Weekly Column: Preventing Abuse of Federal Disaster Assistance

Preventing Abuse of Federal Disaster Assistance
Weekly Column
by Senator Susan M. Collins

Friday, June 3, 2005

For many people who are true victims of natural disasters, federal disaster assistance programs are essential to rebuilding their homes and lives. The critical nature of this assistance makes reports of erroneous payments, mismanagement, and outright fraud during last fall's hurricane season particularly disturbing. With this year's hurricane season underway, we cannot sweep such serious allegations under the rug; we must instead face them head-on and remedy the problems in order to preserve public confidence in this critical program.

I recently chaired a hearing of the Homeland Security and Governmental Affairs Committee to examine the integrity of the Federal Emergency Management Agency's (FEMA) disaster-relief program. The hearing focused on FEMA's response to the series of hurricanes that struck southern states last year, and the subsequent evidence of fraudulent claims, wasteful spending, and ineffective management. While these particular events took place in Florida, this issue has ramifications for future disaster-relief efforts in all regions of our country.

Florida was hit by four powerful hurricanes in quick succession in the span of just six weeks in August and September of 2004: Charley, Frances, Ivan, and Jeanne. In some parts of Florida, there was tremendous devastation. More than 120 Floridians lost their lives; 10 percent of the state's housing was damaged or destroyed by the hurricanes; more than 700,000 residents were affected; and property damage exceeded $21 billion. But not all regions of the State suffered such devastation.

A disaster of this scale required a rapid and substantial response. FEMA responded with more than $2 billion in immediate relief to Floridians as they rebuilt their battered state. While we expect relief in such dire circumstances to be swift and substantial, we did not expect what came next.

No sooner had the 2004 hurricane season ended than Florida newspapers began reporting erroneous payments and widespread fraud in FEMA claims in Miami-Dade County. Nearly 12,600 residents collected more than $31 million in payments from Hurricane Frances, even though that Labor Day storm hit 100 miles to the north.

In fact, the effect of Frances in Miami-Dade was more like a thunderstorm than a huricane: some downed trees and power lines. The Miami-Dade County Office of Emergency Management described the local damage as "minimal," and the National Weather Service had no reports of flooding. Yet the American taxpayers bought Miami-Dade residents thousands of television sets, air conditioners, and other appliances, from microwave ovens to sewing machines. The taxpayers also filled rooms with new furniture and closets with new wardrobes, paid to repair or replace nearly 800 cars, and provided housing assistance - to people living in undamaged homes.

In response to these and other questionable expenditures, the Department of Homeland Security's (DHS) Office of Inspector General (IG) undertook an audit of FEMA's assistance programs in Miami-Dade County for Hurricane Frances, and my Homeland Security and Governmental Affairs Committee also investigated damage claims. The DHS IG audit reaches several disturbing conclusions that confirm the Committee's findings. It is often impossible to determine whether the payments FEMA made were based on actual disaster-related damages. The verifications of many personal-property damages were based solely on undocumented verbal statements: no receipts, no proof of ownership, in some cases, not even a damaged item to inspect. Similarly, the guidelines for repairing or replacing automobiles were lacking. Rental assistance was provided to people who had no apparent need for this assistance.

The IG's report identifies a number of significant control weaknesses. One of the most troubling findings by the Inspector General is that FEMA inspectors were allowed to record damage to furniture or appliances even though the item allegedly had been thrown away before the inspector arrived. That is simply an invitation to fraud.

The audit also found substantial deficiencies in the rental assistance program. One example is the Expedited Assistance Program, in which FEMA would send one month's rent to anyone in the disaster area who called and answered certain questions correctly, even before any inspector was sent to verify the claim. Initially, FEMA did not even require the individual to prove that there had been damage to the home. Damage or not, FEMA sent each person a check for $726. It was a "pay first, ask questions later" policy.

More than $9 million in total rental assistance was paid to some 5,000 people in Miami-Dade. The auditors found that this money was paid to some people whose homes were later found to be completely undamaged by the storm. In addition, there is no evidence that claimants actually used the money for the intended purpose: that is, to live elsewhere while their homes were repaired.

For example, last October, FEMA awarded $18,452 to a Miami-Dade resident for rental assistance, as well as for the replacement of clothing, the furnishings in three bedrooms, and a host of appliances. A subsequent inspection found that the home had suffered no storm-related damage whatsoever. The IG's report also raises questions about why FEMA paid for funerals there when medical examiners reported no storm-related deaths in Miami-Dade.

Other errors were caused by FEMA's efforts to further streamline and accelerate the inspection process. FEMA's decision to introduce these new guidelines while thousands of inspectors were already in the field caused considerable confusion, particularly for new inspectors, and led to numerous errors and overpayments. To cite just one example, FEMA records show that an applicant in Miami-Dade was awarded $13,002.06 in personal property losses through an "inspector speed estimating error."

No one contests the need for the federal government to provide swift and compassionate assistance to the victims of natural disasters. But when scarce resources are wasted, fraudulent claims are paid, and safeguards are ignored, there are new victims: the taxpayers. And it is a false choice to say that we cannot protect taxpayers while responding effectively to the urgent needs of disaster victims.

http://collins.senate.gov/low/crecord.cfm?id=238497