/ Local News

05/15/2008

By JOHN MORENO GONZALES  / Associated Press

State officials on Thursday sought to take the reins from a private contractor that wanted to use a collections agency to recover as much as $175 million in suspected grant overpayments from hurricane victims, citing a lack of confidence in the company's ability to determine who owed money and who did not.

Paul Rainwater, executive director of the Louisiana Recovery Authority, said the state would establish a three-person panel to hear the cases of people suspected of owing money to the $10.3 billion flagship recovery program, Road Home. The program was designed to provide up to $150,000 for each storm-affected homeowner to either rebuild or relocate.

The panel will review the documentation of applicants who believe they owe no money, Rainwater said. It will not include a representative of ICF International, the Fairfax, Va. firm whose plans to hire a collector were first reported by the Associated Press.

Those who were the victim of gross errors made by ICF will owe likely nothing, Rainwater said, emphasizing that the new approach will be "compassionate." But if ICF made a technical error in the myriad of rules that determine the size of a grant, he said, the state will still be forced to recover that money from applicants under federal law. He said they will be offered a payment plan that takes into account their financial struggles in rebuilding from hurricanes Katrina or Rita, which struck in 2005.

"An 85-year-old woman who may have received too much, are we going to actually go out and collect money and have a collections agency hound that person?" said Rainwater, noting that he was empowered by Gov. Bobby Jindal to implement the changes. "I don't think that's the right thing to do, and neither did the governor think that's the right thing to do."

Those suspected of outright fraud will be referred to law enforcement, said Rainwater. So far, there are about 45 suspected cases of such fraud being investigated by federal authorities, said LRA spokeswoman Christina Stephens.

Even without a law being broken, federal law requires that the state deduct insurance and other aid payments from individual Road Home grants, and give that money back to the Department of Housing and Urban Development coffers that fund the program. HUD spokesman Brian Sullivan did not immediately return calls for comment on Rainwater's plan to fulfill that responsibility.

The LRA's changes were not good enough for community groups that advocate for Road Home applicants.

"I had my doubts about his (Rainwater's) use of the term 'compassionate,'" said Melanie Ehrlich, co-chair of the Citizens Road Home Action Team, or CHAT. "It's not just ICF's mistakes, but it's also shifting policies."

Gentry Brann, a spokeswoman for ICF, indicated in an e-mail Thursday that the company should not take all the blame for collections strategy. It won the Road Home contract and formulated most of its rules under the supervision of former Gov. Kathleen Blanco's administration.

"Every stage of the grant recovery and appeals processes was designed previously with the full approval of the state," Brann said. "As the contractor, we will follow the state's direction and will continue to work to implement the processes they determine most effective moving forward."

ICF faces a Louisiana Inspector General investigation into a $156 million contract increase it received in the waning days Blanco's administration. ICF and subcontractors including Louisiana construction giant The Shaw Group stand to earn $912 million for running the Road Home, though state audits have repeatedly found grant miscalculations and other mistakes in the program.