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  • FEMA demands return of disaster assistance funds from property owners

    Tom Solberg

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    FEMA demands return of disaster assistance 
funds from 
property owners May 13, 2011 – Attorneys who assist property owners impacted by floods and other disasters may soon hear from clients caught up in a new nationwide effort by the Federal Emergency Management Agency (FEMA) to recoup disaster assistance funds that it believes were improperly dispensed by the agency since 2005.

    FEMA began sending thousands of “notice of debt letters” in March under revised recoupment rules seeking to recover more than $22 million distributed in response to floods, tornadoes, hurricanes and other disasters in places ranging from Arkansas to Wisconsin.

    About $1.1 million of this amount would come from 413 Wisconsin households, according to data obtained by the Associated Press.

    “The survivors of these disasters have been through a lot, and while we are committed to moving this process forward expeditiously, we also want to take the time to get it right,” said FEMA Spokeswoman Rachel Racusen. “So we are continuing to look at documents and information for each of these cases, to make sure we are recouping the right funds from the right people.”

    FEMA, which is a part of the Department of Homeland Security, is reviewing approximately 168,000 cases of potential improper payments. While some of these may be dropped following an internal review, the agency expects to send out more notice of debt letters.


    Following a presidentially-declared disaster, FEMA provides temporary housing, crisis counseling, legal services, unemployment assistance and other assistance to individuals and families in need through its Individual Assistance program.

    FEMA officials have testified that its “highest priority in the immediate aftermath of a disaster is helping the people who need it most, and providing assistance as quickly as possible. However, FEMA must balance the requirement to quickly distribute funds to meet the needs of disaster survivors with its responsibility to be good stewards of taxpayer funds. After every disaster, FEMA audits disaster assistance payments to ensure taxpayer dollars were properly spent.”

    In the aftermath of Hurricanes Katrina and Rita, FEMA sought to recoup what it claimed were improper disaster assistance payments using procedures that allegedly provided inadequate notice and standards for decision-making.

    In April 2007, a group of affected disaster assistance applicants filed a class action suit, alleging that FEMA violated the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the Administrative Procedure Act and the Due Process Clause of the U.S. Constitution.

    New Administrative Rule

    A new rule promulgated by FEMA in response to the litigation and other developments makes significant changes to the recoupment process intended to ensure that applicants are afforded adequate due process and better communication with FEMA.

    If an applicant files an appeal regarding the notice of debt, he or she will now have the ability to request an oral hearing if the indebtedness cannot be resolved by FEMA's review of the documentary evidence alone. FEMA has also redesigned its recoupment procedures to clarify the written notification informing applicants of their potential debt to the government.

    FEMA's recoupment process also allows individuals who cannot afford to repay their debt in one installment to work out a payment plan based on their relevant financial circumstances. In addition, individuals are provided the opportunity to request a compromise or waiver for all or part of their debt, based on financial inability to pay, or other special circumstances.

    Thus, the revised rule offers property owners several options following receipt of a Notice of Debt letter, which include:

    • Paying the amount in full;

    • Requesting a payment plan;

    • Requesting a compromise or waiver for all or part of their debt, based on financial inability to pay or other special circumstances; or

    • Filing an appeal within 60 days.

    Minimizing future errors and recoupments 

    FEMA spokeswoman Racusen noted that “unfortunately, during the response to any disaster, assistance sometimes goes to individuals who were not eligible for it, because the assistance was duplicative of benefits they received through other sources, or because of other human or accounting errors.”

    But she stressed that the agency has also taken steps to reduce the error rate as it responds to fresh disasters. “New safeguards have been put in place to greatly reduce the error rate of improper disaster payments,” Racusen said.

    FEMA invites anyone who feels they have received a notice of debt letter in error or has questions about their case to contact the agency at 1-800-816-1122.

    By Tom Solberg, Media Relations Coordinator, State Bar of Wisconsin 


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