The Federal Emergency Management Agency has not attempted to collect roughly $643 million in improper payments to 160,000 individuals who claimed they were victims of hurricanes Katrina and Rita, according to a new report released on Monday by the Homeland Security Department's inspector general.\
Auditors blamed the delays on FEMA leadership, which has yet to sign off on a new process, mandated by judge's order in a 2007 class action lawsuit, for recovering the misspent funds.
In the wake of hurricanes Katrina and Rita, FEMA disbursed more than $7 billion in individual assistance payments to survivors. But the agency now estimates approximately $643 million of those payments were issued improperly due to inadequate internal controls, human error, mistake or fraud.
Federal agencies made roughly $125 billion in improper payments in fiscal 2010, mostly through Medicare, Medicaid and unemployment insurance programs. While the value of improper payments governmentwide increased from $110 billion in fiscal 2009 to $125 billion in fiscal 2010, the governmentwide improper payment rate actually declined from 5.65 percent to 5.49 percent, Office of Management and Budget Controller Danny Werfel said in November 2010.
In July, President Obama signed the Improper Payments Elimination and Recovery Act, which enhanced payment recapture audits and intensified the scrutiny on agencies failing to reduce errors. The administration wants to recoup at least $2 billion in erroneous payments between fiscal 2010 and fiscal 2012. Werfel said agencies are "right on target" to meet the goal.
As an incentive, agencies are allowed to keep 25 percent of recovered funds for a federal financial management program, 25 percent for the program's original purpose and 5 percent for the inspector general's office. The remainder is returned to the general treasury to lower the national debt.
-Robert Brodsky, GovExec.com
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