During August 2005, Hurricane Katrina hit New Orleans and the surrounding area with an intense force that cost many lives and massive destruction. Katrina has been known as the costliest natural disaster as well as one of the five deadliest hurricanes in the history of the United States.
A woman from New Orleans was living in a Catholic Charities shelter when Katrina hit. The woman applied for relief and was awarded $6,500 for rent payments. Six years later the Federal Emergency Management Agency (FEMA) found the woman in Texas and requested the $6,500 back. Upon inquiry FEMA admitted that it was their error, however, they still wanted the money back! The woman from New Orleans is not that only hurricane victim that FEMA wanted money back from – there were 83,000 other people.
This is not uncommon and it seems to happen in almost all disasters. Many victims who receive this request think that it is a fraud. Can FEMA ask for money back? The answer is a resounding “yes”! There are number of reason for FEMA to request the repayment, such as; duplication of benefits with a household member, duplication of benefits with insurance, dwelling was not principal residence, failure to maintain flood insurance, misspent the money, fraud, etc. Whatever the reason, their request should not be ignored.
Here are some steps to follow:
- Request from FEMA why they want the money back
- Request from FEMA a copy of your file
- Pay in full (you can appeal – but this will limit the amount that you owe)
- Do nothing – not advisable – since eventually FEMA can garnish federal payments such as social security or IRS refunds!
- Request a waiver, however, be aware that if your household income is over $90,000 FEMA will require at least a partial payment
- Request a compromise – paying over time, smaller payment amount, delay the payment
- Request an appeal – this is only done on paper although you may eventually be able to have an oral hearing
FEMA has a recoupment hotline at 1-800-816-1122 to obtain information and forms on how to get through this process.
Most of the victims have been through a great deal of stress and this process does not help, it is important to stay calm and respond appropriately. FEMA is a large government agency handling several thousand cases. This process will take time and patience and hopefully the government has time and patience also.
For questions or assistance, please contact a member of Withum’s Insurance Services Group by filling out the form below.
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