Bill aims to keep FEMA from collecting Sandy overpayments due to error

National and local politicians want to stop Federal Emergency Management Agency officials from demanding residents pay back $23.4 million in financial assistance awarded to superstorm Sandy victims.

During a news conference in Long Beach on Friday, Rep. Gregory Meeks (D-St. Albans), Rep. Kathleen Rice (D-Garden City), local politicians and residents whom FEMA wants to claw back money from pressured Congress to pass a bill that would waive the debt when payments were made by error or mistake. It would not apply to fraud cases. A similar bill expired in 2010.

"These are hardworking individuals who committed no crime, no fraud," Meeks said. "Our natural disaster response must be more sensitive to victims' concerns."

The bill passed committee, but has not been called for a House vote.

FEMA sent demand letters to 5,350 applicants in New York and New Jersey who the agency believes were either overpaid or improperly paid from $26.99 to $31,900 per case.

Nearly 1,000 demand letters have been sent to Long Islanders, amounting to $6.79 million, according to documents obtained by Newsday through the Freedom of Information Act.

Meeks also said House and Senate lawmakers from both parties would send a letter to FEMA next week asking the agency to stop collection efforts until the bill passes.

"They're victims, and they're being victimized again," Rice said.

FEMA's Director of Public Affairs Rafael Lemaitre said the agency didn't comment on pending legislation or correspondence, but the amount it wanted to claw back represents less than 2 percent of the overall aid awarded to individuals.

"We know that for that relatively small percentage of individuals it can be very difficult, and FEMA is committed to maintaining a fair and transparent process for recovering improper payments," he said in a statement. He said people have options: pay, appeal, request a compromise or start a payment plan.

Once recipients receive a demand letter, they have 30 days to pay or risk interest charges. Appeals must be filed within 60 days. Penalties begin to accrue at 90 days; 120 days after the initial letter is sent, FEMA turns the account over to the Treasury Department, which can garnish wages, tax returns and other benefits to recoup the debt.

Advocates say the process is hard to understand, appeals are difficult, and penalties are severe.

Cedarhurst resident Alan Oberstein said he got a letter from FEMA in April demanding about $2,900. A week later, a letter from Treasury said he owed $800 more in penalties and fees. "I don't know what fees," he said. "It's not like a bank. It was very vague."

Oberstein, whose house was flooded with 10 feet of water, asked Rice's office for help. The case is still unresolved.

Treasury officials would not disclose recoupment fees.