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6 Years Later, Katrina Victims Fight FEMA Debts

AP | 12/30/2011, 10:22 a.m.

NEW ORLEANS -- When the Federal Emergency Management Agency mailed out 83,000 debt notices this year to victims of Hurricane Katrina and other 2005 storms, one of the letters showed up in David Bellinger's mailbox. Bellinger, who is blind, needed a friend to read it and break the news that FEMA wants him to pay back more than $3,200 in federal aid he received after Katrina.

"I nearly had a stroke," recalls the 63-year-old, who moved to Atlanta after the storm wrecked his New Orleans home. "I'm totally blind. I subsist entirely on a Social Security disability check. If I have to pay this money back, it would pretty much wipe out all the savings I have."

Many other Gulf Coast hurricane victims are in the same position, angry and frustrated at the prospect of repaying money they spent years ago as they tried to rebuild their lives.

FEMA is seeking to recover more than $385 million it says was improperly paid to victims of hurricanes Katrina, Rita and Wilma. The debts, which average about $4,622 per recipient, represent slightly less than 5 percent of the roughly $8 billion that FEMA distributed after the storms. At least some of the overpayments were due to FEMA employees' own mistakes, ranging from clerical errors to failing to interview applicants, according to congressional testimony.

But the agency says it is required by law to make an effort to recover improper payments, even if the recipient wasn't at fault. Last week, however, Congress approved legislation that would allow FEMA to waive many of the debts. President Barack Obama signed the measure -- part of a $1 trillion spending package -- into law last Friday.

FEMA spokeswoman Rachel Racusen said the agency is reviewing the law's provisions and developing a plan to implement them. It remains to be seen how many recipients of FEMA money could benefit from the change.

Sen. Mary Landrieu, a Louisiana Democrat who sponsored the provision, said disaster victims shouldn't be punished because FEMA was "dysfunctional."

"They have significantly improved the process," Landrieu said. "This is very unlikely to happen again."

Racusen said the agency has implemented "strong protections" to avoid making improper payments, reducing its error rate from about 14 percent after Katrina to less than 1 percent for more recent disasters.

"We have also worked to significantly improve the recoupment process so that it is more understandable and provides due process for both disaster survivors and taxpayers," she said in a statement.

FEMA's collection efforts aren't limited to the 2005 storms. The agency has mailed out more than 6,000 debt letters to survivors of other recent disasters, including floods.

Approximately 2,500 recipients, including 930 victims of the 2005 hurricanes, have appealed their debt notices. FEMA says about 30 percent of those appeals successfully erased at least some of the debt. Recipients also can ask for a waiver due to economic hardship.

"It is important for any individual who has received a recoupment notice to know that these letters are the start of a conversation with FEMA, not the end," Racusen said.