatrick, a public school teacher, should have been able to repair their home and move on with their lives because they had flood insurance and homeowners insurance on their 215 S. Alexander St. home.

Instead, they're living down the street while two enormous braces prop up their empty home to keep it from falling over. They have filed for Road Home grant money and are suing Allstate Insurance Co. for paying them only $3,944.73 on their homeowners insurance claim for wind damage that they say will cost tens of thousands of dollars to fix. Their house has been deemed a total loss.

"They just nickel and dimed us to death," Homan said. "Our problem was the structural damage. It would have been so easy for them in the beginning to have maxed out the policy."

As the Road Home grant program confronts a $5 billion shortfall, the line of applicants includes people like the Homan-Fitzpatricks, who had insurance to cover most of the Katrina repair bills but found themselves with uncompensated wind damage that has delayed the region's recovery.

Walter Leger, head of the housing and redevelopment task force at the Louisiana Recovery Authority, says he has no idea how many people who were insured but unable to collect on their policies ended up in line for the Road Home program, but he suspects that the Homan-Fitzpatricks are not alone.

"I think there's probably quite a few. They probably are deterred by the fact that to really fight your insurance company, you have to have an attorney. That probably hinders a lot of people," said Leger, a lawyer.

Leger said it's probably easier for people to sign up for the Road Home than to battle their insurance companies, especially since the amount is often only a few tens of thousands of dollars. "The insurance company's job is to give you as little as they can."

The Washington, D.C., nonprofit Taxpayers Against Fraud, said it sounds like the Road Home program is as much a public subsidy to the insurance industry as it is a program to help disaster victims.

"Right now the Road Home program sounds to me like it's being used as an enabler for companies shirking their responsibility and ripping off taxpayers," said Patrick Burns, communications director for the group. "This is a situation in which the system is set up to transfer the liability to the federal government while transferring the profit to the company."

Skinny kitchen

Homan is generally satisfied with the $73,000 he got in flood insurance for his home. He's got his quibbles, such as a few appliances missing from the estimate and his kitchen being measured as an impossibly skinny 2.5 feet wide, but by and large he feels as though the money from the federal flood insurance program will be sufficient to fix his flood damage.

But the homeowners insurance claim with Allstate is a different story. About 10 adjusters visited the house as Homan believes that the Northbrook, Ill., company was trying to drag out his claim and wear him down.

To Homan, the signs are fairly obvious that the slow-rising floodwaters that crept into his house in the wee morning hours the Tuesday after the storm were not the cause of the structural damage, and that the lean of the house was clearly new with the storm.

Unpainted portions of the windows and clapboards were revealed when the house shifted to the left, as the boards separated from where they had resided for most of the past century, revealing unweathered wood. The powerful Greek columns supporting the two story home's upper gallery have split lengthwise under the duress, again revealing unweathered wood. And the house next door is leaning in the same direction as Homan's.

When the team from Haag Engineering Co. finally made it to the house in February 2006 on an inspection that had been ordered in October 2005, the engineers concluded that the tilt was a pre-existing condition. "It was leaning like this before Katrina, is what they're saying," Homan said.

Haag didn't really want to talk with them and was at the property for less than 15 minutes. Homan said he got the feeling the engineers' minds were made up before they arrived. "We knew something was up. They didn't want to talk to us. They were just here for a few minutes," Homan said.

Because the house was at such a lean that he couldn't shut and lock the front door, at some point after the storm, Homan cut a triangle off the bottom of the front door and attached it to the opposite corner of the top of the door to make it fit. When the Haag engineers saw the oddly shaped door, they pointed to it as proof of their conclusion that the damage was long-standing.

"They said, 'Aha. The house was leaning before the storm,' " Homan said. "They ignored all this other evidence."

When Homan finally got the engineering report several months later, it referred to the "Wilson" house and had a picture of someone else's home.

Allstate declined comment on Homan's situation and the Road Home.

"We don't typically discuss individual customer situations," Allstate spokeswoman Kate Hollcraft said. "Allstate has already settled 98 percent of our Katrina-related claims in Louisiana. Each case is considered individually based on the facts and information presented. We continue to work with our customers to resolve any remaining claims."

David Margulies, a spokesman for Haag Engineering, said his company was unaware of any problem with the engineering report of Homan's house.

"Haag is not familiar with this particular individual, but if someone brings an issue to our attention, we will research it and address it," Margulies said.

Sending a signal

Because they needed money to repair and couldn't afford to wait for Allstate, Homan and his family decided to apply to the Road Home program to make up for what Allstate won't pay.

Homan and his family recently were awarded $150,000 from the Road Home: $30,000 to elevate, because their property missed qualifying for ICC by a few inches, and $120,000 for structure damage that was unpaid by insurance.

Despite the Road Home award, Homan and Fitzpatrick are not withdrawing their insurance lawsuit because they feel it's important to send a signal to insurance companies that they need to pay the people who bought policies from them.

"We'd be much happier if they paid our bills instead of taxpayers," Homan said. "I just feel that they've behaved unethically through the whole process. We also have nothing to lose, so we might be their worst enemy."

Burns' group tracks whistleblower lawsuits such as the New Orleans suit unsealed in May that alleges that insurance companies systematically overbilled the federal flood program for hurricane damage while underpaying wind claims. He says the best way for the federal government to help hurricane victims is not to provide rebuilding grants to people who haven't tapped out their insurance, but rather to throw its weight behind a few strong insurance cases against each company to send a message to private industry that the government cares whether it pays its obligations.

"This is a case where government can help, but maybe the best way for government to help isn't to write a check, it's to send a lawyer and a legal brief," Burns said.

Homan and his family applied to the Road Home program because they couldn't wait any longer on Allstate and because the program allows them to recover legal fees for pursuing the company.

Burns applauded Homan and Fitzpatrick for continuing their insurance claim on behalf of others even as their own rebuilding needs have now been addressed.

"He has the immediate need of taking care of this family, and he also has this larger sense of community and national pride. He knows what is right for his family now is wrong for his family over time. My hat's off to him," Burns said. "Will the government please help this man?"

Holding up the money

The Homans' decision to pursue Allstate is also a relief to Louisiana Recovery Authority.

"Good for him," Leger said. "We're all fighting to get more money from Washington. If you assume that his claim is legitimate, the insurance company is holding up Road Home money that could help someone else."

When people get Road Home money, they agree to assign any future insurance benefits to the state of Louisiana, which also reserves the right to pursue insurance claims. Leger said Louisiana Recovery Authority has had several meetings with the attorney general's office about pursuing those claims.

Kris Wartelle, a spokeswoman for state Attorney General Charles Foti, said that key people were out of town and she was unable to comment on what's happening with the Road Home and insurance.

"We are considering looking into some LRA issues. Whether they encompass what you're talking about, I couldn't say," she said.

But Leger takes issue with Taxpayers Against Fraud's charge that the Louisiana Recovery Authority should have prioritized Road Home awards to avoid subsidizing the insurance industry.

Who should have received priority? The uninsured? The elderly? Those with special needs? Those in a certain part of the state? Those below a certain income level? Or those like Homan who took care to buy insurance, but who have been unsuccessful in fighting their insurance companies? Just even identifying people in these groups would have been cumbersome, Leger said.

"I understand the sentiment, and it is a good sentiment, but deciding who gets to the line first is difficult." Leger said. "That's my point: How do you define the most needy?"

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Rebecca Mowbray can be reached at rmowbray@timespicayune.com or (504) 826-3417.


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