FEMA cancels superstorm Sandy relief claw back of $5.4M

One dollar of every $5 the Federal Emergency Management Agency demanded back from superstorm Sandy victims has been wiped away after New York and New Jersey residents appealed their cases.

FEMA has stopped trying to collect nearly $5.4 million of $24.69 million in disaster recovery funds that the agency s believed was improperly paid after the 2012 storm, according to new data obtained by Newsday through a Freedom of Information Act request.

On Long Island, FEMA dismissed debt totaling $1.56 million for 216 households, many of them in Long Beach, Massapequa, Oceanside and Lindenhurst.

FEMA spokesman Rafael Lemaitre said in response to questions about the canceled debt that the agency was “conducting an intensive review of all debts” and had removed some because of additional information provided by applicants.

“FEMA has also identified some cases in which the debt [clawback attempt] was not valid,” Lemaitre said. “In these instances, FEMA promptly terminated the debt, notified the applicant and processed a refund for any funds already paid to FEMA.”

Lemaitre could not say how many cases were terminated because they were invalid or for how much.

He said the agency is changing its debt collection process before it is certified but could not provide additional details.

SEE PHOTOSAerial views of Sandy damage

“The fact that so many recoupment cases are canceled upon further review only speaks to how burdensome this entire process has been for Sandy victims,” said Sen. Cory Booker (D-N.J.), who with other area politicians is pushing for FEMA to waive debts not involving fraud.

In the aftermath of the 2012 storm, FEMA awarded more than $1.4 billion in aid to help people recover, rebuild and replace losses brought on by the massive storm. Awards were capped at $31,900. In some cases, FEMA wants the entire award back, with interest charges bringing the amount to more than $37,000.

Other federal agencies also gave out money as part of longer term recovery efforts. Aid from those efforts came much later than FEMA’s individual assistance.

FEMA said the money it wants back is only a fraction of aid provided and the clawback cases represent people who should not have been eligible for a variety of reasons, including that they received duplicative insurance payments, the property was not their primary home or multiple people applied for the same aid from one household.

SEE PHOTOSSandy's destruction

But critics say FEMA’s attempts to recoup money were often based on bad information or assumptions.

“In general, FEMA will take a little piece of information and sort of run with it and come up with a conclusion that is wrong,” said Jonathan Fox, a supervising attorney in the storm response unit at New York Legal Assistance Group, which is helping people appeal disaster case rulings.

Between February 2013 and April 2016, FEMA sent out 3,726 debt letters to households in New York and New Jersey. As of this month, 1,420 aid applicants appealed and 769 of those cases were successful. Of those, 86 percent, or 659, led to debt being completely waived, or zeroed out.

Other cases were modified to lower amounts.

After the appeals process was completed, the amount owed had gone from $5.82 million to $426,728. Cases continue to be appealed and reviewed.

SEE PHOTOSLI's Sandy deaths: A look at the victims

“If there’s such a high success rate, it really suggests [letters] went out too aggressively,” said Will Friedman, acting director of NYLAG’s storm response unit.

The data also showed that:

• As of May 9, FEMA wanted to claw back $12.19 million from New Yorkers, including $5.34 million from residents in Nassau and Suffolk counties.
• Long Beach residents owe the most in New York, with $1.24 million in FEMA debt, followed by $454,304 in Freeport, $420,877 in Oceanside, $324,259 in Massapequa and $311,120 in Lindenhurst.
• The U.S. Department of Treasury is attempting to collect $3.79 million in New York, including $1.46 million on Long Island. Depending on the effort involved recouping the money, the agency can assess penalties of up to 30 percent.
• Long Island cases at Treasury range from as low as $13.01 in Cedarhurst to as high as $37,267.01 in Long Beach.

FEMA said it is bound by federal law to recover funds that were paid but should not have been.

Once a debt notice is sent out, recipients have 30 days to pay the debt in full or risk interest charges. An appeal must be filed within 60 days and penalties can begin adding up within 90 days of the initial debt letter. After 120 days, the debt is sent for collection to Treasury, which has the ability to garnish wages, tax refunds and other benefits. Depending on how the agency collects the debt, it can assess penalties of between 28 percent and 30 percent.

Amityville resident Tom Cohill lost two appeals fighting FEMA’s demand for $27,000 back because of a duplication of benefits. The retiree opted for payment plan and if he doesn’t start paying about $500 a month by the end of May, his case will be sent to Treasury, where it will accumulate more fees.

“I haven’t been too successful with anything,” Cohill said. “I’m so frustrated.”

Advocates and victims say the process can be cumbersome, initial notices of debt do not clearly explain why the money is wanted back, and getting access to personal files is time-consuming, sometimes taking longer than the appeal window.

In some cases, debt letters from FEMA do not get to a person if they’ve been displaced and they only find out about their debt when Treasury, which has current address information from tax forms, sends a collection letter.

And if a debt is waived by FEMA but Treasury has begun garnishing wages, it can take time to stop collections.

“This is a problem that is beyond annoying,” Fox said. “It’s a ridiculously Byzantine process, an interagency process.”

FEMA said it does not have the authority to waive debt and several bills have been filed to address that.

Sens. Chuck Schumer and Kirsten Gillibrand and Reps. Gregory Meeks and Kathleen Rice in New York, and Sens. Robert Menendez and Booker in New Jersey, have pushed for changes and supported bills filed in early 2015 to allow waivers.

“The government shouldn’t be clawing back money from victims who have done nothing wrong, victims who have already spent whatever money they received and even gone into debt working to recover from Sandy,” Rice said. “FEMA says they want to put survivors first, but in these cases they’re telling survivors they owe money with little details about why, denying appeals with no transparency, and sending the debt to the Treasury — basically washing their hands of any responsibility while the government starts taking the money from wages and Social Security checks.”

“Sandy victims need our assistance and our compassion, and should not have to be burdened by additional administrative appeals and battles with their federal government,” said Meeks, whose house resolution (Rice is a co-sponsor) to grant waivers in certain conditions has been in committee since February 2015.

A bill filed by Rep. Lou Barletta (R-Pa.) was passed by the House earlier this year and could provide relief. The measure is part of the FEMA reauthorization bill but it also includes provisions to waive debt made in error, orders the agency to conduct a study on disaster costs and losses, and bars collection efforts from occurring after three years have passed.

A spokeswoman for the Homeland Security and Governmental Affairs Committee in the senate said the chairman is vetting several bills relating to FEMA and “discussing reforms with the appropriate stakeholders.”

The Barletta bill and one from Menendez are on that list.

“Long Island residents haven’t stocked FEMA aid away — they spent it repairing their homes so they could move back in,” Schumer said. “I will continue to push legislation that would require FEMA to waive all debt among superstorm Sandy victims, unless clear evidence of fraud is brought to light.”

Cohill supports any efforts to change what is happening with FEMA debt such as his own. “Hopefully something else comes along,” he said. “I’m going to start paying this. I don’t have any other choice.”