[StBernard] Katrina victims may have to repay money

[Westley Annis]

Katrina victims may have to repay money 
Contractor says it rushed to deliver aid; agency to collect overpayments
The Associated Press
updated 7:01 p.m. CT, Sat., March. 29, 2008
NEW ORLEANS - Imagine that your home was reduced to mold-covered wood
framing by Hurricane Katrina. Desperate for money to rebuild, you engage in
a frustrating bureaucratic process, and after months of living in a
government provided-trailer that gives off formaldehyde fumes you finally
win a federal grant.

Then a collector announces that you have to pay back thousands of dollars.

For thousands of Katrina victims, this may be a reality.

A private contractor under investigation for the compensation it received to
run the Road Home grant program for Katrina victims says that in the rush to
deliver aid to homeowners in need some people got too much. Now it wants to
hire a separate company to collect millions in grant overpayments.

The contractor, ICF International of Fairfax, Va., revealed the extent of
the overpayments when it issued a March 11 request for bids from companies
willing to handle "approximately 1,000 to 5,000 cases that will necessitate
collection effort."

The bid invitation said: "The average amount to be collected is estimated to
be approximately $35,000, but in some cases may be as high as $100,000 to
$150,000."

The biggest grant amount allowed by the Road Home program is $150,000, so
ICF believes it paid some recipients the maximum when they should not have
received a penny. If ICF's highest estimate of 5,000 collection cases -
overpaid by an average of $35,000 - proves to be true, that means applicants
will have to pay back a total of $175 million.


'Finding the underpayments'
One-third of qualified applicants for Road Home help had yet to receive any
rebuilding check as of this past week. The program, which has come to
symbolize the lurching Katrina recovery effort, has $11 billion in federal
funds.

ICF spokeswoman Gentry Brann said in an e-mail Friday that the overpayment
recovery effort was made inevitable when insurance and other aid to Katrina
victims was eventually measured against what an applicant received from the
Road Home program.

Brann said there was a sense of urgency in paying Road Home applicants, and
ICF knew applicants might eventually have to return some money.

"The choice was either to process grants immediately or wait until the March
2008 deadline (for submitting Road Home applications) before disbursing any
funds," Brann said in her e-mail.

Brann pointed out that 5,000 collections cases would represent a 4-percent
error rate for the Road Home that is "quite good for large federal
programs."

Frank Silvestri, co-chair of the Citizen's Road Home Action Team, a group
that formed out of frustrations with ICF, sees it far differently.

"They want people to pay for their incompetence and their mistakes. What
they need to be is aggressive about finding the underpayments," he said.
"People relied, to their detriment, on their (ICFs) expertise and rebuilt
their houses and now they want to squeeze this money back out of them."


Governor under investigation
The prospect of Road Home grant collections comes less than two weeks after
the Louisiana inspector general and the legislative auditor said they were
investigating why former Gov. Kathleen Blanco paid ICF an extra $156 million
in her waning days in office to administer the program. With the increase,
ICF stands to earn $912 million to run Road Home, a contract that also
sweetened its initial public stock offering, helping it buy out four other
companies and enter government contracting in sectors including national
defense and the environment.

Paul Rainwater, executive director of the Louisiana Recovery Authority, the
state body that asked for the Blanco-ICF investigations, acknowledged the
collections could be painful for applicants, many of whom have used up their
nest eggs to rebuild.

"The state must walk a fine line of treating homeowners who have been
overpaid with fairness and compassion and ensuring that all federal funds
are used for their intended purpose," said Rainwater, an appointee of new
Gov. Bobby Jindal.

Upon receiving money from Road Home, grantees sign forms that say they must
refund any overpayments.

Melanie Ehrlich, co-chair of Citizen's Road Home Action Team, which has
documented Road Home cases that appear littered with mistakes, said she had
no confidence that ICF had correctly calculated overpayments. She charged
that the company was more likely using collections as retribution against
people who had appealed their award amounts in effort to get the aid they
deserved.

"I think they are looking for ways to decrease awards and that's part of
dissuading people," she said.

Brann said applicants are told an appeal could boost or diminish their
award. She called Ehrlich's charge "a totally unfounded assertion."


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