Dec. 21, 2011
BATON ROUGE, La. - The state of Louisiana has demanded nearly $10 million from ICF International, the former Road Home contractor, who made improper payments to Road Home applicants. Office of Community Development - Disaster Recovery Unit Executive Director Pat Forbes stressed that the state is targeting ICF International for the nearly $10 million, instead of homeowners, because the company made the improper payments.
Since August 31, 2011, the Office of Community Development - Disaster Recovery Unit, which administers the program, has sent 239 demand letters to the ICF International on files where the contractor's error caused grant funds to be improperly paid.
Under the state's contract with ICF International, which was not renewed after its initial three-year agreement, the company agreed to follow program policies and regulations when it was processing homeowner grants. Failure to do so is a breach of its contract.
OCD-DRU is finalizing demand notices for another several hundred files where a homeowner was overpaid because of ICF's mistakes.
OCD-DRU Executive Director Pat Forbes said, "We can't have homeowners being penalized for the mistakes of the contractor. We are demanding that ICF International pay for its errors and we intend to take legal action if the company does not."
Seeking repayment for erroneous payments from ICF is part of Louisiana's effort to recapture funds that were improperly paid to homeowners, as required by the federal government.
The Road Home program is funded with billions in federal Community Development Block Grants from the U.S. Department of Housing and Urban Development. As such, it has a HUD-approved plan for recovering funds that were incorrectly paid to program participants.
The first step is a state review of all files identified as having a potential overpayment through a process called "post closing review," in an attempt to determine the cause of the overpayment. Common causes for a case to be flagged as potentially having an overpayment include the file missing documentation, homeowners receiving additional unreported insurance proceeds or the contractor making an administrative error.
Already almost 25 percent of the files reviewed by OCD-DRU staff have been able to be taken out of the grant recovery process after this additional review, usually because the state was able to collect a missing piece of documentation.
After this first review, the state sends letters to homeowners who have been identified as potentially owing funds. In cases where the homeowner agrees that his or her grant was overpaid, the state works with the homeowner to set a payment plan to voluntarily repay the grant.
If the homeowner does not respond or disagrees that the funds are owed, the file goes to the state's Grant Recovery Panel, which reviews all files to determine whether a repayment is required. If this panel determines that the overpayment was the result of a mistake by the program's former contractor, ICF International, OCD-DRU seeks repayment from the contractor.
Homeowners who must repay funds are allowed to set up payment plans to ensure that the repayment is not a hardship on their family. Any case where fraud is suspected is immediately turned over to the proper law enforcement agency for investigation.
The Road Home program has paid more than $8.9 billion to 129,588 homeowners, making it the largest program of its kind in American history.
GRANT RECOVERY BY THE NUMBERS:
As of mid-December, OCD-DRU has 2,139 files worked or in progress:
- 485 files (22.6 percent) were removed from the grant recovery process after an additional state review, which eliminated the need to recapture more than $6.4 million from homeowners;
- For 209 files, the homeowner agreed that he or she was overpaid and voluntarily repaid $1.1 million to the state;
- The remaining 1,355 files are in the "funds recapture" process. Once a file gets to this point, it is reviewed by a Grant Recovery Panel to determine if a homeowner owes money back to the program.
- The Grant Recovery Panel has reviewed 601 files and determined that on 398 of these files, the overpayment was not the fault of the homeowner and that the state should seek repayment from an alternate source, such as its former program contractor;
- Starting in August, state began sending demand letters to ICF International. So far, OCD-DRU has demanded repayment from ICF on 239 files, totaling roughly $10 million in overpaid grant funds;
- From the review panel, the state has determined 53 files needed to have funds repaid. In this situation, the Attorney General's office assists OCD-DRU in collecting the funds from the homeowner. OCD-DRU works with homeowners to find a repayment schedule that is within their means.
- So far, this process has returned $55,864 to the state, with another $334,127 in progress.
The Disaster Recovery Unit within the Office of Community Development is dedicated to helping Louisiana's citizens recover from hurricanes Katrina, Rita, Gustav and Ike. As the state's central point for hurricane recovery, the OCD-DRU manages the most extensive rebuilding effort in American history, working closely with local, state and federal partners to ensure that Louisiana recovers safer and stronger than before.