New York and New Jersey homeowners whose properties flooded during Hurricane Sandy filed a series of class action lawsuits on Friday, leveling a new set of fraud allegations — this time, involving manipulated software programs — against insurers and the federal government. 

The four complaints all claim that insurers systematically underpaid claims by purposefully excluding sales tax from damage calculations. Homeowners filed three lawsuits in federal court in the Eastern District of New York, and one suit in federal court in New Jersey.

In New Jersey, where the state charges a 7 percent sales tax, that means “for every $100,000 worth of storm damages, homeowners were shortchanged $7,000,” says attorney Charles Mathis IV, with Merlin Law Group. 

“This was potentially hundreds of millions of dollars that was underpaid to Sandy victims,” says Louisiana-based attorney John Houghtaling, who represents homeowners in the three New York suits. 

The suits, with their focus on common insurance estimates, broaden accusations of fraud beyond the allegations of altered engineering reports that have roiled FEMA’s National Flood Insurance Program (NFIP). The agency, succumbing to pressures from lawmakers and homeowners’ attorneys, agreed on Wednesday to reopen all 144,000 Hurricane Sandy flood insurance claims to a new review process.  

Engineering reports were written up for 14 percent of Sandy flood insurance claimants, according to Mathis. Yet, by comparison, virtually everyone received estimates from adjusters who evaluate damages.

“The issues we’re alleging in our complaint are potentially very pervasive,” Mathis says. 

Three of the lawsuits name insurance companies which are among the dozens of private carriers that administer claims on behalf of FEMA —handling about 83 percent of the program’s 5.3 million policies.

A fourth suit, filed in New York, names the National Flood Insurance Program itself as a defendant. FEMA’s own insurance unit — known as “NFIP Direct” — administers the rest of the policies in the program.

As in the other New York class actions, the homeowner accusing the NFIP says her insurer “uniformly” failed to include sales tax in damage estimates, and conspired to cover it up with adjusting and software firms involved in the claim.

“They put a notation to the policyholder that tax was included in the line items of the estimate,” says Houghtaling. “And it turned out that was a lie.”

At FEMA, the agency “can’t comment on the specifics of ongoing litigation,” a representative said, “but we remain committed to increasing oversight of the program to ensure it’s fair, transparent and efficient.” 

A representative for Standard Fire Insurance, a unit of Travelers Insurance, said the company does not comment on pending litigation. Representatives for Wright National Flood Insurance and for Simultaneous Solutions Inc. — the maker of Simsol software that is being sued in all three New York suits — did not respond to messages seeking comment. 

In the New Jersey case, against Selective Insurance, homeowners Charles and Beverly Mooney allege that even though their damage estimate stated that sales tax was included in each line item, a software program called Xactimate was “incapable” of performing that function at the time.  

Reached for comment, a representative for Selective said the company does’t discuss pending lawsuits. 

Like the Mooneys, another New Jersey homeowner, Humphrey Uddoh, recently accused Selective of using a fraudulently altered adjuster report to underpay his claim. In that case, slated for an evidentiary hearing in May, Uddoh alleges the Selective not only changed the report, but kept evidence hidden from him during nearly two years in litigation. 

Amid the ongoing fallout from the fraud allegations, FEMA confirmed earlier this week the departures of two senior agency officials. Next month, a U.S. Senate task force will begin to tackle structural reforms to the program

Meanwhile, multiple government investigations continue. They include a criminal probe in New York state, and an investigation by the inspector general’s office at the Department of Homeland Security, which oversees FEMA.