[Senate Hearing 109-161]
[From the U.S. Government Publishing Office]
S. Hrg. 109-161
FEMA'S RESPONSE TO THE 2004 FLORIDA HURRICANES
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
MAY 18, 2005
__________
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Committee on Homeland Security and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Michael L. Stern, Deputy Staff Director for Investigations
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Mary Beth Schultz, Minority Counsel
Trina D. Tyrer, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 1
Senator Lieberman............................................ 5
Senator Coburn............................................... 8
WITNESSES
Wednesday, May 18, 2005
Hon. Bill Nelson, a U.S. Senator from the State of Florida....... 8
Richard L. Skinner, Acting Inspector General, U.S. Department of
Homeland Security.............................................. 12
Hon. Michael D. Brown, Under Secretary for Emergency Preparedness
and Response, U.S. Department of Homeland Security............. 21
Alphabetical List of Witnesses
Brown, Hon. Michael D.:
Testimony.................................................... 21
Prepared statement........................................... 45
Nelson, Hon. Bill:
Testimony.................................................... 8
Prepared statement........................................... 35
Skinner, Richard L.:
Testimony.................................................... 12
Prepared statement........................................... 37
APPENDIX
Exhibit No. 5, a chart entitled ``Errors Found Through Quality
Control Inspections Conducted by PB (389 QC Inspections
Total)''....................................................... 75
Exhibit No. 6, ``IHP Daily QC Report''........................... 76
Exhibit No. 7, ``IHP Daily QC Report''........................... 79
Exhibit No. 8, ``IHP Daily QC Report''........................... 86
Exhibit No. 9, ``IHP Daily QC Report''........................... 89
Form Letter from Mr. Brown and Jeb Bush.......................... 90
Hon. Mark Foley, a U.S. Representative from the State of Florida,
prepared statement............................................. 92
Hon. E. Clay Shaw, Jr., a U.S. Representative from the State of
Florida, prepared statement.................................... 95
Responses to questions for the Record for Mr. Skinner from:
Senator Collins.............................................. 97
Questions for the Record for Mr. Brown (responses were not
received by press time) from:
Senator Collins.............................................. 98
Senator Lieberman............................................ 100
Senator Lieberman on behalf of Senator Sarbanes.............. 106
FEMA'S RESPONSE TO THE 2004 FLORIDA HURRICANES
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WEDNESDAY, MAY 18, 2005
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:32 a.m., in
room SD-562, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins, Coburn, and Lieberman.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will come to order.
Good morning. Today, the Committee examines the integrity
of the Federal Emergency Management Agency's Disaster Relief
Program. Our focus is on FEMA's response to the series of
hurricanes that struck southern States last year and the
evidence that has emerged of fraudulent claims, wasteful
spending, and inefficient management.
Disaster assistance programs are vital to those who are the
true victims of natural disasters. The critical nature of this
assistance makes reports of waste, mismanagement, and outright
fraud particularly disturbing. We cannot sweep such allegations
under the rug. We must face them head on in order to preserve
public confidence in this critical program.
Although our focus is on specific events in Florida, this
issue has ramifications that are relevant to future disaster
relief efforts in all regions of our country. In a span of just
6 weeks in August and September of 2004, Florida was hit by
four powerful hurricanes in quick succession. In some parts of
Florida, there was tremendous devastation. More than 10 percent
of the State's housing stock was damaged or destroyed by the
hurricanes, affecting more than 700,000 residents. Property
damage exceeded $21 billion, and 117 Floridians lost their
lives.
A disaster of this scale required a rapid and substantial
response. FEMA responded with more than $2 billion in immediate
relief to the State. We expect relief in such dire
circumstances to be swift and substantial, but we did not
expect what came next: No sooner had the 2004 hurricane season
ended than Florida newspapers began reporting erroneous
payments and widespread fraud in FEMA claims in Miami-Dade
County. Nearly 12,600 residents collected more than $31 million
in payments from Hurricane Frances, even though that Labor Day
storm hit 100 miles to the north.
The effect of Frances in Miami-Dade has been described as
that of a typical thunderstorm: Some downed trees and power
lines. In fact, the Miami-Dade County Office of Emergency
Management described the damage from that hurricane as minimal,
and the National Weather Service had no reports of flooding.
Yet taxpayers bought Miami-Dade residents thousands of
television sets, air conditioners and other appliances, from
microwave ovens to sewing machines. The taxpayers also bought
rooms full of furniture, new wardrobes, and paid to repair or
replace nearly 800 cars. It provided rental assistance to
people living in undamaged homes.
In response to these and other questionable expenditures,
the Department of Homeland Security's Office of Inspector
General undertook an audit of FEMA's assistance programs in
Miami-Dade County for Hurricane Frances. We will hear about
that audit later this morning from the acting inspector
general, Rick Skinner, and from Michael Brown, the Under
Secretary for Emergency Preparedness and Response. This
Committee has also been investigating the process by which
individual damage claims are evaluated and verified.
The IG's audit reaches several disturbing conclusions that
confirm the Committee's findings. It is often impossible to
determine whether the payments FEMA made were based on actual,
disaster-related damages. The verifications of many personal
property damages were based solely on undocumented verbal
statements. No receipts, no proof of ownership, and in some
cases, not even the damaged item to inspect.
Similarly, the guidelines for repairing or replacing
automobiles were lacking. Rental assistance was provided to
applicants who had no apparent need or who had failed to
demonstrate eligibility for this assistance.
The IG's report identifies a number of significant control
weaknesses that create the potential for widespread fraud,
erroneous payments and wasteful practices. One of the most
troubling findings by the IG is that FEMA inspectors were
allowed to record damage to furniture or appliances even though
the item allegedly had been thrown away before the inspector
arrived. This system is simply an invitation to fraud.
The audit also finds substantial deficiencies in the rental
assistance program. One example is the Expedited Assistance
Program, in which FEMA would send one month's rent to anyone in
the disaster area who called and answered certain questions.
This was done before any inspector was sent to verify the
claim. In essence, it was a pay first, ask questions later
approach. Initially, FEMA did not even require the individual
to represent that there had been damage to the home. Damage or
not, FEMA sent each person a check for $726. More than $9
million in total rental assistance was paid to some 5,000
people in Miami-Dade. The auditors found that this money was
paid to people whose homes were declared unsafe by FEMA
inspectors for unspecified and in many cases dubious reasons.
In addition, there is no evidence that claimants actually used
this money for the intended purpose; that is, to live elsewhere
while their homes were being repaired.
The IG's findings of waste and ineffective controls are
supported by the evidence that this Committee has gathered
during its own investigation. We have uncovered many instances
in which applicants received awards for personal property,
rental assistance, or both despite the fact that subsequent
quality control inspections showed that there had been no
storm-related damage to the home or its contents. For example,
last October, FEMA awarded $18,452.37 to a Miami-Dade resident
for rental assistance as well as for replacement of clothing,
the furnishings in three bedrooms, and a host of appliances.
Yet, a subsequent inspection found that the home had suffered
no storm-related damage whatsoever.
Other errors were caused by FEMA's efforts to further
streamline and accelerate the inspection process. FEMA's
decision to introduce these new guidelines while thousands of
inspectors were already in the field caused considerable
confusion, particularly for the new inspectors and led to
numerous errors and overpayments. To cite just one example,
FEMA records show that an applicant in Miami-Dade was awarded
more than $13,000 in personal property losses through what was
called an inspector speed estimating error. The IG's report
also raises questions about why FEMA paid for funerals when
medical examiners reported no storm-related deaths in Miami-
Dade.
No one contests the need for the Federal Government to
provide swift and compassionate assistance to the victims of
natural disasters, but when scarce resources are wasted,
fraudulent claims are paid, and safeguards are ignored, there
are new victims: The taxpayers, and it is a false choice to say
that we cannot protect the taxpayers while responding
effectively to the urgent needs of disaster victims.
[The prepared statement of Senator Collins follows:]
OPENING PREPARED STATEMENT OF SENATOR COLLINS
Today, the Committee examines the integrity of the Federal
Emergency Management Agency's disaster-relief program. Our specific
focus is on FEMA's response to the series of hurricanes that struck
southern states last year and the subsequent evidence that has emerged
of fraudulent claims, wasteful spending and ineffective government
management. Although our focus is on specific events in the recent
past, this issue has ramifications that are relevant to all regions of
the country and to all future disaster-relief needs.
In the span of just six weeks in August and September of 2004,
Florida was hit by four powerful hurricanes in quick succession:
Charley, Frances, Ivan, and Jeanne. More than 10 percent of the state's
housing stock was damaged or destroyed by the hurricanes, affecting
more than 700,000 residents. Property damage exceeded $21 billion. One
hundred seventeen Floridians lost their lives.
A disaster of this scale required a rapid and substantial response.
FEMA responded with more than $2 billion in immediate relief to
Floridians while they rebuilt their battered state.
We expect relief in such dire circumstances to be swift and
substantial. We did not expect what came next.
No sooner had the 2004 hurricane season ended than Florida
newspapers began alleging substantial and widespread fraud in FEMA
claims based on the fact that nearly 12,600 residents in Miami-Dade
County have collected more than $31 million in payments from Hurricane
Frances, even though that Labor Day storm hit 100 miles to the north.
The effect of Frances in Miami-Dade has been described as that of a
typical thunderstorm: Some downed trees and power lines. In fact, the
Miami-Dade County Office of Emergency Management described the damage
from the hurricane as ``minimal.'' Yet the American taxpayers bought
Miami-Dade residents thousands of television sets, air conditioners and
other appliances, from microwave ovens to sewing machines. The
taxpayers also bought rooms full of furniture and new wardrobes, and
paid to repair or replace nearly 800 cars.
There are many issues to be explored in this matter, including the
extent of fraud and abuse of FEMA's individual assistance program
during the 2004 hurricanes. Today our focus will be on a new audit by
the Department of Homeland Security's Office of Inspector General. I am
pleased that the Acting Inspector General, Rick Skinner, is with us
today to discuss this report. We will also be joined by Michael Brown,
Under Secretary for Emergency Preparedness and Response, to discuss
FEMA's response to this report.
This Committee has been investigating the process by which
individual damage claims are evaluated and verified. On this point, the
audit makes several disturbing findings. It is often impossible to
determine whether the payments FEMA made for individual claims were
based on actual disaster-related damages. The verifications of many
personal-property damages were based solely on undocumented verbal
statements: No receipts, no proof of ownership, in some cases, not even
a damaged item to inspect. Similarly, the guidelines for repairing or
replacing automobiles and other items were lacking. Rental assistance
was provided to applicants who had no apparent need or had failed to
demonstrate eligibility for such assistance.
I should note that the purpose of this audit was not to uncover
actual incidents of fraud, but to examine whether FEMA has the proper
systems in place to prevent and detect fraud. The report identifies a
number of significant control weaknesses that create the potential for
widespread waste, fraud, and abuse.
One of the most troubling findings by the Inspector General is that
FEMA inspectors were allowed to record damage to furniture or
appliances even though that item allegedly had been thrown away before
the inspector arrived. That is simply an invitation to fraud.
The audit also finds substantial deficiencies in the rental
assistance program. One example is the Expedited Assistance Program, in
which FEMA would send one month's rent to anyone in the disaster area
who called and answered certain questions correctly, before any
inspector was sent to verify the claim. Initially, FEMA did not even
require the individual to represent that there had been damage to the
home. Damage or not, FEMA sent each person a check for $726.
As for the $9 million in total rental assistance paid to some 5,000
people in Miami-Dade, the auditors found that this money was paid to
people whose homes were declared unsafe by FEMA inspectors for
unspecific, even dubious, reasons. In addition, there is no evidence
that these people actually used the money for its intended purpose:
That is, to live elsewhere while their homes were repaired.
The OIG's findings of waste and ineffective controls are supported
by evidence that this Committee has gathered in its own investigation.
We have uncovered many instances in which applicants received awards
for personal property, rental assistance, or both, despite the fact
that subsequent quality-control inspections showed that there had been
no storm-related damage to the home or its contents.
For example, on October 11, 2004, FEMA awarded $18,452.37 to a
Miami-Dade resident for rental assistance, as well as for the
replacement of clothing, the furnishings in three bedrooms, and a host
of appliances. A subsequent inspection found that the home had suffered
no damage whatsoever.
Other errors were caused by FEMA's efforts to further streamline,
or accelerate, the inspections process. FEMA's decision to introduce
these new guidelines while thousands of inspectors were already in the
field caused great confusion, particularly for new inspectors, and led
to numerous errors and overpayments. To cite just one example, FEMA
records show that an applicant in Miami-Dade was awarded $13,002.06 in
personal property losses through an ``inspector speed estimating
error.''
Given that no storm-related deaths were reported in Miami-Dade,
questions have been raised as to why FEMA paid for several funerals
there. The OIG reviewed three cases of funeral payments in Miami-Dade
and found that none were disaster-related. In one case FEMA paid for
the funeral expenses of a Miami-Dade resident who dies in an automobile
accident after Hurricane Frances had passed through the area. Although
the crash report said the accident was caused by the victim's excessive
speed, FEMA awarded funeral expenses because wet roadways associated
with the hurricane ``could have'' contributed to the accident.
I would like to thank Senator Nelson for his appearance here today.
I would also like to thank Representative Mark Foley, who has submitted
a written statement but could not be here today. I would note, too,
that Senator Martinez wanted to be here today but could not due to an
unavoidable conflict. They were among the first to raise alarms about
FEMA's disaster-relief program. They have seen first-hand the
devastation these storms brought to their home state of Florida.
No one contests the need for the federal government to provide
swift and compassionate assistance to the victims of natural disasters.
But when scarce resources are wasted, fraudulent claims are paid, and
safeguards are ignored, there are new victims: The taxpayers. And it is
a false choice to say that we cannot protect taxpayers while responding
effectively to the urgent needs of disaster victims.
Chairman Collins. I want to recognize the individual who is
going to be our first witness today. Senator Bill Nelson has
worked very hard on this issue. He was one of the first who
raised the alarm about wasteful spending and talked to me about
it last year at that time. I told him the Committee would begin
its investigation, and I want to recognize his leadership.
I also want to recognize the leadership of Representative
Mark Foley, who has submitted a written statement but could not
be here today. I would also note that Senator Martinez has
expressed a great deal of interest in these hearings, but he
also had a conflict which prevented him from testifying. But I
look forward to hearing the witnesses' testimony today and
particularly that of our lead-off witness, Senator Bill Nelson.
I would now like to turn to the Committee's Ranking Member,
my colleague, Senator Lieberman.
OPENING STATEMENT OF SENATOR LIEBERMAN
Senator Lieberman. Thank you, Madam Chairman.
Let me join you in welcoming our colleague, Senator Nelson
here and to thank him for his leadership on this matter. I know
he is concerned about the way in which public money has been
distributed in disaster cases and whether it has been
distributed appropriately, but I also want to thank you, Madam
Chairman, because you responded to his request and that of the
other members of the Florida delegation to hold this hearing
and to commit significant time of both of our staffs to this
investigation. But I do believe it is worthwhile.
This hearing is called to examine whether adequate controls
exist to ensure that vital Federal disaster relief is going to
where it is supposed to be going. That seems simple enough, but
as you have just made clear, Madam Chairman, the Federal
Emergency Management Agency paid thousands of residents of
Miami-Dade County millions of dollars in disaster relief,
despite the fact that the eye of Hurricane Frances hit about
100 miles north of Miami-Dade County.
Many of the people given aid by FEMA neither needed nor
deserved the relief. That is not my conclusion; it is the
conclusion by the investigation of the Department of Homeland
Security's Office of Inspector General. And that circumstance
is not only wrong; it is unacceptable. The tradition of
Americans helping Americans through their Federal Government in
the aftermath of a natural disaster traces back, as far as my
staff could find, at least to 1803, when Congress authorized
aid to a New Hampshire town that had been devastated by a fire.
But this generous tradition will be jeopardized if the
American people or we, their representatives in Congress,
conclude that their tax dollars are not being spent fairly,
efficiently, and responsibly. Madam Chairman, I am going to ask
that some considerable amount of the remainder of my statement
be included in the record as if read, because it really
overlaps with exactly the case that you have just laid out and
go on and say this: The IG of the Department of Homeland
Security concluded that because the procedures used in Miami-
Dade were also used throughout the State of Florida and because
most of those procedures were also used throughout the Nation,
a shadow has been cast on the appropriateness of FEMA's awards
of disaster relief, and that is a shadow that we together must
remove.
FEMA's mission of responding to natural disasters and
providing financial assistance to those harmed by them is an
absolutely critical one. None of us question that mission. The
question is how the mission is being carried out. In order to
fulfill the mission in the best interests of both those hurt by
hurricanes, tornadoes, earthquakes, fire, and flood, and those
whose taxes support those relief efforts, we have got to make
sure that FEMA is following the rules and ensure that relief
funds go where they should be going.
Again, unfortunately, the IG's investigation as well as the
one conducted by our staff--and I thank the bipartisan staff
for the high quality work they did on this investigation--both
call into serious doubt whether that is happening, whether FEMA
is fulfilling its responsibilities.
Madam Chairman, the hurricane season will soon be upon us
once again. According to researchers at the National
Oceanographic and Atmospheric Administration and at Colorado
State University, this hurricane season could be another active
and destructive season. It is important that this Nation's
disaster resources, taxpayer dollars, are used where they are
truly needed and that no questions regarding fairness,
efficiency or responsibility taint those relief efforts.
We can only judge FEMA by how it reacts in emergencies.
That is its mandate, its very reason to be, and that is why the
investigation that is the topic of this hearing is not only
important for what happened in this particular case but it is
important overall. Where FEMA is found wanting, we must make
changes together with FEMA to ensure that the American people
continue to support our tradition of swiftly coming to the aid
of our fellow Americans when disaster strikes anywhere in this
Nation.
Thank you, Madam Chairman.
[The opening prepared statement of Senator Lieberman
follows:]
OPENING PREPARED STATEMENT OF SENATOR LIEBERMAN
Thank you Madam Chairman for calling this hearing today to examine
whether adequate controls exist to ensure that vital federal disaster
relief is going where it is supposed to be going.
That seems simple enough.
But the question arises over the fact that, last year, the Federal
Emergency Management Agency paid thousands of residents of Miami-Dade
County, millions of dollars in disaster relief despite the fact that
the eye of Hurricane Frances hit about 100 miles North of Miami-Dade
County.
Many of the people given aid by FEMA neither needed nor deserved
it, according to an investigation by the Department of Homeland
Security's Office of Inspector General.
This is wrong.
The tradition of Americans helping Americans in the aftermath of a
disaster traces back to 1803, when Congress authorized aid to a New
Hampshire town devastated by fire.
But this generous tradition will be jeopardized if Americans come
to feel their tax dollars are not being spent fairly, efficiently--and
with accountability.
The problems in Miami-Dade County began with FEMA declaring the
county eligible for disaster assistance without assessing the storm's
impact or documenting reasons for the declaration.
The facts show that the hurricane did not hit Miami-Dade County.
Indeed, the IG's investigation determined that the strongest sustained
winds were just 47 miles per hour--far below hurricane force--and that
the county saw no reports of flooding.
While these conditions undoubtedly caused damage, the IG found that
FEMA failed to assess and document whether that damage rose to the
level requiring federal assistance.
Thus, the IG concludes that FEMA mishandled the declaration
process--one essential tool FEMA must use to safeguard taxpayer
dollars.
But by including Miami-Dade County in its disaster declaration,
FEMA made millions of people eligible for assistance--stretching its
already thin resources even thinner and making its programs
``susceptible to waste, fraud and abuse,'' according to the IG's
report.
Some small but telling examples, Madam Chairman:
FEMA awarded rental assistance to people who apparently
weren't in need of shelter. For instance, FEMA gave almost $1,500 in
rental assistance to one person whose home had sustained just $93 in
damage. In other instances, FEMA awarded rental assistance to people
who didn't need to leave their homes. This happened because eligibility
criteria in some instances failed to require that an applicant's home
actually be damaged in order to receive assistance;
FEMA, in accordance with its own procedures, spent
millions replacing items that the household never had;
FEMA's contract inspectors conducted thousands of
inspections of homes within blocks--once a single block--of their own
home, which the IG found raises at least the appearance of a conflict
of interest;
FEMA gave Miami-Dade residents whose vehicle had
supposedly been destroyed by Frances $6500 for replacement costs even
though their vehicle was worth only a fraction of that.
Unfortunately, Madam Chairman, FEMA's problems in the way it doled
out disaster relief do not stop at the boundaries of Miami-Dade County.
The IG concluded that because the procedures used in Miami-Dade
County were also used throughout the State of Florida--and because most
of those procedures were used throughout the Nation--a shadow is cast
on the appropriateness of FEMA's awards of disaster relief to
individuals throughout Florida and the rest of the Nation.
FEMA's mission of responding to natural disasters and of providing
financial assistance to those harmed by them is an absolutely critical
one--and one I completely support. That's not what this hearing is
about.
But in order to fulfill that mission in the best interests of both
those hurt by hurricanes, tornadoes, earthquakes, fire and floods--and
those whose taxes support the relief efforts--we must make sure that
FEMA follows the rules and ensures that relief funds go where they
should be going.
Unfortunately, the IG's investigation, as well as the one conducted
by our staff, call into serious doubt whether that is happening.
The start of the hurricane season is almost upon us. According to
researchers at the National Oceanic and Atmospheric Administration and
Colorado State University, this season could be another active--and
possibly destructive--year.
It's important that our Nation's disaster resources--our taxpayer
dollars--are targeted to where they are truly needed and that no
questions regarding fairness, efficiency, need or accountability taint
our relief efforts.
We can only judge FEMA by how it reacts in emergencies. That is its
mandate--its very reason to be.
And where FEMA is found wanting, we must make changes to ensure
that Americans continue to support our two-century-old tradition of
swiftly coming to the aid of our fellow Americans when disaster strikes
anywhere in the Nation.
Thank you Madam Chairman.
Chairman Collins. Thank you very much. I appreciate all
your work on this issue, and your full statement will be
inserted in the record as if read.
Senator Coburn, we are delighted to have you with us today.
I know wasteful spending is very high on your radar screen, and
we appreciate your joining us.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Thank you, Madam Chairman, and I appreciate
both you and the Ranking Member for holding this hearing.
We often hear in Washington that the reason we cannot
control our spending is because of mandatory spending, and we
are going to have an actual deficit this year of $622 billion.
That is the real number. That is not what you will hear most
politicians say. But its $622 billion, and this hearing is
important because across our government there are ways we can
improve spending, we can allocate our resources better, we can
more effectively do the jobs that we have been asked to do.
So I look forward to the testimony. I will not be able to
be here for the entire hearing, and I thank you, Senator
Nelson, for bringing this up as well as Senator Martinez. It is
important. If we are going to really help people, then we
cannot expend resources on those who do not need our assistance
when there are others who truly do. Thank you.
Chairman Collins. Thank you.
Senator Nelson, thank you so much for being here today, and
I would ask that you proceed with your statement.
TESTIMONY OF HON. BILL NELSON,\1\ A U.S. SENATOR FROM THE STATE
OF FLORIDA
Senator Nelson. Madam Chairman, your opening statement was
so comprehensive that I can short-circuit a lot of my remarks.
---------------------------------------------------------------------------
\1\ The prepared statement of Senator Nelson appears in the
Appendix on page 35.
---------------------------------------------------------------------------
First of all, I want to thank you and Senator Lieberman for
taking the initiative to do the investigation. As I came to you
with what we were hearing back home, and obviously, something
was wrong. You did not hesitate a moment. You first did the
investigation by your own staff. It has now augmented, as you
have referenced, the IG's report. And thanks to you, you are
bringing this into the full light of the sunshine with this
hearing.
And what we are seeing is a picture that is not a pretty
picture, because we appropriated $8.5 billion just to FEMA for
these four storms, most of which would be allocated to Florida,
because that is where it got the brunt. And in fact, not only
are we experiencing the circumstances that you have outlined
where payments have gone into Miami-Dade County that the winds
did not get up there, and look at what was said right there by
the Miami-Dade Emergency Operations Center: Damage and debris
from--you are taking it down, and I am reading it. [Laughter.]
Damage and debris from Frances is minimal. You have pointed
that out. You have pointed out the fact that burials, funerals
were paid for when, in fact, many more, in excess of 300, were
paid for when the officials had said that the deaths accruing
directly according to the storms was somewhere in the range of
about 125. You have pointed out that in fact, that those
payments were made before a damage assessment was in fact made,
and so, you have laid out in your comments here, I think, the
essence of what we ought to be looking at.
Now, there is an additional thing that I would add. First
of all, I want to credit FEMA. We learned some serious lessons
after the 1992 monster, Hurricane Andrew. One level of
government was not talking to another level. It was chaos. FEMA
was not ready. And out of those lessons learned, the immediate
aftermath of the storms, there was an excellent response. And
FEMA in large part should be given the credit. The State of
Florida and its Emergency Operations Center working with FEMA
and the local governments; they had everybody talking to each
other. FEMA had prepositioned things so that you could begin to
get supplies in. There was the National Guard that set up a
distribution center at the Lakeland Airport and had all of
these convoys that were getting supplies in. It really looked
like we had our act together and that we were responding to the
lessons that we had learned after that monster hurricane.
But then, as time began to wear on, and give credit where
credit is due. I mean, who has ever had to respond to four
hurricanes in a row within a 6 weeks' period? So FEMA was
overwhelmed. But as the time continued to wear on, either there
is a problem in a structure of FEMA that the Congress in its
oversight capacity should address, or there is poor management,
or there is both. And that is my hope, that as a result of the
leadership of you two Senators that you are going to be able to
help FEMA to help folks like us, because hurricane season is
starting on June 1.
Now, I just want to show you the path of the four
hurricanes. Madam Chairman, this was extraordinary in 6 weeks.
In 6 weeks; this is the first one that came in. This is
Charlie. Now, the good news about Charlie is that Charlie was a
very tight hurricane. It had winds of 145 miles an hour, but
those sustained winds were only about 10 miles wide. If it had
been a monster like Andrew that was 40, 50 miles wide, you can
imagine.
The other good news was that Charlie, which, by the way, I
was tracking Charlie way down south of Cuba as a hurricane
hunter in the NOAA, and I want to commend them for your
consideration, too, because they have gotten very
sophisticated. On this particular one, we were dropping SONS,
which is a loaded instrument package that would fall from
42,000 feet all the way to the ocean, and then, the plane
collects the data in real time, beams it by satellite back to
the National Hurricane Center, and there, they can get, because
of all of these incredible measurements, a better estimate of
which way it is heading.
Senator Lieberman. Bill, you are the only Member of
Congress that I know of who could say at 42,000 feet was not as
high as he has been.
Senator Nelson. I tell you, it was not quite as fun,
either.
Originally, we thought Charlie was really going to be the
next Andrew, because it was scheduled to skirt the Keys and
come right up into Tampa Bay. And you can imagine, if the
waters from that counter-clockwise had pushed all of the waters
up into Tampa Bay, you would have had a major flooding problem.
Instead, Charlie is coming up here; suddenly takes a right turn
and comes up Charlotte Bay and hits ground zero at 145 miles an
hour, which was Punta Gorda.
It continued right on up the central core of Florida,
exiting at Daytona Beach; massive destruction all the way that
was within the narrow diameter of the hurricane. All right; a
few weeks later, here comes Frances; third one, Ivan, that just
tore up the Panhandle, particularly Pensacola. The Navy base
itself had $750 million of damage.
Then, here comes the fourth one, Jeanne, and notice where
the three have crossed: This is just south of Lakeland in
southeast Polk County. The little rural county to the south of
it, Hardy County, has, to date, only 21 percent of its FEMA
claims paid. I wanted to bring this to your attention because
where three major hurricanes crossed, very near Hardy County, a
poor, rural county, you only have 21 percent of their claims
paid. This just should not be, and this should be part of the
oversight.
And so, Madam Chairman, today, I am going to be filing
legislation that is going to be referred to your Committee that
I would respectfully suggest are some things that you might
want to look at. This legislation is going to require
preliminary damage assessment before Federal assistance can be
paid out, something we have already talked about. It also
tightens the rules so that FEMA inspectors can better identify
disaster-related losses of household items and document the
verbal accounts that they were getting from storm loss instead
of just gathering up people down at the local Hardee's and
taking their verbal accounts of what the inspectors never saw.
For example, in Miami-Dade County, almost $100,000 was paid
to residents for destroyed cars, and the IG report said that
damage to those vehicles was not verified. Well, under this
legislation that I am filing, it is going to require proof.
This legislation would also limit funeral assistance to
disaster-related deaths, and we have already heard about that,
and under this legislation, inspectors would not be able to
assess the losses of their neighbors or make purchases from the
residents whose homes they have reviewed, which is a clear
conflict of interest.
This would prevent cases like the one of the FEMA agent who
bought an oceanfront home from a 72-year-old woman who sought
out agency advice when she became concerned about the mold that
was occurring in her home as a result of the storm. It is
alleged that she was duped to sell her home for way under the
fair market value. This legislation would address that. And
this bill toughens penalties for fraud and strengthens the
requirements for criminal background checks.
The estimates are, Madam Chairman, that up to 22 percent of
FEMA inspectors had criminal records, including rap sheets for
serious crimes. This just should not be. So I hope you will
consider this legislation as you go about your deliberations as
to what you want to do. And I hope that your Committee will
look beyond the IG report for other ways to improve our
Nation's disaster assistance agency.
Now, Madam Chairman, I can give you a few places to start:
For example, I know many officials in Florida that would love
to chat with your staff, including John Booth, the Executive
Director of the Palm Beach County Solid Waste Authority, or
George Touart, Escambia County Administrator, or Dave Metzger,
the Orange County Public Works Director.
What in my judgment you all need to do in your oversight
capacity is to give FEMA clear, concise procedures for helping
local governments pay for doing such things as removing debris
from private roads. They have the ability, according to their
own regulations, to do this in the interests of public health
and safety.
But how many times did we hear all the way from the
Panhandle down to the southwest coast to the southeast coast of
Florida that FEMA said that they were not, even under their own
discretion, going to allow under the caveat of public health
and safety to remove that debris from a private road. I have
worked with county after county in our State, and they have
pleaded to get needed help. And many of those counties, though
cash-strapped, are footing the vast majority of the bill for
the essential cleanup.
Madam Chairman, because they are footing the bill for this
essential cleanup, their budgets are decimated, and those
officials, naturally, are praying that they are going to be
spared a hurricane coming in this next hurricane season. So
while FEMA needs to do a better job, Congress needs now to act
in order to regain the public trust by ensuring that taxpayer
money appropriated is spent wisely, Senator Coburn, and that it
is spent efficiently to help Americans recover from natural
disasters.
We owe this not just to the folks who have suffered so much
in my State but to the residents of the other hurricane States
that are going to get hit in the future. All along the Gulf
Coast and the Atlantic Coast, we are in the paths of
hurricanes. This is a part of the lifestyle that we have. But
you can look to other States: Look at the Californians, who
happen to live on a fault line, or look at the Washingtonians,
who happen to live in the shadow of Mount Saint Helens, or look
at the rural Americans who happen to live near rivers that
swell and city dwellers who have to face the constant threat of
the turmoil and the tragedy surrounding terrorists.
And so, I finish where I started, Madam Chairman: This
would not be happening without your and Senator Lieberman's
leadership, and I thank you from the bottom of my heart that
this issue needs, this story needs to be told, and in so
telling this story, I believe that we will get things much more
ready to adequately handle these kinds of natural disasters in
the future. Thank you.
Chairman Collins. Thank you very much for your leadership
on this issue. We very much appreciate your bringing these
concerns to the Committee's attention. Thank you very much for
your testimony.
Senator Nelson. Thank you.
Chairman Collins. Our next witness today is Richard L.
Skinner, the Acting Inspector General of the Department of
Homeland Security. Mr. Skinner has vast experience in audit and
oversight, which is invaluable to this Committee and to the
American people. The audit that Mr. Skinner conducted regarding
FEMA's response to the 2004 hurricanes will be the subject of
his testimony today.
We welcome you and look forward to your testimony.
TESTIMONY OF RICHARD L. SKINNER,\1\ ACTING INSPECTOR GENERAL,
U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Skinner. Thank you, Madam Chairman.
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\1\ The prepared statement of Mr. Skinner appears in the Appendix
on page 37.
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As the Hon. Nelson pointed out, your statement was very
comprehensive, so I hope what I have to say here does not sound
redundant or duplicative of what you have already said, but
thank you for the opportunity to be here today to discuss our
work on FEMA's Individuals and Households Program (IHP), in the
Miami-Dade County area following Hurricane Frances.
Our report on this subject is being released to the public
today and is included as an attachment to my prepared
statement. In 2004, the State of Florida was affected by an
unprecedented four hurricanes in 2 months, causing widespread
damage and destruction. In addition, during the Florida
disasters, FEMA was also delivering aid to individuals and
households in 15 other States and two territories.
According to FEMA, the upsurge of the disaster activity
during that time period proved well above its standing
operational capabilities, necessitating the hiring and training
of additional staff and contract personnel. We acknowledge the
difficult balance that FEMA must strike between speed and
stewardship of taxpayer resources, a balance between the need
for adequate documentation and the need to expedite assistance
to disaster victims.
Nevertheless, as our audit concludes, there is considerable
room for improvement in the manner in which FEMA administers
its disaster relief responsibilities. The inclusion of
Florida's Miami-Dade County in the declaration for Hurricane
Frances and subsequent awards of about $31 million under the
IHP has been the subject of considerable public reporting and
concern. As a result, we initiated an audit of the IHP in
Miami-Dade County to determine, one, whether FEMA had
sufficient evidence to support the county's eligibility for IHP
assistance, and two, whether adequate program controls existed
to ensure that funds were provided only to eligible applicants
for eligible purposes.
We found critical shortcomings in both areas. I would like
to point out, however, what the audit did not attempt to do.
The audit did not attempt to verify claimants' losses or
incurred costs, nor did it attempt to determine the extent of
fraud in Miami-Dade County. While our audit procedures provided
due diligence to situations involving potential fraud, all
matters involving fraud are being handled separately by our
Office of Investigations in coordination with the U.S.
Attorney's office for the Southern District of Florida.
While our audit of IHP at Miami-Dade County may be
complete, our investigative efforts are still ongoing. Other
than to say we still have an aggressive investigative program
within the State of Florida, including Miami-Dade County
relative to the four hurricanes that hit the State during 2004,
it is our policy not to discuss our fraud detection initiatives
or our investigations involving fraudulent claims. To date, 14
individuals have been arrested for making false claims.
Our audit concluded that FEMA designated Miami-Dade County
eligible for IHP without a proper preliminary damage assessment
(PDA). FEMA contends that such an assessment is not required
under its regulations. Instead, FEMA officials advised us that
they relied on their best judgment at the time to amend the
President's declaration and add 13 counties for disaster relief
under the IHP. However, we believe that, notwithstanding the
regulations, a PDA was required by the President's declaration,
as I will attempt to explain here.
In anticipation of the impact of Hurricane Frances,
Florida's Governor submitted a disaster declaration request on
September 2, 2004, 2 days before the storm, to FEMA's Region
IV, requesting that all 67 counties in the State be declared
eligible for public assistance and that 18 counties be declared
eligible for the full complement of individual assistance
programs, including IHP.
The President's declaration, however, dated September 4,
2004, excluded Miami-Dade and another 12 of the 18 counties
recommended by the Governor for IHP and stipulated that FEMA
could provide assistance beyond the designated areas subject to
completion of PDAs.
Nevertheless, effective September 5, 1 day later, FEMA
amended the President's declaration to make IHP available to
residents of Miami-Dade County and the other 12 counties that
were initially requested by the Governor but excluded in the
President's declaration. FEMA made the decision to add those
counties based on the path of Hurricane Frances as it made
landfall on September 5, 2005. The decision was not supported
by a PDA, however, as required by the President.
FEMA notes in its response to our report that a
comprehensive door-to-door damage assessment would have unduly
delayed FEMA's response efforts. While we believe that a PDA
was required to document the impact and magnitude of the
hurricane in Miami-Dade, a door-to-door assessment of damages
was not necessarily needed nor suggested by our office.
Although there is sufficient evidence today after the fact
that the county indeed experienced some damages related to
Hurricane Frances, it is still unclear, in our opinion, that
the extent of the damages would have warranted the inclusion of
the county in the Presidential declaration. A PDA, as required
by the President, would have eliminated any doubt whether or
not the county qualified for IHP assistance.
As a result of the declaration for Miami-Dade, residents
now not severely affected by the hurricane were eligible to
apply for assistance. While FEMA says rightfully residents
still had to be found eligible in order to receive such
assistance, Hurricane Frances, along with the previous and
subsequent disasters, strained FEMA's inspection resources,
tested program controls and made the IHP more susceptible to
potential fraud, waste, and abuse. Further, as I will attempt
to explain in this statement, flaws in the IHP, and the absence
of certain internal controls increased the likelihood that
funds were not always provided to eligible applicants for
eligible expenses.
We recommended that for future disasters, FEMA ensure that
PDAs are performed to determine the type, extent, and location
of disaster-related damages whenever practicable. FEMA asserts
that it already does this and that its actions in Miami-Dade
were operationally and situationally defensible. We disagree.
We continue to believe that a PDA was required by the President
and that a PDA would have been both practicable and
justifiable, especially in light of the fact that Hurricane
Frances made landfall 100 miles north of Miami-Dade County,
produced only moderate tropical force winds, and caused no
flooding whatsoever.
Furthermore, we found no evidence to suggest that the
county experienced widespread trauma, that is, loss of life,
loss of essential utilities, and other essential services or at
least not for a duration that would have justified the
inclusion of the county in the President's declaration.
I now would like to discuss the major program control
weaknesses that we found relative to the IHP itself; first,
concerning Other Needs Assistance (ONA). As of February 28,
2005, FEMA provided $18 million in ONA to Miami-Dade County
residents in response to Hurricane Frances. We determined that
ONA, especially for the repair and replacement of household
room items and automobiles, should be more closely aligned to
actual losses and that better documentation was needed to
support determinations that damages and deaths were directly
caused by the storm.
For example, FEMA awarded $10.2 million to repair or
replace household room items. However, the procedure used by
FEMA to replace household room items allowed for funding of all
items in what FEMA constituted as a full room, regardless of
the actual loss. In other words, a resident may have had a
single bed in a room, which was destroyed by the storm. Yet,
FEMA would pay the resident the cost of an 11-piece bedroom
suite. We recommended this procedure be changed. FEMA agreed
with our recommendations and said it is reviewing the use of
the generic room concept. FEMA believes that with today's
technology, it can increase the specificity of the inspection
without substantially increasing the time required to complete
the inspection.
In addition, according to the State's established
replacement value for eligible, disaster-damaged vehicles, FEMA
provided $6,500 for each automobile destroyed. For 15 of the
automobiles, the retail book value, at least in our sample,
totaled $56,000. However, FEMA awarded $97,000 for those
automobiles. In our opinion, FEMA should work with the States
to establish a more reasonable replacement value for destroyed
automobiles.
Now, concerning housing, FEMA awarded $13.1 million to
Miami-Dade applicants for rental assistance and home repair and
replacement. However, the implementation of the housing
assistance component of the IHP was hampered by several
procedural missions and generally weak guidelines for
performing inspections and documenting results. For example,
some rental assistance applicants received but may not have had
a need for such assistance; while others may simply have not
been eligible for the assistance.
Finally, FEMA's oversight of inspection needs improvement.
Specifically, contractors were not required to review
inspection reports prior to their submission to FEMA for
payment. Edit checks for inspection errors were made after
payments rather than before, and no provisions existed for
inspectors who lived in the areas to recuse themselves from
inspections that may present possible conflicts of interest.
The policies, procedures and guidelines used in Miami-Dade
for the IHP were also used throughout the State of Florida.
Further, according to FEMA officials, most of the procedures
were used for disasters in other States, making our findings
and recommendations broadly applicable to FEMA's implementation
of the IHP nationwide. FEMA acknowledges that our report
identifies several legitimate program flaws in the IHP and has
agreed to make the necessary improvements.
Madam Chairman, that concludes my prepared remarks. I would
be happy to address any questions that you or any of the
Members may have.
Chairman Collins. Thank you very much, Mr. Skinner, for an
excellent presentation.
FEMA comments on the audits. When I was looking through the
comments that FEMA officials made on your IG report, I was
particularly struck by one statement: ``FEMA says we were
pleased that the OIG confirmed no widespread or systemic waste
or abuse in Miami-Dade County in the wake of Hurricane
Frances.'' I must say I am baffled by that statement. Is that a
fair reflection of your conclusions that you found no pattern
of or widespread waste or abuse?
Mr. Skinner. No, not at all. That is not an accurate
reflection of our report at all.
There are four things I would like to point out here: One,
we found some very serious systemic weaknesses and internal
control weaknesses with regard to all parts of the IHP program.
This, in turn, has consequences; that is, it does, in fact
increase the potential for fraud, waste and abuse.
Second, I would like to point out that the purpose of this
audit, in itself, was not to identify fraud, waste, and abuse
per se. We were looking at the processes and procedures in
place to determine whether they were adequate enough to ensure
that payments were proper to eligible applicants for eligible
purposes.
Third, we have a very aggressive investigative program that
is still ongoing in Miami-Dade. We have already made 14
arrests. It is premature at this time to say that there is no
widespread fraud, waste, or abuse while we still have an
ongoing investigative program.
And finally, the mere fact that we do not find or prosecute
everyone that committed fraud or identify all the waste, does
not mean that it does not exist. A lot of the fraud is very de
minimis, and it is very hard to prosecute. So it could be
widespread, just not prosecutable.
Chairman Collins. And in fact, I think a more accurate
description of your report would be to say that the internal
control weaknesses that you identified were prevalent and
create, in fact, a strong potential for abuse, wasteful
spending, erroneous payments. Is that a fair statement?
Mr. Skinner. Absolutely, that is correct, Senator.
Chairman Collins. According to the data we have been
provided by FEMA, in Miami-Dade, FEMA spent some $17.1 million
for personal property awards, $9.3 million for rental
assistance, $2.7 million for home repairs and a little more
than $1 million for expedited assistance, almost $600,000 for
transportation. Did you find weaknesses in the program controls
in each of these areas? I am trying to get at the question of
whether there was a problem in only one part of the disaster
assistance or whether you found weaknesses in all of the areas.
Mr. Skinner. The problems that we found were across the
board. We found problems in each and every one of the
components of the IHP program. For example, funds provided for
repairs and replacement of household room items were not based
on actual losses. Recipients of rental assistance oftentimes
may not have been eligible or may not have even requested
rental assistance, but were paid for rental assistance.
Guidance and criteria for replacing automobiles and paying for
funerals, as you mentioned earlier, were just nonexistent. It
was very judgmental. So this was prevalent across all
components of the program, the weaknesses that we looked at.
Chairman Collins. And that is particularly troubling,
because that means that there are systemic weaknesses in FEMA's
disaster relief programs that are not unique to what happened
in Miami-Dade. The situation there appears to have been worse
because there was not an assessment of damages before the
designation was made for eligibility, creating all sorts of
questions about whether individuals should have been eligible
for assistance in the first place. But if these weaknesses are
prevalent in all these programs, then, that suggests a
potential for similar problems whenever these programs are
triggered. Is that fair?
Mr. Skinner. Yes, that is correct. These are programmatic,
systemwide weaknesses that were not applied just in Miami-Dade.
They were applied throughout the State of Florida, and for that
matter, these are the same policies, procedures, internal
controls, and guidelines that are applied for all disasters
nationwide. So what we found here, I think, is just indicative
or representative of the problems that we may have on a
nationwide basis.
Chairman Collins. Thank you. Mr. Skinner, as you are aware,
the Committee staff has also been investigating the claims in
Florida, and there is a black exhibit binder that I think now
is on your table before you.
At tabs 6 through 9, you will find that there are four
examples of quality control reports performed on claims that
were paid by FEMA in Miami-Dade as a result of Hurricane
Frances. And I would like to give you a moment to find those,
and if we have them on display as well, if we could have those
put up.
The four claims total approximately $45,000, but what
struck me is in each case, the quality control report found no
damage to the home whatsoever: No storm-related damage. FEMA
awarded money for such things in these four cases as rental
assistance, damage to furniture, clothing, televisions, air
conditioners, automobiles, telephones, and appliances. In one
case, you will see FEMA awarded hundreds of dollars to pay for
the repairs to a dryer, and yet, the inspector indicates that
there was no dryer. In another case, payment was made for a
washer that the applicant did not even own.
These examples concern me greatly, because they appear to
reflect fundamental problems with the inspection process that
was used by FEMA. And the inspectors really are the front lines
of defense. They are the ones who are supposed to ensure that
money is not wasted and that damage really did occur, and yet,
we found widespread problems as we started going through the
quality control reports that were taking a look at the
decisions made by the inspectors.
The Committee staff interviewed several of the quality
control inspectors who told us that by and large, these were
not close calls, that there was simply no hurricane-related
damage. The four examples that I have just discussed and that
we have provided to you, are these the types of results that
you would expect based on the program control weaknesses that
you identified in your audit?
Mr. Skinner. Yes, it would. Two things I would like to
comment on this or maybe three: It looks like the quality
control program is working, to identify something as egregious
as this. But first, it is very telling on the quality of the
inspections themselves. There is something inherently wrong
with the way we did our inspections if we can find examples
like this through our quality control program.
These inspectors, I believe, who were in Miami-Dade, a good
many of them were not only inexperienced, but they were poorly
trained and not always adequately supervised. That, coupled
with the internal control weaknesses as these inspection
reports went through the process, that is, they were not
checked before they were sent to FEMA. FEMA's edit checks were
done after the payments were made. These issues all contribute
to these types of problem cases. So this does not surprise me
at all. This is probably somewhat widespread, I would contend.
Chairman Collins. It seems to be--based on the separate
investigation that the Committee has done. It just is
extraordinary that payments were made to individuals who were
living in undamaged homes, and in a couple of the cases before
you--we are talking about payments of $18,000, $19,000. In
addition, these individuals also received rental assistance,
and yet, their homes were undamaged. And that is the issue I
want to move to next. FEMA paid about $9.3 million in rental
assistance to more than 5,000 people in Miami-Dade County; is
that correct? Or in the neighborhood?
Mr. Skinner. Yes, that is correct.
Chairman Collins. So that is almost a third of the money
went for this rental assistance. In the sample of files that
you and your auditors reviewed, was there any evidence at all
that the recipients of rental assistance ever actually moved
out of their homes?
Mr. Skinner. No, not at all. We did not find any examples
where anyone actually moved out of their homes.
Chairman Collins. So, yet, people received rental
assistance, and yet, they did not leave their dwellings.
Mr. Skinner. That is correct.
Chairman Collins. And is it your understanding that when
FEMA awards rental assistance, it actually has to be spent on
rent.
Mr. Skinner. That is our interpretation. That is why it is
called rental assistance.
Chairman Collins. That does seem fairly logical.
Mr. Skinner. Yes.
Chairman Collins. So does FEMA ever attempt to determine
how many people who received rental assistance actually used it
for that purpose?
Mr. Skinner. As far as I know, no.
Chairman Collins. Is this another area where you think
that--let me ask you: What do you think needs to be done to
tighten up on the rental assistance program?
Mr. Skinner. For one thing, what we found was that people--
FEMA's guidelines were very explicit, FEMA's IHP guidelines for
rental assistance. That is, if you receive payment for rental
assistance, you are, in fact, to use it for rental assistance,
and you must maintain receipts for 3 years to support the fact
that in fact you used it for rental assistance.
However, the inspector guidelines that were passed out to
the inspectors actually advised the applicants that no, you in
fact did not have to use your rental assistance funds for
rental assistance; you could use them for home repairs. It
appears to us that the right hand does not know what the left
hand is doing. The guidelines need to be very explicit, and the
inspectors have to understand, or at least FEMA has to provide
clearer guidelines to make it perfectly clear that just because
you may be eligible for rental assistance does not mean that
you should be entitled to rental assistance.
Oftentimes, and this gets back to the quality of the
inspections, the inspectors would deem homes unsafe. And
oftentimes, many times, we have questioned whether that
determination was supportable. But by merely checking that the
home was unsafe, these individuals were automatically made
eligible for rental assistance and were, in fact, paid for
rental assistance, and oftentimes, they did not even ask for
rental assistance, but since they were determined eligible by
the inspector, they in fact received rental assistance, and I
think there is a breakdown in communications, guidelines, and
in internal controls.
Chairman Collins. So did your inspectors also find that
there were cases where homes were declared unsafe when, in
fact, they just needed very minor repairs?
Mr. Skinner. Oh, yes, as we went through the inspectors'
reports, we found many cases in which, for example, a window
was missing at a cost of $97. It was declared unsafe.
Therefore, they qualified for rental assistance and received
rental assistance, although they did not move or did not
relocate.
Chairman Collins. So you may have cases where an individual
has very minor repairs, and it is an actual case where the
repairs were $97, and yet, the individual could receive $726 in
rental assistance, additional payments for repairs; in other
words, payments far exceeding what the minor repairs are and
yet never moved out of the house.
Mr. Skinner. That is entirely true. That is entirely
accurate, yes.
Chairman Collins. Could you explain to us more about how
the Expedited Assistance Program works? I understand that is a
rarely used process, but it was used in Miami-Dade.
Mr. Skinner. Yes, it is my understanding as well that it is
rarely used. I know it was called something else in other
disasters, Fast Track in Northridge and in Andrew. In Miami-
Dade, in essence, they opened a door for expedited assistance
for rental assistance, and all that was required was a call-in,
and you had to meet three criteria or two or three criteria and
answer two or three questions to be made eligible. One, you had
to attest to the fact that was your primary residence, and two,
you needed essential housing needs or, in fact, you were living
somewhere else, and that would automatically qualify you for
rental assistance. Once was done; the payments were made, and
there was no follow-up or any verification that any of those
people, in fact, were eligible or entitled to rental
assistance.
Chairman Collins. Is this done generally just over the
telephone, then?
Mr. Skinner. Yes.
Chairman Collins. Where the applicant calls in, answers a
series of questions, but are you telling me there is no
verification before the check is sent?
Mr. Skinner. That is correct.
Chairman Collins. So this is the pay first, ask questions
later approach; is that fair?
Mr. Skinner. Yes, pay first, verify later; that is
absolutely correct.
Chairman Collins. I would like to turn to the issue of
payments for automobile repairs and replacement. There were
some 800 payments for repairs, or I should say there were
payments for repair or replacement of some 800 automobiles in
the county. I find this very strange, given the minimal damage;
there was not flooding; there were not particularly high winds.
But there were also issues about how the payment amount is
arrived at. Could you elaborate on that?
Mr. Skinner. It is my understanding that this is negotiated
between the State and FEMA as to what is a fair value for a
car. And, in the State of Florida, and I think every State is
handled differently, it is not a FEMA standard or a national
standard. In the State of Florida, I think they determined
that, that is the State, and FEMA accepted their
recommendation, that if any cars needed to be replaced that the
minimum payment should be around $6,500.
Chairman Collins. And is that regardless of what the Blue
Book value is for the car?
Mr. Skinner. That is correct.
Chairman Collins. So you could have and indeed found cases
where the Blue Book value of the car might have been $2,000,
and yet, a payment of more than $6,000 was made?
Mr. Skinner. Yes, in our sample, we found several cases of
that.
Chairman Collins. I would also like to look at one of the
specific automobile cases that you discuss in your report,
because it really stood out to me: In this case, FEMA paid
$6,500 for a 1998 Toyota Corolla that was supposedly destroyed
by an electrical fire, and you note in the report that the
inspector provided no explanation of how a hurricane,
particularly one that hit 100 miles north, could have
contributed to an electrical fire. Do we know if the inspector
ever actually saw this car?
Mr. Skinner. Well, in this particular case that you are
talking about, we did in fact call the former car owner, and
that individual advised us that the car had been towed prior to
the inspector's arrival. So, therefore, the inspector had to
rely entirely on her verbal representation that yes, I had a
car, and yes, it was destroyed through an electrical fire, and
yes, it has now been discarded. But that was not reflected in
the inspector's report. We obtained that information by, in
fact, talking to the individual.
Chairman Collins. But what happened in this case was that
FEMA paid $6,500 to an individual who claimed to have had a car
that was destroyed by an electrical fire that was somehow
related to the hurricane, but there was no actual car to
inspect; is that accurate?
Mr. Skinner. That is correct.
Chairman Collins. So there is no way to know if there ever
was an electrical fire in this car.
Mr. Skinner. That is right.
Chairman Collins. And there is absolutely no way to
determine, assuming there was an electrical fire in the car,
that it had anything to do with the hurricane.
Mr. Skinner. That is correct.
Chairman Collins. And yet, this payment was made.
Mr. Skinner. Yes, it was.
Chairman Collins. Well, Mr. Skinner, I think you have
raised an awful lot of concerns, and I really appreciate all
the work that you and your office have done. I want to just end
with one final question, and that is in FEMA's response to your
report, FEMA suggests that achieving the standards that the IG
has said should be achieved to protect the taxpayers is
unattainable. That is the word used by FEMA officials.
FEMA officials say we are dealing with an emergency
situation. We are dealing with urgent claims, and it is
impossible for us to guard against the susceptibility to waste,
fraud, and abuse and at the same time serve the victims of
natural disasters. What is your comment on that?
Mr. Skinner. I disagree with that. For one thing, the
technology exists today to allow the inspectors to do a better
job, technology that did not exist back in the times of Andrew.
Second, I think every disaster, every scenario, every situation
has to be evaluated on its own. In Punta Gorda, yes, we had
clear evidence that the situation was dire so as far as the
impact of the storm.
But as you get out away from the eye of the storm and into
the marginal counties such as Miami-Dade, the delivery of
services, yes, we want it to be timely, but we do not want to
sacrifice our responsibility to be good stewards of the Federal
dollar, and people were not, in Miami-Dade County, they were
not living in tents; they were not living in shelters; they did
not experience widespread trauma. They did have water. They did
have electricity. I think we could have taken greater caution
as we proceeded in providing assistance in that type of an
environment.
Chairman Collins. Thank you so much for your excellent
testimony. I certainly agree. I think it is a false choice to
say that we cannot serve the victims of natural disasters
effectively, compassionately and swiftly without sacrificing
the integrity of this program, and indeed, many of the
recommendations that you have made would help put in the kinds
of controls that would greatly reduce the potential for the
kind of erroneous payments, wasteful practices, and indeed,
outright fraud that both your auditors and our investigators
have documented occurred.
So thank you very much for your testimony, and we look
forward to working closely with you.
Mr. Skinner. Well, thank you, Madam Chairman.
Chairman Collins. Thanks. I would now like to call our next
witness, Michael D. Brown, the Under Secretary for Emergency
Preparedness and Response at the Department of Homeland
Security. Secretary Brown is responsible for coordinated
Federal disaster relief activities, including the
implementation of the Federal Response Plan. Mr. Brown, we very
much appreciate your being here today.
TESTIMONY OF MICHAEL BROWN,\1\ UNDER SECRETARY FOR EMERGENCY
PREPAREDNESS AND RESPONSE, U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Brown. Good morning, Senator, and thank you for having
me. I certainly do appreciate it.
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\1\ The prepared statement of Mr. Brown appears in the Appendix on
page 45.
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I think it is important that we have some perspective of
what took place that horrible 6 weeks, so in the vernacular,
``roll the video.''
[Video shown.]
Mr. Brown. Madam Chairman, that 2004 hurricane season
marked the busiest season in FEMA's history. FEMA responded to
68 declared major and emergency disasters in 2004. Within a
span of only 6 weeks, four powerful hurricanes struck Florida,
producing widespread damage and causing terrible destruction
and displacement. In response to hurricanes spanning both the
East and Gulf Coasts, FEMA opened and maintained 27
simultaneous disaster field operations in 15 States and two
territories.
We registered nearly 1.7 million people for disaster
assistance, a record number of open disasters, a record number
of registrants. In an average year, just to give you some
perspective, FEMA only registers 480,000 people. FEMA quickly
expanded our capabilities across the board to meet those
challenges. We hired, trained, and fielded thousands of
additional phone operators and inspectors as well as thousands
of additional community relations workers.
But FEMA does not do its work alone. In each of these
disasters, we stood shoulder to shoulder with our State
partners, our local partners, and indeed, even with our Federal
partners. We are now months removed from the immense and
daunting challenges we faced during that unusually cruel
season, and I want to remind everyone what an extraordinary
period we faced.
FEMA's response to the hurricanes and the tropical storms
last year represented the single largest mobilization of
emergency response and recovery resources in the history of
this country, surpassing even the response to September 11 and
the 1994 Northridge earthquake. It was a massive undertaking
and a relief operation for which I am exceptionally proud.
It is imperative that we remember and understand the
challenges and the complexities that we confronted. In full
situational context, before anyone attempts to craft new
answers and new procedures which may, on their face, seem
reasonable but without closer and more studied scrutiny will
have unintended negative consequences. We must never lose the
sense of urgency that drives our response to victims and
communities in need or be forced to sacrifice that urgency in
the pursuit of elusive administrative perfection.
Our mission to get help quickly to those who so desperately
need it must take priority yet be carefully and always balanced
with our obligation to be stewards of the taxpayer dollars. I
personally was on the ground in the midst of our response
operations, and I was able to judge for myself the urgency of
the situation. I can assure you that FEMA was never stampeded
into making any decisions. We made informed yet sometimes very
difficult choices in order to meet the demands of the
extraordinary situations created not just in Florida but all
along the Eastern half of the United States. I just want to say
publicly that I am proud of FEMA's employees and their
accomplishments.
Senator there is always room for improvement. Our processes
and procedures are not exceptions to that rule. Many of our
programs have been refined and updated over the years. Since
1992, when FEMA was very heavily and I think appropriately
criticized for its slow response to the victims of Hurricane
Andrew, the men and women of FEMA have pursued and implemented
changes, efficiencies, and upgrades through the use of new
technologies, faster systems, and clearer procedures. During
that same time, we have also seen the implementation of a brand
new program, the Individuals and Households Program, enacted by
you in 2000 under the Disaster Mitigation Act.
While I look forward to constructively discussing many
ideas for these improvements, I want to remind everyone that
our processes and procedures have been forged over countless
disasters, through years of experience and have consistently
weathered and withstood the test of time and repeated trial. We
constantly observe and review our responses after every
disaster, not only to identify those things that we did well
and can be proud of but also to identify and remediate areas
that require our improvement.
Four hurricanes impacting 15 States in 6 weeks is an
exception to our normal course of business. Those four
hurricanes were an anomaly. Yet it is our duty and our mandate
to act regardless of the situation. You see, we do not have the
luxury of dictating the conditions under which we operate. It
is in that very spirit that I look forward to our discussions
today. While media and other reports have focused on errors, I
would sincerely and respectfully suggest that this hearing, in
addition to focusing on the errors, also focus on the hundreds
of thousands of people who did receive assistance and on the
thousands of inspectors who successfully conducted hundreds of
thousands of inspections all across the affected States.
I simply do not listen to those who suggest that we should
pay excessive scrutiny to one county or to one group of people
affected by a disaster and not to others. These storms do not
respect geographical boundaries, nor do they respect
socioeconomic demographics that would justify in some people's
mind a higher level of scrutiny.
Unfortunately, I often see competing local agendas. Those
with political differences sometimes attempt to cloud our
mission to deliver aid and to deliver to those who most need
our help. While we and I personally will always strive to
strike a proper and defensible balance between timeliness and
fiscal surety, you who legislate daily know that these
decisions that we make are never black and white. That is why I
have tried to provide some necessary post-event context to
serve as a setting for continued discussion of the fundamental
issues that any large scale event of this type presents.
Perspective seems to have been lost in the public
discussion. Early concerns were over reports that Miami-Dade
County suffered less severe damage from last season's
hurricanes than counties to the north, where the eyes of
Hurricanes Frances and Jeanne made landfall, and that somehow
Miami-Dade received seemingly disproportionate Federal
assistance. In fact, I think that those concerns led to this
inquiry. But to give a thorough understanding of FEMA programs
and procedures and the differences between our individual
programs and our government programs, it will become clear that
many of those early concerns were misguided.
Early press reports and even reports in this hearing today
that somehow we should engage in county by county comparisons
of total outlays will yield faulty results and incorrect
conclusions. In addition to levels of damage, many factors
influence the distribution of Individuals and Households
Program assistance, including the population, the proportion of
insured applicants in counties affected by disasters, and even
the income levels.
Raw comparisons of the aggregate amounts of disaster
assistance delivered in these counties led to starkly skewed
comparisons, faulty conclusions and an inaccurate perception.
Less than 2.9 percent of the residents in Miami-Dade County
received any FEMA aid, an amount that I believe is commensurate
with the amount of damage and proportionally much less than the
counties at the eye of the hurricanes.
FEMA responded aggressively and proactively to the needs of
all affected citizens of the State of Florida who were eligible
for assistance. The amount of money spent in one county did not
reduce the amount of money available to other counties, nor did
the money we spent in one area reduce levels available in other
areas.
With all of the good that has been accomplished in Florida,
we know that there was some assistance given incorrectly,
through errors of data entry, inspections and, unfortunately,
even through fraudulent claims. I make no excuse for those
errors, Senator. I am proud of actually the few errors that
have been surfaced out of the hundreds of thousands of
inspections that were conducted.
Our overriding priority in a near-catastrophic incident is
to get help quickly to those who need it desperately while
continuing to exercise all reasonable diligence over our
obligation to continue to be outstanding stewards of taxpayer
dollars. That will always be the balance that FEMA strives to
meet: The balance between getting aid quickly, effectively to
everyone who needs it and balancing the desire to make sure
that we are good stewards of taxpayer dollars. That is our
mission, Senator.
Again, thank you for having me here today.
Chairman Collins. Thank you very much, Mr. Brown, for your
statement.
In response to your opening remarks and the video that you
played, I want to emphasize to you that the Members of this
Committee very much appreciate and recognize the vital role
played by FEMA in helping the victims of natural disasters. It
is because of our appreciation for that role that we are
particularly concerned about what this Committee's
investigation has uncovered.
The public is perfectly willing, indeed eager, to help the
victims of natural disasters rebuild their lives and their
communities, but the public is not willing to see patterns of
abuse, wasteful spending, outright fraud, erroneous payments,
and that undermines public support for providing that
assistance, and that is why this is of great concern to me.
If the public feels that millions of dollars are wasted,
they are going to be far less likely to support the
appropriation of additional funds to help people in future
disasters. And that is why this Committee, which has new
oversight responsibility for FEMA, is conducting this
investigation.
In your comments, you said that focusing on one county,
Miami-Dade in this case, as the Committee's major focus has
been, results in faulty results and incorrect conclusions. Yet
the Inspector General said that the systemic weaknesses and the
lack of controls that his audit identified could be applied
beyond Miami-Dade and, in fact, characterized the provision of
assistance in general. Do you disagree with that finding?
Mr. Brown. The extrapolation of things that were found in
Miami-Dade to other areas of the State, particularly areas of
the State that were particularly hard hit, I think does draw
incorrect conclusions. The reason for that is this: It is very
easy for an inspector to make a determination when he looks at
a home and all that is there is a foundation. It is more
difficult for an inspector to make a determination of what has
really occurred in those marginal areas where it is more
difficult to discern, and you have to use judgment as to
exactly what occurred, particularly when you are making those
discerning kinds of judgments in housing stock that is old and
decrepit and--by our standards, by the standards you and I
would want to live in--is certainly substandard.
And so, to draw the conclusions from those kinds of
inspections to all of the programs throughout all of the
country, and the State in this case, I think is an incorrect
extrapolation.
Chairman Collins. Well, let me give you a specific example
that the Inspector General identified as an inappropriate
process that leads to overpayments. He told us that FEMA
inspectors, when they are evaluating a spare bedroom, for
example, evaluate it as if it has two twin beds, a chest of
drawers, a nightstand, a lamp; in other words, as if it is
fully furnished, even if that bedroom, in fact, only contained
a single bed. If that is being done in general, why does that
not produce overpayments everywhere that procedure is applied
and not just in Miami-Dade?
Mr. Brown. That is actually an excellent question, and the
reason for it is because in most areas it is safe to assume
that in the destroyed home that you see--that is the typical
middle class home--it is easy to make the assumption that yes,
there is that property in the structure. It is more difficult
to make that judgment--and I agree with you. I think in those
marginal areas, we do need to tighten that up. And so, if there
is a way that we can do that tightening up so that in the
marginal areas that are not as clear-cut as the destroyed
typical middle class home, then, I am willing to do that, and I
think that we should do that. But to draw the extrapolation
that because we found a situation in one county that may have
an unusual situation and extrapolate that to all inspections
done all across the State, I do think that is incorrect.
Chairman Collins. Do you think that FEMA should be paying
for furniture that does not exist?
Mr. Brown. We should not be paying for anything that does
not exist.
Chairman Collins. Well, is that not what happened?
Mr. Brown. But Congress told us that we would. But it does
in those very marginal cases. And I would like to eliminate
those marginal cases.
Chairman Collins. If you are using a generic room approach,
you are paying for furniture that does not exist.
Mr. Brown. That is correct, and I do believe we need to
tighten that up in those marginal cases. That is the balancing
act that I talk about. We should not require an inspector that
is in a neighborhood that you and I could look at and say, it
is reasonable to assume that there was the typical furniture in
that home, and that home is now demolished; I do not think that
either one of us want to be in a position where we are going to
delay assistance to that individual while they go out and
somehow prove to us that they had a nightstand or two
nightstands and a king-size bed versus a double bed.
I do not think we want to get into that kind of
discriminatory, discerning type of practices. I do agree with
you, though, that the other side of the balance is to try to
figure out a way where it is in those very marginal cases, how
do we in fact do that determination without slowing down the
aid so much that that victim who really does need our
assistance is now waiting 2, 4, 5, or 7 days for that
assistance? That is the balance we are trying to find.
Chairman Collins. Do you think FEMA inspectors should be
okaying payments for automobiles that have been towed away and
cannot be inspected?
Mr. Brown. I knew you would ask me about that particular
example, and that is a tough example. I was not there, and I
did not see, I did not talk to that individual like I would
talk to you right now and read your body language and check
your sincerity and understand the whole totality of
circumstances of what that inspector is seeing on the ground.
We have to give the inspectors some latitude to recognize
that people's lives have been upended. They are at the worst
point in probably their entire lives about how to make a
decision. You take a single mother in Miami-Dade County who
maybe relied upon that Opel Cadet to get her kids to school or
to get to work maybe two or three jobs that she is working.
That inspector has to make a judgment call.
Yes, we negotiated with the State under the IHP program
before we went into the disaster about what we would pay. Our
goal is to get that single mother transportation, not to give
her $250 or $450 or $2,000 to meet the Blue Book value of her
car but to give her reimbursement for the transportation so she
can make the decision, get another vehicle, return to work, get
those kids back to school. That is the judgment that those
inspectors make in the field.
Chairman Collins. Mr. Brown, do you disagree with Florida
officials who said that the damage from Hurricane Frances in
Miami-Dade County was minimal? Do you disagree with the Weather
Service assessment that there was no flooding?
Mr. Brown. It is not a matter whether I disagree or not. It
is what the facts are. The facts are this, Senator: The private
insurance companies, who have a vested interest in not paying
out claims to the extent that they do not have to have to date
paid out $60 million in property damage claims to Miami-Dade
County. There was damage in Miami-Dade County. We have also had
requests from the County of Miami-Dade for reimbursement of
both emergency protective measures and for debris removal. We
have paid over $700,000 in Miami-Dade County for debris
removal. So all of the premises that so many people have
started from that we paid for things in Miami-Dade when the
hurricane did not get there, and there was no damage, is just
incorrect.
Chairman Collins. Well, we all know that insurance claims
cover a far broader array of damages than FEMA assistance.
Mr. Brown. And that is why I focused----
Chairman Collins. That is totally different. You can have
an insurance claim for minor flooding in your cellar as a
result of a thunderstorm. We are talking about a hurricane.
Mr. Brown. That is correct, and hurricane bands can produce
tornadoes. If you are living in substandard housing, sustained
winds of 59 miles an hour can make your home uninhabitable. And
so, we should not pick on the people of those neighborhoods
because they live in unfortunate, substandard housing, and they
do not have insurance. We should not pick on them because of
that.
In Miami-Dade County, the Governor had already ordered a
mandatory evacuation. I tried to get into Miami International
Airport. It was closed. There were severe rains. There were
severe thunderstorms. Frances was still making landfall. This
is one of the slowest hurricanes that we have seen in the
history of this country. We did not know which direction she
was going to turn or what to do. We made the absolute right
call in declaring Miami-Dade, because it is my honest and
sincere opinion that had we not added Miami-Dade County on to
the President's disaster declaration, I would have been hauled
up here and been asked why did I not provide aid to those
people and those neighborhoods where those tropical force winds
either caused damage or caused them to suffer.
Chairman Collins. The Presidential declaration said that a
preliminary damage assessment should be done before Miami-Dade
County was added. Why was that not done?
Mr. Brown. If I may, I believe that the Inspector General
is just wrong in that regard. The President's letter, and I
want to quote it verbatim--I got the wrong page up. I am sorry.
The letter is addressed to me.\1\ ``You are authorized to
provide individual assistance in the designated areas,
assistance for debris removal and emergency protective measures
(Category A and B) under the Public Assistance Program in all
counties in the State and Hazard Mitigation statewide, and any
other forms of assistance under the Stafford Act you deem
appropriate subject to completion of Preliminary Damage
Assessments.''
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\1\ The letter referred to appears in the report entitled ``Audit
of FEMA's Individuals and Households Program in Miami-Dade County,
Florida, for Hurricane Frances,'' Department of Homeland Security,
Office of Inspector General, Office of Audits, OIH-05-20, May 2005, on
page 34.
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Chairman Collins. Subject to the completion of a PDA.
Mr. Brown. Any other assistance other than Categories A and
B, which under the FEMA programs would be Categories C through
G. If I wanted to provide any of those categories of
assistance, the President said before you add those counties
and provide that kind of assistance, you must do PDAs. A and B
were the exception. That is the way FEMA has always operated.
Chairman Collins. In your written statement, you say, ``In
normal circumstances, some of the quality control problems we
saw in Florida would be unacceptable. Given the context,
complexity, and enormity of our operations, their results were
far more commendable.'' I would like to refer you to Exhibit
No. 5,\2\ in the exhibit book on the table. If we could have
the exhibit put up. This exhibit, as you can see, is entitled
Errors Found through Quality Control Inspections Conducted by
Parsons-Brickerhoff. This chart shows a 37 percent error rate
on personal property inspections conducted in Miami-Dade and an
18.5 percent error rate on the home unsafe determinations, a 16
percent error rate on furnishings, 16 percent on clothing and
11.5 on willingness to relocate. Are these the kinds of quality
control results that you view as ``commendable''?
---------------------------------------------------------------------------
\2\ Exhibit No. 5, a chart entitled ``Errors Found Through Quality
Control Inspections Conducted by PB (389 QC Inspections Total)''
appears in the Appendix on page 75
---------------------------------------------------------------------------
Mr. Brown. Yes, and can I explain why?
Chairman Collins. Yes, this is very interesting.
Mr. Brown. We have within our contracts, which are
currently under review to renew, an extraordinarily tight
quality control process. So within that 37 percent that you see
on personal property errors, there is a list of 65 different
items that the quality control people go through and actually
nitpick, if I can use that word. They are trying to find errors
not just substance but in procedure, in the way the inspector
actually dealt with the applicant, things such as did the
inspector arrive on time, was the inspector friendly.
And so, those kind of things are categorized so that we can
take every single one of those 65 items and improve that
particular inspector's quality of inspection. So I am not
surprised, as long as that 37 percent does not translate into
some figure that is an outrageous amount of money that has gone
out that should not that we have to now go recoup, that 37
percent figure does not mean anything to me other than that the
quality control process was working, and they were doing what
they had to do to make that procedure even better.
I do not think we can take--what I am trying to drive at is
that you cannot take that particular figure and drive that
percentage to an amount of money that we have to recoup.
Chairman Collins. This is a sampling. To me, it is an
alarming sampling. Let me show you some of what we found in our
investigation. I would like to refer you to Exhibit No. 9 in
the book.\1\ This is a quality control report. Do you see on
the far right, the level of damage done? None? We found this
over and over again, and yet, in this, thousands of dollars
were paid out to individual claimants. The quality control
report points out that there was money provided to repair a
dryer. There is no dryer.
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\1\ Exhibit No. 9, ``IHP Daily QC Report'' appears in the Appendix
on page 76.
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And this is not just a single example. We have many
examples.
Mr. Brown. And I recognize that in the course of responding
to these disasters which, again, just let me give you a little
perspective. Take an average, well, there is no average
disaster. I have made it a philosophy of mine when I get asked
by the news media, well, how does this compare to where you
were 2 days ago, I just do not compare one county to another or
one State to another.
But if you take just some of the disasters that FEMA has
dealt with during my tenure, let us take the California
wildfires, for example. In the California wildfires, we did
23,398 inspections. In Florida, we did--are you ready for
this?--885,744 inspections. That is how much we had to ramp up.
So there is no question in my mind that this Committee, the
press, myself, my staff, all of us can find documents like this
that are going to show where errors were made.
That is not acceptable to me. I want to clean that up. I
want to fix that process. But to extrapolate from that and say
that the quality control process that we have in place which is
designed to find these errors is broken I think is incorrect.
Chairman Collins. Well, let us talk about the inspection
process. FEMA asked each of its contractors to perform 15,000
inspections per day, which is double the maximum number that
they were required to perform under the contracts. When FEMA
took this step, did you realize that meant that the contractors
were going to have to hire thousands of new inspectors?
Mr. Brown. I did, and if I can describe the choice that I
have to make as the leader of this organization, the choice is
this: Florida and these other States have been hit with a near
catastrophic event. It is not unlike what a terrorist could
have done if a terrorist had been trying to do something. So I
make the determination that in trying to reach this balance, I
can do one of two things: I can either stop all inspections
such as was done in the 1994 Northridge earthquake and just pay
money out based on ZIP Codes, or I can ramp up, work with the
contractors, do everything I can trying to be a good steward of
the taxpayer dollars and get eyes on every claim.
My objective was to get eyes on every claim made and not
pay things out by ZIP Code. So when you are doing 885,000
inspections, there are going to be errors. I want to clean
those up, but I still believe I made the right decision for the
taxpayers and the disaster victims of continuing to get aid out
to them but not do it on a blanket basis like was done in 1994
on a ZIP Code basis.
Chairman Collins. Are you aware that FEMA's preliminary
analysis of inspector error rates for all of the Florida
disasters shows that new inspectors have an error rate of more
than three times that of experienced inspectors?
Mr. Brown. I do, and in fact, if you look specifically at
Miami-Dade County, which is the impetus for this investigation,
you look at the--it is 50-some experienced inspectors had an
error rate of something under 2 percent, and the inexperienced
inspectors had an error rate somewhere close to 9 percent, 9.8
or something, I believe it was, 9.2.
I think what that shows is of those 2,000 inspectors,
additional inspectors that we brought on, some of the companies
did an excellent job of training them and educating them and
limiting what they were able to do until they gained
experience. They had kind of an algorithm built in so that a
new inspector would go out with another inspector. They would
only allow them to do five inspections, bring them back in,
check their work, see if they are ready to go back out again;
maybe do some more. So we did make that decision to ramp up the
inspections, which we knew would cause a higher error rate, but
we knew in the long run, that was still the more prudent thing
to do to continue to get assistance out as quickly as possible.
Chairman Collins. Are you aware that inspectors were
deployed to the field before their background checks were
completed?
Mr. Brown. I am not aware that they were deployed before
the background checks were completed. I am aware that
background checks are required.
Chairman Collins. Are you aware that several of the
inspectors had to be removed because they had serious criminal
records?
Mr. Brown. I am aware that there were some that were
removed. We found some on our own that we removed for various
reasons, and I do not believe that--and while that is not
acceptable to me, I mean, I would prefer to have everyone with
a perfect background, I think it is also unfortunate that we
lump in some of these folks that maybe had a DUI or maybe had a
misdemeanor of some sort that have paid their debt to society,
went out and conducted the inspections and that we have had,
again, almost a million inspections done and no complaints
about anyone with a criminal background doing anything
improper.
Chairman Collins. No complaints, so those inspection forms
where the quality control inspector later found that there was
absolutely no damage, you do not think that suggests there was
a problem with the inspector who did the original assessment?
Mr. Brown. No complaints from those that received the
inspection, no complaints from the victims.
Chairman Collins. Well, I am not surprised that the victims
did not complain. They got checks even though their homes were
undamaged. In fact, there is an amazing document attached to
one of the quality control reports where it says the applicant
called in to find out what is the check to be used for? This is
a case where there was no damage.
Mr. Brown. Senator, again, with all due respect, that is
not acceptable to me. We want to tighten those up, and we want
to fix those. We have found examples of that where we tried to
fix it. Again, if I put it in the context of what the choice is
that we make, we all have choices to make, and in this case,
the choice was ramp up the inspections, try to get as many out
there so I have eyes on every claim, or just do the blanket ZIP
Code. I refuse to do the latter.
Chairman Collins. Well, I do not think those are the only
choices. I agree with you that you made the right decision in
not doing the ZIP Code approach, but I think we could do a lot
better. To go back to my generic room example, those problems
were first identified back in 1991 by an IG report, and yet,
FEMA is still using that approach. I realize that was long
before you became head of the agency.
Mr. Brown. But that report also recognized that while that
approach had flaws, the IG report from Hurricane Andrew also
told us to continue to try to find the quickest, the most
efficient approach that would get the money out the fastest to
individuals. That is the competing interest that we still
fight.
Chairman Collins. See, this is where you and I have a
fundamental disagreement. I do not think there is a tradeoff
between responsive, swift assistance to those who are truly
victims and protecting taxpayers against waste, fraud, and
abuse. I think we can do both, and I think we greatly improve
the chances of doing both by implementing procedures and
safeguards that will ensure that the money is well spent and by
having a system of checks and balances and quality control that
would greatly reduce the possibility of erroneous payments or
outright fraud. And I do not see this tradeoff. I think it is a
false choice.
Mr. Brown. But may I explain? Because I think whatever the
exhibit was that showed the graphs with the error rates, that
shows that the quality control system does work. And
ironically, it works both ways. We have found--we are in the
process right now in Florida of recouping money from
individuals that through our quality control process, we found
should not have gone to those people.
Now, I would like to tighten that up even more so that at
some point, we can narrow that down to where we actually know
that before the check goes out, granted. But that quality
control process also finds people where the inspectors made the
error on the side of the taxpayers, where they were actually
eligible for more money that we did not get them. So I think
that shows that the quality control process gets, and what you
and I are discussing is how can we make that quality control
process meet both objectives? How can we have a quality control
process that allows us to get eligible victims the money that
they deserve that you tell us as Congress we have to give them
under the law and at the same time do it in a manner that is
fast and efficient so that the taxpayers then do not lose
confidence in FEMA because getting the assistance to people
takes so long to get it to them. That is the balance we are
trying to get to.
Chairman Collins. Let me give you another very concrete
example: FEMA, in the midst of all these hurricanes, which were
putting enormous strains on your resources----
Mr. Brown. Absolutely.
Chairman Collins [continuing]. Decided to take steps to
expedite inspections by introducing some new guidelines. These
guidelines, inspectors have told us, created a great deal of
confusion on what the standards were, but they also had another
consequence. The change in the guidelines, contractors have
told us, forced them to disable their error checking software.
So here is a key safeguard built into the system to catch
errors, but because of the change in guidelines in the midst of
trying to handle all of these hurricanes, that safeguard was
taken away.
Mr. Brown. That troubles me, but again, let me put it in
perspective: It was one level of safeguards taken out. It did
not take away all of the safeguards. It did not take, for
example, the edit check away from the Palm Pilot that the
inspector actually used in the field. It was down the road that
it took one level out. The other checks remained in place.
Chairman Collins. It is yet another example of a safeguard
that was not in place. That is the problem.
Mr. Brown. But what I do not want the public or the
taxpayers to take from that statement is that all safeguards
were then taken away.
Chairman Collins. No, but----
Mr. Brown. It was one level of safeguard that, yes, did go
away.
Chairman Collins. That would have picked up some of the
errors. And keep in mind some of the mistakes are mistakes.
There are errors. We have other examples of outright fraud. We
have examples when you were talking about the inspectors. We
have examples of inspectors who have been referred to the
Office of Inspector General's criminal investigators because
they did no inspections. They never showed up at the houses.
They just filled out the forms.
Mr. Brown. And in fact, some of those inspectors were
actually found by our own quality check system.
Chairman Collins. I would say that is a pretty serious
problem with inspectors when you are saying----
Mr. Brown. Senator, I do not disagree with you. The fact
that we have an inspector who goes out to Burger King and tells
people to come by and let me fill out the forms while you are
sitting in the Burger King is totally unacceptable to me. But
in the context of 7,000 inspectors, do we want to get--I do not
think we will realistically ever get to the point where there
are no inspector errors or there are no inspectors or
individuals, for that matter, receiving our assistance who are
not going to try to cheat us.
So we have to make certain that we have the right kinds of
proper safeguards in place. I think that sometimes, the
examples which are egregious, unacceptable to me, they are
frankly outrageous; they are just outrageous to me, sometimes
causes us to lose sight of those safeguards that are in place
that allow my team to actually identify an inspector like that
and turn him over to the Inspector General.
Chairman Collins. Do the FEMA claim forms have any kind of
warning on them to the claimant that false claims will be
prosecuted?
Mr. Brown. Yes, it is no different than many other
government forms that require when you do self-verification
that you do it under penalty of perjury, that you do it, that
you have told the truth; it has all of those things on there.
Chairman Collins. I want to turn now to the issue of rental
assistance. As I indicated earlier, more than $9 million was
spent on rental assistance in Miami-Dade. That is close to a
third of the money that was spent. Do you know how much of that
money was actually spent to rent alternative accommodations?
Mr. Brown. We do not, and I think that is one area where we
can make some improvement. If you look at the 1992 Inspector
General's report, it recognized both the validity and the
importance of this rental assistance, particularly when it is
in the expedited assistance format, and they recommended that
we cut that back to 2 months. In this case, we actually cut it
back to 1 month. It is only when we go into the second or third
months of that expedited assistance that we actually do the
verification of the first month, did you actually spend it on
that, and I think that is an area where we need to tighten that
up. I do not want to get rid of the expedited assistance
program, and I would also like to tighten up the rental
assistance programs so we can do more verifications of that.
Chairman Collins. The Inspector General points out that
some 4,300 applicants who received rental assistance did not
indicate any need for shelter at the time that they registered.
The IG also told us that he believes rental assistance must
actually be spent on rent, as he memorably said, that is why it
is called rental assistance.
Mr. Brown. Right.
Chairman Collins. Do you agree with that?
Mr. Brown. Absolutely, but what is rent? Rent is a motel.
It could be a camper-trailer that you found that someone is
going to let you live in for awhile. Sometimes, these are dire
straits, and they find whatever they can to rent. I do not want
that condition, though, to negate the fact that I agree with
you: We need to have a better way of verifying that rental
assistance while at the same time making sure that people who
have the need to be able to get into a motel or an apartment or
whatever that they are indeed able to do that.
Chairman Collins. The reason I ask is you have said,
``seeking other accommodations and residing elsewhere are not
eligibility criteria for receiving rental assistance.'' You can
see why that statement would puzzle me.
Mr. Brown. Right.
Chairman Collins. So you do believe that it is supposed to
be used for rent.
Mr. Brown. Yes, but again, not to belabor the point, it can
take many forms. It could be that they find some guy who has
got four or five camper-trailers, and yes, I know you have lost
your home, or you cannot live in your home for whatever reason,
and I will rent that to you for awhile. Sure.
Chairman Collins. Mr. Brown, let me just ask you one final
question, and that is to go back to the declaration process. I
want to read you a quote from a memorandum submitted by a FEMA
employee. Clay Hale is his name. He said, ``the most
significant change that would reduce the amount of
inappropriate assistance would be to improve the declaration
process.'' Do you agree with that?
Mr. Brown. I cannot agree or disagree with that. I do not
know in what context he says that, what he means by improving
or changing the declaration--I just do not know what he means,
Senator, with all due respect.
Chairman Collins. Well, I guess, then, my final question to
you will be this: What do you think should be done to better
administer disaster relief so that we do not have the high
incidence of erroneous payments, fraudulent claims, wasteful
spending that certainly appears supported by the evidence with
regard to Miami-Dade County?
Mr. Brown. Every year, every single year in every disaster,
because we do play this balancing act, FEMA ends up recouping
money from individuals who received money that they should not
have received or received more money than they should have
received.
We also make, through our quality control process, checks
where people end up receiving money that they should have
received that they did not receive. And so we have to, after
every disaster go through and try to find ways that we can
tighten up and improve our processes. And to give you just very
briefly without going into all the details, because I do not
want to bore you with those; we will put those in the record,
some of the things that we are doing: We are trying to better
define the contract for developing our communications strategy
so that county commissioners, for example, better understand
what they are getting money for.
We want to standardize the PDA process so that the whole
desire of doing PDAs, that we have standardized processes for
different ways of doing PDAs. We want to develop clear standard
operating procedures for interim shelter and necessary support
resources; develop comprehensive new management plans for the
direct housing opportunities that we pay for. We want to
upgrade our technology. We think that with as fast as
technology is improving, there are certainly ways that we can
do to speed the amount of information that we get in the field
and to verify that information.
We want to develop some threshold matrices to activate the
surge registration intake capabilities. In other words, when we
have to ramp up to something where we are typically doing
480,000 registrations a year, and suddenly, we have to do 1.2
million to 1.7 million registrations because of an unusual
event, we want to develop the protocols in advance for doing
that.
We want to take the recommendations the IG had. If you read
my response to the IG report, many of those recommendations, we
have already started implementing. Some, we want to sit down
obviously and have further discussions, but many of those
things we are already doing and want to implement.
Chairman Collins. I appreciate your testimony here today.
It is my conclusion that a great deal of work remains to be
done to ensure that in our efforts to deliver swift,
compassionate assistance to the disaster victims that we do not
compromise the taxpayers' money. I am very concerned about the
integrity of this program, and I believe that if we do not take
steps to greatly reduce the kinds of problems that the
Inspector General and this Committee's investigations revealed
that public support for disaster relief will be diminished, and
I know that we share a common goal of making sure that disaster
victims are served compassionately and quickly. I hope we also
share the common goal of making sure that taxpayers' money is
not wasted.
Mr. Brown. Senator, we share both of those goals. My pledge
to you is that we will continue to work with you and the
Committee to implement recommendations to find ways that we can
meet both of those goals.
Chairman Collins. Thank you.
The hearing record will remain open for 15 days. I want to
thank all of our witnesses today as well as the staff for their
work. This hearing is now adjourned.
[Whereupon, at 11:29 a.m., the Committee adjourned.]
A P P E N D I X
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