FEMA mistakenly doles out cash, asks for it back

March 25, 2011 6:26:54 AM PDT
The Federal Emergency Management Agency gave a west suburban woman thousands of dollars after last July's flood, but now the agency wants it back.

FEMA gave Lisa DiVito, of Elmwood Park, $3,400 after her home received thousands of dollars in flood damage last July. Now, FEMA said that payout was a mistake and the agency wants the money it gave Divito -- and thousands of others in similar situations-- back. The government admits its mistakes add up to more than half a billion dollars.

"It was bad, it was the worst I've ever seen," DiVito said of the July 2010 flooding in her Elmwood Park home. Flood water destroyed her basement and overwhelmed her pumping system with sewage. "Because the pressure built up the access panel shot off the wall and it was coming out full force like a fire hydrant."

After the July 2010 floods, FEMA organized relief for local victims and offered grants -- more than $300 million -- to help suburban homeowners rebuild.

"Disaster assistance wasn't designed to cover all your losses. Some losses that have occurred, all the money can't replace family heirlooms but it does help you begin that recovery process," Gene Romano, FEMA spokesperson, said in August 2010.

Divito applied for the program, sent FEMA information about the portion of damage her insurance company covered, and then received a FEMA check for $3,400 for more repairs. But six months later, DiVito got a letter demanding the money back -- and threatening to put her in collections if she didn't pay up.

In a panic-- she called the agency. "The FEMA representative said that I was one of the first to get the letters, thousands will be getting the letters, going all the way back to Hurricane Katrina," DiVito said.

FEMA's representative told Divito that because insurance covered part of her damage, FEMA made a mistake and shouldn't have issued her a grant. FEMA officials say they may have mistakenly given out 160,000 grants nationwide since 2005 -- totaling more than a half a billion dollars.

"The FEMA representative describes this as 'a real hot mess,'" DiVito said.

A FEMA spokesperson would not comment about DiVito's specific case but says FEMA officials "have been actively working to recoup any payments that were disbursed improperly, while continuing to support communities as they recover. FEMA . . . is required by law to identify any cases in which federal assistance may have been improperly distributed and to recover those funds."

"It's really cruel, almost cruel to come back later and say we want the money back," Pete Silvestri, Elmwood Park Village president said. He thinks FEMA's error shouldn't be a disaster victim's problem.

"It's a horrible way to come back and say, 'OK, you're flooded, you relied on our representations, we're going to penalize you. Now we're going to take that money back.' That just makes no sense," Silvestri said.

FEMA officials say more than 900 Illinois residents will be receiving letters from FEMA soon asking for their grants back.

DiVito says she's still out about $8,000 because she had to replace her damaged furnace. She plans to appeal the decision.

FEMA's director of public affairs, Rachel Racusen, released a statement Thursday: At FEMA we are committed to being responsible stewards of taxpayer dollars, and we have been actively working to recoup any payments that were disbursed improperly, while continuing to support communities as they recover. FEMA, along with other federal agencies, is required by law to identify any cases in which federal assistance may have been improperly distributed and to recover those funds. As a result of a lawsuit filed in 2007, FEMA's recoupment efforts were suspended at that time.

"Under our current leadership, we have worked diligently to put protections in place that will safeguard against waste, fraud and abuse, significantly reduce the percentage of improper payments, and develop a fair, open and transparent process for recovering these payments. FEMA has made key improvements to ensure this process is as fair and as easy-to-understand as possible for disaster survivors. These improvements include clearly articulated letters that notify applicants of a potential improper payment, their potential debt amount, the reason for this potential debt, and what their options are for appealing or repaying the debt.

Last week, we took the first step by publishing the rules for this new recoupment process, and began notifying individuals that may have received improper payments. We are committed to working with all individuals identified for potential recoupment to ensure they have a complete understanding of the determination made in their case and the various options available to them to either appeal or resolve this debt.

Disaster survivors have been through a lot and they deserve a process that is fair and transparent. Part of the reason we structured the new recoupment process this way, by first notifying individuals of their potential debt, was to make sure they had an opportunity to present us with additional information that could prove they were eligible for their aid and therefore be removed from the recoupment process. As we continue this process, we will work closely with any individual who wants to appeal their potential debt and presents us with new or additional information. We encourage anyone who feels they have received one of these letters in error to contact FEMA at 1-800-816-1122.

FEMA Information:

  • FEMA Blog about new recoupment process: blog.fema.gov
  • Recent Senate committee testimony by Beth Zimmerman, FEMA Deputy Associate Administrator of Response and Recovery: hsgac.senate.gov
  • FAQ on Notice of Debt letter: faq.fema.gov
  • How to file an appeal: faq.fema.gov