Nearly two years ago, mega storm Sandy hit the East Coast. To help hurricane victims, the government sent $1.4 billion in emergency disaster relief aid. However, after approximately 4,500 households were analyzed by the Federal Emergency Management Agency suspicions rose that improper payments had been made to some recipients after the storm.
Last week, FEMA requested $5.8 million to be repaid from 850 of those recipients, which could increase once all the other cases have been reviewed. The recoupment effort typically involves cases where FEMA believes a household received more money than allowed under the program’s rules, not necessarily that people had tried to intentionally cheat the government.
FEMA determined that many people were ineligible based on damaged properties being rentals or vacation homes opposed to primary residences. In addition, there was double dipping by some households, which consists of more than one member of a home receiving payments. For instance, a New York resident received a demand letter for about $17,000. According to FEMA, the man was ineligible to receive financial aid because both he and his aging father had applied for disaster relief funds while living in the same home.
The other problem is that some of the people who were provided with FEMA financial aid had insurance coverage or failed to purchase a policy. This same New York individual had not bought flood insurance after receiving $25,000 from FEMA associated with hurricane Irene that hit one year prior. Unfortunately, this too made him ineligible because according to Federal rules, he failed to purchase the required insurance after receiving aid.
As reported, the average amount of aid being demanded back by FEMA is $6,987, which for many people would be extremely difficult considering most aid applicants have an annual gross income of $30,000 or less. Of the cases currently being reviewed, 25 accumulative households reported an annual gross income of $500,000 or less.
Most of the money FEMA wants repaid, $53 million, comes from the larger pool of households still awaiting review. Of course, any refunds recouped would probably be just a portion of the demanded amount. According to Ann Dibble, director of the Legal Assistance Group’s storm response unit in New York, most of the financial aid given to hurricane victims is long gone and likely spent on recovering from Sandy.
Although the east coast has been hammered with multiple destructive hurricanes, Sandy was among the worst in US history. From that storm, over 280 people lost their lives. As far as FEMA, close to 179,000 New York and New Jersey households received payments to cover damaged property and temporary housing. Due to the large number involved, much of the recoupment effort focuses on those two states although Rhode Island, Maryland, and Connecticut households are also under review.
In 2011, FEMA tried to collect money from people who simply could not afford to pay, which led to legal battles. At that time, a minimum of 90,000 letters were mailed out to households, requesting repayment of the aid received. However, much of that debt was waived by the authority of Congress and now efforts are geared toward households that have the ability to pay some, if not all of the money received.
John Kelly, assistant inspector general for emergency management oversight with the Department of Homeland Security, confirms that better controls are now in place. As part of this, thousands of cases have been reviewed by FEMA to determine if payments are in fact warranted. After all, there are other government agencies trying to recover some of Sandy’s funding as well.
For hurricane Katrina, almost 800 people were charged with fraud-related crimes in 41 different federal jurisdictions compared to just seven cases associated with Sandy and while FEMA does not believe fraud is a big problem connected to financial aid and this particular storm, this too will be considered as part of the overall review and recoupment process.