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Posted at 6:00 AM ET, 01/ 4/2011

FEMA hasn't recouped $643 million, watchdog says

By Ed O'Keefe

Eye Opener

The Federal Emergency Management Agency hasn't recouped about $643 million in federal disaster relief funds improperly distributed to about 160,000 victims of Hurricane Katrina and other natural disasters, according to a new watchdog report.

A report released late Monday by the Department of Homeland Security's inspector general urges FEMA to promptly authorize the collection of the potentially improper payments.

The audit comes amid renewed political pressure to cut federal spending and curtail improper payments to fraudulent beneficiaries and delinquent government contractors. Federal agencies and departments made about $125 billion in improper payments during fiscal 2010, due mostly to increased unemployment insurance and Medicaid payments, according to Obama administration officials.

Once a president declares a federal disaster, storm survivors may apply for financial assistance, including reimbursement for home repairs, medical needs and storage. FEMA has distributed more than $7 billion in payments to about 5.5 million survivors of disasters since hurricanes Katrina and Rita, according to FEMA.

But multiple congressional and watchdog investigations published since 2005 detail hundreds of millions of dollars in potentially improper payments. FEMA made nearly $17 million in rental assistance payments to storm victims living in agency-funded trailers, according to a 2006 Government Accountability report. The agency also distributed about $20 million to storm victims who cited the same property when seeking assistance after both Katrina and Rita, despite federal rules that prohibit survivors from making multiple disaster requests for the same property.

Delays in recouping the improper payments stem from a June 2007 federal court ruling that ordered FEMA to stop collection activities until it changed the collection process. New procedures have been awaiting approval since 2008, but neither current FEMA Administrator Craig Fugate nor his Bush-era predecessors have approved the plans, according to the audit.

"Further delay only makes aging debts more difficult to collect," Homeland Security Inspector General Richard L. Skinner wrote in his report.

FEMA is "committed to being responsible stewards of taxpayer dollars" and has been working to finalize plans to recoup misspent funds since before the audit, according to spokeswoman Rachel Racusen. Fugate is expected to approve changes to the collections process soon, she said.

The report's publication came on the same day that House Republican leaders detailed plans to investigate allegations of waste, fraud and abuse across the federal government.

Rep. Darrell Issa (R-Calif.), incoming chairman of the House Oversight and Government Reform Committee, intends to focus on the "institutionalized culture of waste, fraud and abuse" within the federal bureaucracy, his spokesman, Kurt Bardella, told The Post. "The enemy isn't the Democrats or the Republicans," Bardella said. "It's the bureaucracy that outlasts any one administration or political party."

In recent months, the administration and lawmakers have taken steps in a bipartisan fashion to better monitor potentially fraudulent payments. Legislation signed by President Obama last July requires agencies and departments to spend at least $1 million annually to recoup improper payments. The Improper Payments Elimination and Recovery Act of 2010, which passed with bipartisan support, also orders agencies to cut overpayment errors and sets penalties for agencies that fail to comply.

RELATED: Director W. Craig Fugate refocusing a chastened FEMA

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By Ed O'Keefe  | January 4, 2011; 6:00 AM ET
Categories:  Eye Opener, Oversight  
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Can anyone explain how this sentence makes any sense whatsoever?: "Federal agencies and departments made about $125 billion in improper payments during fiscal 2010, due mostly to increased unemployment insurance and Medicaid payments."

Due mostly? Are there not two root causes for virtually all improper payments? a) bureucrats who fail in their job of oversight b) claimants who commit fraud.

The issue that needs exploring, on a large, systemic grand scale, is how do we make government as efficient as a private business when it disburses funds? Yep, its good to try and get the money back. But we NEVER get back all the money, and I NEVER read about anyone being canned for authorizing BILLIONs in improper payments. Occasionally, you'll read about someone or group being prosecuted for fraud, and many times you are speaking of individuals with individually relatively small amounts and prosecutors are "too busy," "understaffed" etc.

It's like illegal immigration: don't spend time trying to scoop up every illegal. Just make it impossible for them to work here. That's the Obama way! Let's do it with this massive fraud as well. Make it impossible to disburse money improperly. Fire those who do.

Posted by: Curmudgeon10 | January 4, 2011 6:36 AM | Report abuse

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