A new push is on to stop Federal Emergency Management Agency officials from sending superstorm Sandy victims to debt collection overseen by the U.S. Treasury Department, which can assess penalties of up to 30 percent.
Sen. Chuck Schumer sent a letter to FEMA Administrator W. Craig Fugate earlier this week asking the agency to set up a Sandy-specific debt review process and to stop sending debt cases to Treasury. He also asked that Treasury return current cases to FEMA for more investigation. "FEMA has an obligation to set up a review process that is thorough, receptive to additional information and fair far before making any referrals to Treasury to seek recoupment of these funds," Schumer (D-N.Y.) wrote in the letter.
In response to the letter, FEMA's director of public affairs, Rafael Lemaitre, said in an email, "We share the senator's desire to do everything possible to support survivors after a disaster."
After Sandy struck in 2012, FEMA awarded more than $1 billion in aid to individuals and households in New York. As of Aug. 4, the agency was trying to collect $14 million in money from Sandy victims in the state that the agency believes it overpaid or improperly paid. Of that amount, 533 cases totaling nearly $3.4 million had been sent to Treasury, where officials can charge higher interest rates -- between 28 and 30 percent.
FEMA said it is bound by federal law to collect money that was paid incorrectly, even if the agency itself made the mistake.
The agency said it tries to work with people to resolve the debt. Once people are notified FEMA wants to claw back money, they are given 30 days to pay the debt or risk interest charges. Appeals must be filed within 60 days and penalties begin within 90 days. If there is no response within 120 days, the case goes to Treasury.
Critics of the recoupment process say it is hard to navigate, the reasons for the debt collection are not clear and appeals are hard to arrange. And once debt reaches Treasury it can be harder to resolve.
"The notice of debt letters are vague," said Daniel Strafer, staff attorney at Touro Law School's disaster relief clinic. "There needs to be changes within the system."
Cedarhurst resident Alan Oberstein found out in April that FEMA wanted back about $2,900. The next week he got a notice from Treasury saying the amount had climbed to $3,800. Over the summer, Treasury said it was going to garnish his wages. He requested his file and was told it would take six months. "I still haven't received any documentation saying why I owe them to begin with," he said.
The Obersteins' house flooded with 10 feet of water. The family had flood insurance on his home but not for the contents. When a FEMA representative came to his house, he said the family was entitled to some money for contents. The individual assistance program could grant up to $31,900 to help with rental assistance, to replace damaged property, contents of a home and other costs.
He got less than $5,000. "It's not like I gave them a bill and said 'here,' " Oberstein said. "They came up with their numbers." Oberstein said that he still does not know why FEMA wanted some of its money back.
For Patricia Angelo, the recoupment was due to confusion over switching from getting aid for a hotel room to then getting money for a rental property. FEMA thought Angelo was taking money for the hotel and for the rental at the same time, she said.
Earlier this month she saw that her wages were being garnished -- a nearly $300 deduction. She went to Strafer for help and this month he got her debt terminated. She was told the recoupment was made in error. "I tried to do everything the right way," said the administrative assistant from Massapequa. "It was like a slap in the face. I just feel like a world of relief."
Several politicians are trying to get relief for disaster victims through legislation. Similar bills submitted in the House and Senate give the FEMA administrator the right to waive recoupment if the overpayment was not due to fraud.
And Rep. Gregory Meeks (D-St. Albans) hopes to introduce a bill this session that would limit the ways Treasury can collect Sandy recoupment, such as halting wage garnishment and using private debt collection firms.
Meeks' legislative director, Gabriel J. Bitol, said the congressmen supported Schumer's action to "highlight the efforts of superstorm Sandy victims to prevent the government from collecting on debts that have accrued not by their fault. We have to do a better job."