Claim for building and contents damage was paid in full under a dwelling policy issued under the National Flood Insurance Program. The dwelling was flooded again five months later, and proof of loss was submitted for building and contents damage more than double that of the first claim.

A fraud adjuster employed by NFIP recommended denial of the claim after three separate and detailed inspections of the property. He found that the first floor of the house had been enclosed after having been built as an elevated building. Contents and building components "lower than the lowest elevated floor of an elevated building" are not insurable under Federal Emergency Management Agency regulations.

The inspector found that the flood water had not risen high enough to damage the second level of the structure, for which claim was made. He also found unrestored damage from previous floods, including rotted sub-flooring, rusted support beams and moldy block walls.

The insured sued the director of FEMA for "wrongful denial of his second claim. FEMA responded with a counterclaim under the False Claim Act, 31 U.S.C. 3729(a), asserting that the second claim was properly denied and that both claims were false claims.

The trial court entered a judgment of almost $50,000 against the insured (treble damages under the Act, as recently amended). It concluded that denial of the second claim was proper and that the first claim violated the False Claims Act. The evidence was clear that the house was elevated and that the policy did not cover damage lower than the lowest elevated floor. It further made clear that the insured made claim for earlier unrestored damage.

The insured argued that the trial court erred in retroactively applying amendments to the False Claims Act, which were not effective until more than three weeks after the second flooding for which claim was made.

The appeal court agreed with the insured that penalty under the False Claims Act must be based on its provisions prior to the amendments, roughly one-third less than the new provisions. However, it rejected his argument that it was required that the government prove specific intent on his part to defraud. (The amendments stated that "no proof of specific intent to defraud is required.") The court cited previous holdings that the terms of the Act before amendment did not require proof of specific intent to defraud. The pertinent language in the amendment was a clarification.

The judgment of the trial court was affirmed in favor of the insurer (FEMA) and against the insured, except for reconsideration of the amount of damages.

MILLER, Plaintiff-Appellant v. FEDERAL EMERGENCY MANAGEMENT AGENCY, ET AL, Appellees. United States Circuit Court for the Eighth Circuit. No. 94-1780. June 20, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5373.