Auditors: FEMA should probe DARFA waiver recipients

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In imparting repayment waivers to recipients of improperly allowed major disaster individual assistance grants, the Federal Emergency Management Agency doesn't probe recipients closely enough, says the Homeland Security Department office of inspector general.

FEMA has authority under a 2011 law to waive debts arising from receipt of improperly bestowed individual assistance grants connected with major disasters declared between Aug. 28, 2005 (i.e., the Hurricane Katrina declaration) and the end of 2010. The law, the Disaster Assistance Recoupment Fairness Act, requires FEMA to withhold a waiver if there's evidence that the improper payment was the fault of the recipient. The agency directive implementing the law holds recipients to a known or should have known standard for familiarity with terms and conditions attached to disbursement of individual assistance grants, a standard lower than intent to deceive.

In the latest (.pdf) in a series of reports examining FEMA implementation of the law, auditors say FEMA hasn't required debtors potentially eligible for a waiver to explain why they are not at fault for receipt of an improper payment. FEMA estimates that of the $8 billion it dispersed in assistance payments during the period covered by the law, about $371 million was potentially improper. Following hurricanes Katrina and Rita, FEMA loosened its controls for individual assistance disbursement.

"We think it is reasonable for there to be evidence in the waiver case file that explains why the debtor did not cause the improper payment," auditors say--something FEMA contests in its official response to the report.

"It is reasonable to assume that most individuals who apply for FEMA assistance have no specific knowledge about FEMA eligibility requirements. In addition, FEMA's ability to judge debtor fault is limited given the lengthy passage of time since the overpayments were first provided," wrote Adrian Sevier, FEMA deputy chief counsel.

Auditors say they've come across cases containing evidence showing fault by debtors. They cite one case of a $12,021 grant given to a recipient who falsely claimed home ownership and who received a waiver. The FEMA adjudicator, auditors say, concluded that the payment occurred because a FEMA home inspector failed to discover that the individual wasn't the true home owner--a fact auditors don't dispute, but disagree with, since the recipient supplied false information.

For more:
- download the report, OIG-13-17 (.pdf)

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