FEMA Attempting to Recoup Mispaid Disaster Relief Funds from Katrina Victims

It’s been more than six years since Hurricane Katrina devastated the city of New Orleans, but the storm and its victims are still making news. The most recent hurricane-related debacle involves FEMA, which is trying to recover over $385 million, which, the agency claims, was “improperly paid” to victims of Katrina and two other hurricanes, Rita and Wilma. The debts, which add up to less than five percent of the nearly $8 billion that was distributed after the trio of storms, average about $4,622 for each recipient.

The catch, of course, is that many of those overpayments were caused by FEMA’s own employees, either because they made clerical errors, or didn’t interview applicants, or any number of other internal oversights. Nevertheless, the agency says, federal law requires that it attempts to recover the money, no matter who was at fault.

Understandably, many of those recipients are extremely upset, not to mention that many are still rebuilding their lives. In order to help with that Congress passed a law late last month that will allow FEMA to waive many of those debts, as part of an overall $1 trillion spending package. Senator Mary Landrieu (D – Louisiana) sponsored the legislation, stating that disaster victims didn’t deserve to be penalized because a government agency was, to use her word, “dysfunctional.”

As for FEMA, their spokesperson Rachel Racusen said that the agency would review the new legislation and develop an implementation plan, though it’s uncertain how many of the people who received notices of overpayment will actually benefit from the changes.

Still, Racusen said, FEMA has put into force new systems and protections to make sure improper payments no longer happen. So far, this has resulted in a reduced error rate – from 14% after Hurricane Katrina to less than one percent after more recent disasters.

In spite of all this, FEMA is still engaged in collection efforts, not just from the storms six years ago, but from other disasters, including floods. As of December 30, 2011, more than 6,000 debt letters have been mailed out, and so far roughly 2,500 people have appealed their notices. About a third of those appeals, FEMA says, erased at least some of the debt.

In addition to appealing the debt notices, those FEMA fund recipients who are affected have the right to request waivers due to economic hardship, or arrange a payment plan.