FEMA Paid $250 Million in Duplicate Aid to Hurricane Sandy Victims

In delivering disaster aid to eligible victims of the 2012 Hurricane Sandy, the Federal Emergency Management Agency paid about $250 million to some 29,000 applicants who had also received benefits from private insurers, a watchdog found.

The Homeland Security Department Inspector General’s Office used data analytics to compare claims of applicants for federal aid with a private insurance database, the office said in an Oct. 23 report titled, “FEMA Faces Challenges in Verifying Applicants' Insurance Policies for the Individuals and Households Program.”

While federal statutes “require FEMA to develop a verification process for the program,” the report said, “the agency has so far been unable to develop or identify a nationwide database for private insurance coverage. It instead solely relies on applicants’ self-certification and legal warnings on application forms.”

The IG referred 51 cases of possible fraud for further investigation. “FEMA needs to solve this insurance verification problem as soon as possible,” said IG John Roth. “Until it does, federal funds invested in disaster relief will continue to be at risk of widespread fraud, waste and abuse.”

Specifically, auditors recommended that FEMA should make applicants aware of penalties for false statements, use an insurance database to review all cases of possible duplication and recoup funds that should not have been paid, and continue researching options to use an insurance database to screen individual assistance applications.

 FEMA officials agreed.