FEMA Waives Repayment of Nearly $95M in Louisiana Storm Aid

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The Federal Emergency Management Agency has waived the repayment of nearly $95 million that the agency believes was improperly paid to victims of Hurricanes Katrina, Rita and Wilma

According to a report by the Department of Homeland Security’s Office of Inspector General, FEMA also denied 1,293 requests totaling $6.3 million in improper payments and has recouped $1.3 million from applicants who got improper disaster payments.

At least some of the overpayments were due to FEMA employees’ own mistakes, ranging from clerical errors to failing to interview applicants, according to congressional testimony. In some cases, the errors resulted in FEMA providing applicants with duplicate payments.

FEMA said it is required by law to make an effort to recover improper payments, even if the recipient wasn’t at fault. Last December, Congress approved legislation that would allow FEMA to waive many of the debts.

The Times-Picayune reports the 18,283 waiver cases processed by FEMA represent 20 percent of the outstanding waivers, which total more than $371 million the agency said should be repaid. In addition to the money not recovered, implementing the waiver program has cost FEMA $4.8 million so far, and has resulted in the refund of $2.5 million to individuals who repaid their grant money, but were later granted a waiver, according to the report.

“It is too early to determine the cost-effectiveness of the process because waiver requests and reimbursements are still ongoing,” said the report issued in mid-September.

The waiver program involves about 4.6 percent of the more than $8 billion in individual assistance payments FEMA has made between August 2005 and Dec. 31, 2010.

The Recoupment Fairness Act allows the FEMA administrator to waive a debt if the excessive payment was based on FEMA error; there was no fault by the debtor; collection of the debt “is against equity and good conscience;” and the debt did not involve fraud, a false claim or misrepresentation by the debtor or others with an interest in the claim.

Among factors FEMA considers is the financial hardship that repayment might cause recipients, as well as the financial worth of the recipients. Debtors with a 2010 adjusted gross income of up to $90,000 are eligible for a full waiver, while those with income over that amount can receive only a partial waiver.

FEMA granted waivers for $50.4 million, involving 6,697 cases, where duplicate benefits were given to more than one person in a household.