Image: FEMA trailers
GERALD HERBERT  /  AP
FEMA trailers are deployed near damaged homes in St. Bernard Parish, La., on Dec. 15, 2005.
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updated 6/1/2011 1:28:36 PM ET 2011-06-01T17:28:36

Nearly six years have passed since Hurricane Katrina drowned New Orleans in misery, but many residents haven't forgiven the Federal Emergency Management Agency for its sluggish response to the storm. Now another delayed reaction by FEMA — a stop-and-start push to recoup millions of dollars in disaster aid — is reminding storm victims why they often cursed the agency's name.

As a new hurricane season begins Wednesday, FEMA is working to determine how much money it overpaid or mistakenly awarded to victims of the destructive 2005 hurricane season. The agency is reviewing more than $600 million given to roughly 154,000 victims of hurricanes Katrina, Rita and Wilma and is poised to demand that some return money.

FEMA already has sent letters to thousands of victims of other disasters, asking them to return more than $22 million. Letters to victims of the 2005 hurricanes could go out in a matter of months, but it's too soon to tell how many people will be told to repay or how much money is at stake.

Story: FEMA asks for return of disaster aid

The effort isn't sitting well with victims who spent the money years ago and who could need help again if another powerful storm hits. It's of little consolation that FEMA says procedural changes since 2005 mean future disaster victims aren't likely to have to deal with large recalls of cash.

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Government forecasters are expecting an above average Atlantic storm season, with three to six major hurricanes that have winds of 111 mph or higher. While no hurricane that strong has made landfall since 2005, forecasters have warned that residents shouldn't count on that streak to continue.

"When you get these high levels of activity the likelihood of a hurricane striking the U.S. goes up quite a bit," said Gerry Bell, lead seasonal hurricane forecaster at NOAA's Climate Prediction Center in Washington.

Paul Wegener, whose New Orleans home flooded up to the gutters after Katrina, felt short-changed when FEMA gave him a $30,000 grant for a house that wound up costing more than $566,000 to rebuild. He applied for more through the state's Road Home program but was told he didn't qualify. The thought of having to return some of his federal aid only compounds his frustration.

"They'll have to pry it from my dead hands if they try," the 75-year-old said.

Under political pressure to help residents after Katrina, FEMA relaxed its safeguards and paid millions so victims could pay for food, clothing, shelter and medicine and also get started on home repairs.

But that allowed thousands of improper and fraudulent payments. FEMA employees awarded money without interviewing applicants or inspecting property and made errors that ranged from recording incorrect banking information to failing to check whether insurance had already covered damage, according to congressional testimony.

The 154,000 cases under review account for less than 10 percent of the $7 billion that FEMA has given to victims of the 2005 hurricanes through its individual assistance program. The recoupment effort doesn't apply to other big-dollar disaster aid programs, like Road Home, which was financed by a congressional block grant.

While hundreds have been convicted of hurricane-related fraud, FEMA spokeswoman Rachel Racusen said many of the cases under review involve mistakes by agency employees or the recipients themselves. Some payments will be deemed proper, some could be referred for fraud investigations and the rest will get letters telling them to pay back improper payments caused by human error, according to Racusen.

Interactive: Hurricane facts, figures & preparation (on this page)

Luisa Mejia, 28, was living in an apartment in Metairie, a New Orleans suburb, when Katrina drove her family out of town.

"We left with nothing but important papers and maybe two sets of clothes," she recalls. "We were in Atlanta with no money, living in a home with 40 people."

All they got from FEMA was a check for $1,200, which they used to buy clothes and food. Six years later, Mejia can't understand why FEMA would ask residents to pay for its employees' mistakes.

"I didn't get the type of money that would make me rich from Katrina," she said. "For people who were honest like me, it's crazy."

FEMA's attempts to collect Katrina and Rita overpayments already have sputtered once. Residents who lost homes filed a class-action lawsuit in 2007 challenging the denial of their housing aid and the recoupment process. The lawsuit argued that FEMA's debt collection efforts were full of errors, based on vague standards and without hearings that would ensure fair treatment.

A judge ordered the agency to suspend the debt collection in 2007, while the lawsuit was pending. FEMA responded by withdrawing all debt notices sent to Katrina and Rita victims and drawing up new guidelines that the agency says will give victims clearer explanations and more opportunities to appeal.

With those guidelines finally approved this year, FEMA started reviewing its backlog of potentially improper payments.

"Under our current leadership, strong protections have been put in place to greatly reduce the error rate of improper disaster payments," Racusen said in a statement. The agency said it has slashed its error rate involving disaster payments from 14.5 percent after Katrina to about 3 percent in 2009.

Interactive: Historical hurricane tracker (on this page)

Critics say the initiative could hurt thousands still struggling to recover, and they doubt whether much of the money would be collected. They also predicted court challenges.

"People used this money to survive," said Davida Finger, a law professor at Loyola University in New Orleans who represented plaintiffs in the class-action case. "We don't want people to have to give money back that they simply needed for rent and food."

FEMA says it is bound by law to try to collect improper payments, but lawmakers have sponsored legislation that would authorize the agency to waive debts if they resulted from an error by FEMA. A Senate committee approved the bill Thursday. No vote by the full Senate has been scheduled.

"Most of the families facing recoupment are honest disaster survivors, facing incredible challenges, who used funds for legitimate and urgent disaster-related needs, and who never intended to accept money to which they were not entitled," said Sen. Mary Landrieu, a Louisiana Democrat who co-sponsored the bill.

The FEMA letters will give individuals at least 30 days to pay back money and explain their ability to appeal, to apply for a hardship waiver or to seek a compromise.

Diane Ridgley, 56, a plaintiff in the 2007 lawsuit, recalled getting a letter from FEMA demanding repayment of nearly $17,000, money she used to replace personal belongings and pay for rent after Katrina destroyed her New Orleans duplex. FEMA told her she should have been ineligible because she listed a family friend with whom she evacuated — but did not live — as a member of her household on her application.

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Ridgley claimed FEMA employees told her to list him that way, but she received a series of confusing letters and denials when she appealed. She said she believes she has finally proven she was eligible, but has kept all of her paperwork in case FEMA comes calling again.

"I don't want nobody coming back on me telling me I gotta pay money," said Ridgley, who recently was laid off her job as a hospital housekeeper. "I know people were doing all kinds of wrong things at the moment. It was desperate times. But that doesn't give them the right to come back six years later."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Interactive: Hurricanes: Destructive forces of nature

Photos: America's worst hurricanes

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  1. Ike

    Galveston and neighbors along the Texas coast saw a direct hit by Hurricane Ike on Sept. 13, 2008. This view was at Crystal Beach, on the Bolivar Peninsula, on Sept. 18. (Eric Gay / AP) Back to slideshow navigation
  2. Ike

    A single home is left standing among the debris of lost homes in Gilchrist, Texas, on Sept. 14, 2008, a day after Ike made landfall. (David J. Phillip / Getty Images) Back to slideshow navigation
  3. Wilma

    Key West, Fla., saw storm surge flooding when Hurricane Wilma made landfall in southwest Florida on Oct. 24, 2005. Wilma roared across the Florida peninsula, pounding Miami, Fort Lauderdale and West Palm Beach. Wilma claimed 5 lives in Florida, 4 in Mexico and 14 in the Caribbean. (Carlos Barria / Reuters) Back to slideshow navigation
  4. Wilma

    Two men sit inside a destroyed mobile home in Fort Lauderdale, Fla. on Oct. 25, 2005, after Hurricane Wilma slammed across the state in about seven hours. Wilma caused $21.5 billion in property losses in the U.S. (Wilfredo Lee / AP) Back to slideshow navigation
  5. Rita

    Tens of thousands fled the Houston, Texas, area on Sept. 22, 2005, as Hurricane Rita neared landfall. (Rick Bowmer / AP) Back to slideshow navigation
  6. Rita

    Residents of Lafite, La., on Sept. 24, 2005, had to deal with waist high flooding as well as a trailer fire after Hurricane Rita passed through the area. Rita caused $11.8 billion in property damages in Louisiana, Texas and Florida. (Kevork Djansezian / AP) Back to slideshow navigation
  7. Katrina

    Survivors of 2005's Hurricane Katrina in New Orleans included this trio: Jennifer Cooper, 33, Otis Brown, 67, and Alber Jean, 50, far left. They fought their way up a highway off-ramp after escaping roof-level flood waters with a larger group aboard a motorboat. (Jim Winn / Vellum Media) Back to slideshow navigation
  8. Katrina

    Hundreds of New Orleans residents were rescued by helicopter and other means in the aftermath of Katrina, which made landfall on Aug. 29, 2005. Some 1,500 people lost their lives due to Katrina, which was the most expensive storm to hit the U.S.: $85 billion in property damage in Louisiana, Mississippi and Florida. (Vincent Laforet / Getty Images) Back to slideshow navigation
  9. Katrina

    Evelyn Turner cries alongside the body of her common-law husband, Xavier Bowie, after he died in New Orleans on Aug. 30, 2005. Bowie and Turner had decided to ride out Katrina when they could not find a way to leave the city. Bowie, who had lung cancer, died when he ran out of bottled oxygen. (Eric Gay / AP) Back to slideshow navigation
  10. Ivan

    The storm surge from Hurricane Ivan cut off this bridge north of Pensacola, Fla., on Sept. 16, 2004. (Rick Wilking / Reuters) Back to slideshow navigation
  11. Ivan

    The owner of this house on Cape San Blas, Fla., kneels to pray after Hurricane Ivan destroyed the property and hundreds more across the coast. U.S. property losses reached $15.5 billion. Ivan also claimed 25 lives in Florida and Alabama. (Phil Coale / AP) Back to slideshow navigation
  12. Frances

    The streets of Titusville and other southeast Florida cities were littered with debris after Hurricane Frances made landfall on Sept. 4, 2004. High winds and rain over several days combined to makeFrances a costly storm, with damages estimated at nearly $10 billion. (Bruce Weaver / AFP/Getty Images) Back to slideshow navigation
  13. Frances

    This mobile home park in Ft. Pierce, Fla., was swamped by storm surge water on Sept. 5, 2004, a day after Hurricane Frances first hit the coast. (Chris Hondros / Getty Images) Back to slideshow navigation
  14. Frances

    Pounding waves and storm surge from Frances left stretches of coastal roads in ruins, including this one in Jensen Beach, Fla. (Chris Hondros / Getty Images) Back to slideshow navigation
  15. Charley

    Volunteer Buddy Shipp sits in the destroyed Peace River Church of Christ in Punta Gorda, Fla., on August 22, 2004. The church's roof was blown off by Hurricane Charley but church members vowed to rebuild. Property damage from Charley reached $16.3 billion. (Mario Tama / Getty Images) Back to slideshow navigation
  16. Charley

    The roof of a garage is blown onto sheriff's cruisers in Punta Gorda, Fla., on Aug. 13, 2004. (Scott Martin / AP) Back to slideshow navigation
  17. Andrew

    Tens of thousands were made homeless by Hurricane Andrew, including Janny Vancedarfield of Florida City, Fla., seen here on Sept. 1, 1992, in front of debris that was once his house. Andrew was the second most expensive storm in U.S. history with property damage of $48 billion. (Lynn Sladky / AP) Back to slideshow navigation
  18. Andrew

    A tornado spawned by Hurricane Andrew destroyed this home on Aug. 26, 1992. (Paul J. Richards / AFP-Getty Images) Back to slideshow navigation
  19. Hugo

    Shrimp boats lie wrecked on the beach in McClellanville, S.C., on Sept. 26, 1989, after Hurricane Hugo hit. The storm caused $13.5 billion in property damage. (Jeff Amberg / Associated Press) Back to slideshow navigation
  20. Hugo

    This bridge on Sullivan's Island, S.C., was knocked out by Hurricane Hugo. The main span of a swing bridge was wrenched off its foundation during Hurricane Hugo's 135 mph winds. (Wade Spees / AP) Back to slideshow navigation
  21. Agnes

    Senior citizens are rescued in Wilkes Barre, Pa., on June 23, 1972, after Hurricane Agnes made the Susquehanna River overflow its banks. Property damage from the storm was estimated at $12.4 billion. (Phil Butler / Scranton Times via AP) Back to slideshow navigation
  22. Agnes

    Floodwaters triggered by rain from Agnes submerge homes in Pottstown, Pa., on June 23, 1972. Agnes was blamed for 122 deaths. (AP) Back to slideshow navigation
  23. Agnes

    Residents of Harrisburg, Pa., flee floodwaters from Agnes on June 23, 1972. (Paul Vathis / AP) Back to slideshow navigation
  24. Camille

    A boy takes a break after returning to the remains of his home in Buras, La., on Aug. 22, 1969, four days after Hurricane Camille hit the Gulf Coast and caused nearly $10 billion in property damage. (Jack Thornell / AP) Back to slideshow navigation
  25. Camille

    An 85-foot boat slumps in a Biloxi, Miss., yard after Camille's storm surge carried it more than 100 yards from its moorage. (Joe Holloway Jr. / AP) Back to slideshow navigation
  26. Betsy

    U.S. Highway 90 at Biloxi, Miss., went under several feet of water as powerful Hurricane Betsy slammed into the coast on Sept. 10, 1965. Betsy was responsible for 75 deaths and $11.9 billion in property damages. (AP) Back to slideshow navigation
  27. Audrey

    Crowds gather graveside for unidentified seaman killed during Hurricane Audrey, which made landfall on June 27, 1957, near the Texas-Louisiana border. The storm was the seventh deadliest in the U.S., claiming at least 416 lives. (Robert W. Kelley / Time & Life Pictures via Getty Image) Back to slideshow navigation
  28. Audrey

    Louisiana residents clean up wreckage in the aftermath of Audrey, which ripped through the southwest part of the state as well as eastern Texas. (Shel Hershorn / Getty Images) Back to slideshow navigation
  29. Galveston

    A large part of of Galveston, Texas, was reduced to rubble after being hit by a hurricane on Sept. 8, 1900. Between 8,000 and 12,000 people were killed and 10,000 left homeless from the storm, the worst natural disaster in U.S. history. (AP) Back to slideshow navigation
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