TALLAHASSEE, Florida — The Department of Homeland Security slipped a firecracker of a press release on New Year's Eve, in which it acknowledged government waste by one of its most stigmatized federal agencies.
The Federal Emergency Management Agency appears to have "overfunded" its Florida public assistance grant program to the tune of $177 million, according to the DHS inspector general's office.
The taxpayer loss stems from the two-year period of 2004 and 2005, when the state was hit with seven hurricanes and two tropical storms. FEMA provides aid to states after the president declares an official disaster. The Public Assistance Program is FEMA’s primary way to deliver financial aid.
The bottom line: FEMA paid for property damages that should have been covered by private insurance in addition to sometimes paying on top of private insurance reimbursements, effectively duplicating recovery benefits.
"Clearly, FEMA’s insurance review process failed to achieve the intended objectives for the 2004 and 2005 Florida hurricanes," the audit concluded.
But that’s not all.
As more light shines on the disaster agency’s mismanagement — nearly a decade later — the audit reveals taxpayers are now on the hook for an estimated $1 billion in future liabilities due to grant award processing failures.
In order to receive the government aid, recipients are supposed to show they’ve acquired proper insurance going forward to both protect taxpayers and hedge against future storm damage. That didn’t happen.
"FEMA’s insurance specialists routinely waived the requirement to obtain and maintain insurance for future disasters, even though they did not have the authority to take such action," the audit states. "As a result, FEMA potentially stands to lose up to a billion dollars in future Florida disasters because many Florida communities may not have adequate insurance coverage for future disasters such as those that occurred in 2004 and 2005."
Christian Camara, director and co-founder of the R-Street Institute, a market-oriented think tank specializing in Florida hurricane insurance reform, sounded a note of caution.
"In the aftermath of a disaster, people genuinely need assistance, and quickly," he told Watchdog. Without defending FEMA’s reported mismanagement, Camara said that, initially, confusion is part of the disaster recovery process and "haste to get people relief can open the door" to mismanagement and fraud.
The question is how much waste and inefficiency is reasonable.
FEMA, best known for its Hurricane Katrina failures, was dinged by the DHS inspector general twice in October: spending $247 million on a computer system that could actually "hamper disaster relief," and failing to track performance-related costs and data associated with Long Term Recovery Offices.
"Without tracking costs or data, FEMA cannot determine whether these offices are cost effective," the Oct. 30 report states.
It’s possible FEMA’s Florida losses and liabilities would not have been addressed at all if not for two waste, fraud and abuse Hotline tips made public almost four years ago.
"This project (audit) was launched based on two hotline complaints made in 2011 and three previous audits conducted on Public Assistance Grant recipients in Florida," Bill Hillburg, director of public affairs for the DHS Office of the Inspector General, told Watchdog in an email.
On closer review, the three previous audits address only a portion of the total suspected overpayments, and all three came after FEMA’s oversight officials were tipped off.
In January 2011, the first of two hotline complaints indicated government benefits were paid for damages private insurance companies should have covered. A month later, a separate complaint alleged FEMA’s management was aware of "insurance adjustment" issues for the two-year period, 2004-05, but sat on it.
"FEMA’s Florida Recovery Office knew about these deficiencies in its insurance review process but did not correct them," the audit states.
Watchdog inquired as to whether the overpayments will be recouped.
"The IG’s office can only make recommendations, and our goal was to prevent future failures in insurance reviews," said Hillburg. "The OIG does not have the authority to make recoveries."
FEMA said it’s providing a written response to the IG audit within 90 days.
Meantime, the inspector general’s office said it’s "concerned that the conditions we identified in this report continue to exist and may be ongoing in some active disasters."
According to the audit, some of the insurance specialists who worked on the Florida recovery effort transitioned to other disasters, including Hurricane Sandy, the 2012 Atlantic superstorm estimated to be the second costliest hurricane ever.
This article originally ran on
Florida Watchdog.org.