Following the 2005 Gulf Coast hurricanes, Loyola Law School’s Law Clinic in New Orleans set up a “Katrina clinic” to handle postdisaster litigation and advocacy (see Davida Finger et al., Engaging the Legal Academy in Disaster Response, 10 Seattle Journal for Social Justice 211 (2011) (background on developing Katrina clinic and description of other models of law school engagement for disaster response)). As a staff attorney with the Katrina clinic, I worked on postdisaster issues. Along with legal services providers, local advocates, and volunteers from around the country, I listened to countless stories with a common narrative of barriers to returning home and rebuilding. To handle the high volume of requests for assistance and reports about problems with receiving government disaster benefits following the hurricanes, the Katrina clinic added a dedicated phone intake line and created an online case management system.
The Federal Emergency Management Agency (FEMA) is the U.S. agency tasked with assisting the neediest individuals and families in the wake of national disasters. The 2005 hurricanes exposed the agency’s shortcomings on many fronts. Some of the most pressing problems at the Katrina clinic were FEMA’s failure to distribute benefits, premature termination of rental assistance before any other safe and affordable housing had been secured, and recoupment of FEMA grant funds.
As evacuees struggled to return home, FEMA’s “Section 408” assistance program was to serve as a critical link to decent housing in disaster-affected areas where housing was at a premium. Under Section 408 of the Stafford Disaster Relief and Emergency Assistance Act, some who were displaced from their homes as a direct result of Hurricane Katrina received financial housing assistance from FEMA (see 42 U.S.C. § 5174 (2006 & Supp. IV 2010)); among those displaced were the low-income people we served through the Katrina clinic. The Section 408 program suffered from two main problems: (1) FEMA terminated Section 408 assistance without adequate notice or opportunity to be heard prior to termination, leaving recipients stranded; and (2) FEMA’s standards and procedures for recovering allegedly overpaid Section 408 assistance inadequately explained the reasons for recovery, failed to offer a meaningful pretermination hearing opportunity in violation of due process requirements, and failed to inform recipients of their right to request a waiver or compromise. FEMA withheld Section 408 assistance once the agency decided unilaterally to recover Section 408 payments.
Our task during this chaotic time was to assist our Katrina clinic’s low-income individuals in receiving FEMA benefits and, in the process, in meeting their pressing housing needs, while we pursued the (broken and unresponsive) implementation of FEMA’s key postdisaster assistance program. To attorneys who provide direct assistance to clients within substandard systems, this framework will sound familiar: how to meet individual client needs and advocate for clients within a larger government program in desperate need of reform.
One unique feature of our work to meet individual needs during this time was that we used volunteer assistance from around the country, given the outpouring of support from law students, legal workers, and advocates following the hurricanes (see Finger et al., supra (discussing Katrina clinic and Student Hurricane Network)). While leveraging resources this way may not be possible in all other advocacy contexts, it worked well in the post-Katrina context. For example, attorneys and law students from outside the Gulf South initiated a “New Orleans Legal Assistance Project.” In early 2008 these volunteers, after learning about low-income people’s particular problems with FEMA’s collection efforts, trained other lawyers and law students in the Boston area to handle individual recoupment cases. Attorneys from New Orleans worked in partnership with this program to help develop training materials and to assist on individual cases handled remotely through this project (see, e.g., New Orleans Legal Assistance Project, FEMA Appeals Training Materials (Jan. 29, 2008) (with credit and appreciation to Steve Fischbach of Rhode Island Legal Services and attorneys at Southeast Louisiana Legal Services)).
Here I focus on FEMA’s debt-collection practices that originated with the recoupment efforts following Hurricane Katrina. As the seven-year anniversary of Hurricanes Katrina and Rita approaches, FEMA’s efforts to recoup Section 408 funds continues. After detailing one client story below to demonstrate the difficulty of contesting the agency’s recoupment efforts, I discuss the impact litigation we filed, weave lessons learned throughout, and conclude with the recent federal legislation on debt waiver through the Disaster Assistance Recoupment Fairness Act of 2011 (Consolidated Appropriations Act of 2012, Pub. L. No. 112-74, § 565, 125 Stat. 786, 982–83 (2011)).
David Bellinger is a still-displaced Hurricane Katrina evacuee from New Orleans. Forced to evacuate from his home in August 2005 with nothing more than the clothes on his back, Bellinger lived in several locations with family members before riding a Greyhound bus to Atlanta on his own to find an apartment. Having lost his eyesight entirely more than twenty years ago as a result of a degenerative eye disease, he relies on assistive technology for the blind and specialized computer equipment to communicate—all of which he lost to Katrina. For the first few days in Atlanta, he had to sleep on the floor.
Unable to work, Bellinger depends on his social security disability benefits. FEMA gave him an initial rental-assistance grant of $2,358, which he appropriately used to cover rent. FEMA also gave him a grant to cover his complete loss of personal property; he used some funds for basic life necessities and saved the remainder. He communicated extensively with FEMA for an extended period during which FEMA confirmed in writing that he was eligible for continuing rental assistance, failed to provide that ongoing assistance, and in a January 2007 phone call advised him that he would not receive ongoing rental assistance. By letter dated February 8, 2007, FEMA sought to recoup $3,243 of the assistance he had already received.
Bellinger eventually became a class representative in a lawsuit we brought with pro bono counsel from around the country (Ridgely v. Federal Emergency Management Agency,No. 07-2146(E.D. La. June 13, 2007)). The suit challenged FEMA’s denial of rental assistance following Katrina and Rita and FEMA’s standards and procedures for recovering allegedly overpaid housing assistance. The court certified two classes and granted the plaintiffs’ motion for preliminary injunction. After FEMA appealed the injunction, the case was remanded for further factual development. FEMA later voluntarily withdrew thousands of pending repayment demands and announced that it would review and adopt new procedures before attempting to recover allegedly overpaid assistance. The parties eventually reached a $2.65 million settlement to resolve FEMA’s termination of Section 408 assistance; the court approved the settlement on December 14, 2010. Attorneys from Weil, Gotshal & Manges LLP were lead trial counsel on this case (see Weil, Hurricane Katrina Victims Class (2012)). While the attorneys from Weil and others from around the country who worked with us on the case did not handle individual recoupment cases, their pro bono work on the class action case proved to be invaluable in challenging the underlying systemic issues and achieving the classwide settlement in the case.
Seven months after the settlement, FEMA, through a boilerplate notice-of-debt letter, informed Bellinger that the agency was again attempting to recoup $3,243 from him. At that time Bellinger’s income did not cover his monthly expenses, let alone leave a surplus to repay FEMA for long-spent rental funds. Starting in the fall of 2011 and through the spring of 2012, Bellinger filed an appeal, a supplemental appeal, a request for compromise, and a waiver request before receiving FEMA’s May 2012 decision that all collection activity by the agency against him would cease. I discuss below additional details related to FEMA’s collection efforts, Bellinger’s administrative appeals, and the federal legislative developments that worked in his favor, resulting in the final waiver of debt in his case.
FEMA’s 2011 Collection Efforts
Starting in the summer of 2011, FEMA sent more than 80,000 notice-of-debt letters to those, like Bellinger, who had received post-Katrina grants (Michael Kunzelman, FEMA Asks Katrina Victims for Money It Wrongly Sent Out, Washington Times (Dec. 28, 2011)). The alleged overpayments were attributed to causes such as FEMA employees’ own mistakes, ranging from clerical errors to failing to interview applicants (Michael Kunzelman, FEMA Unveils Plan to Waive Debts for Victims of Katrina, Boston.com (Feb. 9, 2012)).
The notice-of-debt letters required the grant recipient to submit a written response within sixty days and to attach supporting documents to substantiate the grant recipients’ living arrangements from six years before—rental contracts, rental payment receipts, and household bills, among others. Such documentation from years ago was all but impossible for grant recipients to give the agency in 2011 (see Bill Could Ease FEMA’s Demands for Repayment of Money It Overpaid After Katrina, nola.com (Dec. 19, 2011)). Moreover, those who received FEMA assistance following the 2005 storms were quite likely living in different locations, did not receive mailings from FEMA at old addresses, and did not even know that FEMA had assessed a debt against them for alleged improper payments.
FEMA’s notice-of-debt letters gave grant recipients scant information about the agency’s renewed collection efforts. For example, Bellinger’s notice letter stated that his FEMA funds must be returned because of “duplication of benefits with other agency” (letter from FEMA to David Bellinger (July 7, 2011) (in my files)). The letter failed to state which organization or agency might have duplicated benefits, what month or year such duplication would have occurred, or other salient facts related to the alleged duplication.
According to the notice-of-debt letter, individuals had two options: (1) appeal the debt in an effort to prove that FEMA was incorrect in its determination of their debt, or (2) request a compromise, due thirty days after FEMA sent the requested compromise forms. Under the compromise option, upon demonstrating inability to pay back the alleged debt, FEMA reserved the right to recoup the debt at a later time if personal circumstances changed.
In Bellinger’s case, we requested a copy of his entire FEMA file in September 2011, yet we did not receive it until January 2012, long after deadlines for both the appeal and compromise had passed and well after FEMA had issued a December 22, 2011, decision denying his appeal. FEMA gave no basic template for a file-request letter to facilitate file requests or streamline procedures. FEMA did not give us Bellinger’s file information until we repeatedly requested it.
In this uncertain and ongoing development with FEMA, we cast a wide net with our legal arguments for the clients we represented. In submitting appeals and supplemental appeals (after we received FEMA files) through 2011–2012, we raised a number of key arguments:
- The agency failed to ensure due process under the Fourteenth Amendment.
- The agency failed to meet the Stafford Act’s requirement that disaster relief operations be undertaken in an “equitable and impartial” manner.
- The agency’s claim should be dropped in the interest of justice.
- International human rights law requires the U.S. government to endeavor to give those who endure disasters within the boundaries of this country a meaningful chance to recover and survive. Indeed, the United Nations Guiding Principles on Internal Displacement mandate that national authorities give humanitarian assistance (Principle 3) and basic shelter and housing (Principle 18(2)(b)) to those who are forced to leave and remain away from their homes but remain within the borders of their own country (U.N. Secretary-General, Further Promotion and Encouragement of Human Rights and Fundamental Freedoms, Including the Question of the Programme and Methods of Work of the Commission Human Rights, Mass Exoduses and Displaced Persons, Commission on Human Rights, U.N. Doc. E/CN.4/1998/53/Add.2 (Feb. 11, 1998) (by Francis M. Deng)).
Although our appeals were denied, a new law, the Disaster Assistance Recoupment Fairness Act of 2011, is giving some individuals relief from FEMA’s recoupment, even though they now must navigate yet another way to get this relief. Indeed, the denied appeals in Bellinger’s case were not further challenged when his request for waiver under the new law was granted, bringing to an end FEMA’s efforts to recoup his post-Katrina assistance.
Disaster Assistance Recoupment Fairness Act of 2011 and Debt Waiver
In December 2011 individuals, by then approximately 90,000 disaster survivors from around the country, facing debt collection by FEMA were given a time-limited opportunity for debt waiver when the Disaster Assistance Recoupment Fairness Act of 2011 was enacted. Under the Act, those who received improper payments for disasters between August 28, 2005, and December 31, 2010, have an opportunity to apply for complete debt waiver without the usual tax consequence for debt forgiveness. As with the initial appeal requests, waiver applicants have just sixty days to make the request to FEMA for debt waiver. FEMA’s authority to waive debt under the Act expires at the end of the 2012 fiscal year.
The Act allows the permanent cancellation of such debt as long as three requirements are met: (1) the error in distributing the funds must have been a FEMA error; (2) the debtor must have had no fault in receiving the funds; and (3) collection of the debt would be against equity and good conscience. The disaster survivor’s household adjusted gross income for the last taxable year must be less than $90,000, although those who are above that income and whose cases meet the other qualifying criteria could be eligible for a partial waiver. Specific information on how to prove these standards on an individual basis is not readily available to those completing the waiver application.
FEMA anticipated sending more than 90,000 waiver letters (Kunzelman, FEMA Unveils, supra). Approximately 20,000 of these letters were returned as undeliverable. As of May 22, 2012, only 17,125 waiver requests had been received by the agency, with 4,373 waivers granted and 12,752 still in queue (E-mail from Sandy Lubin, FEMA counsel, to me (May 22, 2012) (in my files)). All told, a majority of those subject to FEMA debt collection have not been able to respond to FEMA’s waiver letter. The Disaster Assistance Recoupment Fairness Act offers those subject to FEMA’s collection efforts some hope for final debt reprieve; how those most vulnerable, most of whom are unlikely to have legal assistance, will fare remains to be seen in light of the widespread lack of response.
Local advocates have continued to work with FEMA personnel to highlight difficulties with the waiver offer; however, how tens of thousands will do under these new guidelines remains unclear. Key difficulties are that FEMA’s written materials are not reaching the intended population; large numbers in the recipient population of FEMA’s debt-waiver letters do not have easy access to free legal assistance; and written materials might be confusing for recipients, especially since hurricane survivors have completed so many information packets for FEMA and other federal, state, and local agencies that debt-waiver-letter recipients might not understand these further requirements so many years after the hurricanes.
Those representing clients facing recoupment must meet FEMA’s stated deadlines and present supporting information as part of the clients’ written response. Supplying this information can be quite challenging where documentation has disappeared over the years and memories have faded. Lawyers must engage keen listening skills as the first step in understanding clients’ evacuation stories and their receiving FEMA funds and must enable clients to tell their stories.
Indeed, we have learned that our clients’ telling their own stories demonstrates specific problems with U.S. agency response and the real-life burdens on people struggling to make ends meet. For example, in the mainstream media Bellinger’s own quotes and narrative of events since his hurricane evacuation highlighted the absolute inefficiency and inequity of the government response (see, e.g., Kunzelman, FEMA Asks, supra).
One final lesson to take from our experience with FEMA debt collection is that key to tackling this kind of systemic issue is a close collaboration between advocates and movement groups to strategize about and advocate widespread reforms. Lawyers assisting clients and demanding relief through impact litigation might not be able to achieve long-lasting policy changes. In the context of FEMA recoupments, lawyers assisted individuals and brought a federal class action case. Client stories appeared in the mainstream media, and federal legislation has eased some financial discomforts. However, the required U.S. response to domestic disasters under the Stafford Act remains largely unchanged. To achieve large-scale reform, we must continue to seek out new partnerships.
I would like to recognize Elizabeth Benki and Sascha Bollag, Loyola Law School Community Justice clinic students from 2011–2012; they successfully assisted clients with recoupment problems and contributed to this advocacy story.