Press Release

Schumer, Gillibrand: Sandy Victims In New York Are Yet Again Facing Possibility Of Being Forced To Return Federal Aid Received In Aftermath Of Superstorm Sandy; Senators Urge Feds To Waive ‘Duplication Of Benefits’ Policy & Allow Federal CDBG-NY Rising Grant Recipients To Keep Additional National Flood Insurance Settlement Funds

Jul 21, 2015

U.S. Senators Charles E. Schumer and Kirsten Gillibrand today called on the U.S. Department of Housing and Urban Development (HUD) and the Federal Emergency Management Agency (FEMA) to forego any efforts to claw-back National Flood Insurance Program (NFIP) insurance money among Superstorm Sandy victims who have recently received additional flood insurance payouts. After Schumer and Gillibrand’s push, FEMA has sought to rectify the widespread evidence of systemic and potentially fraudulent of flood insurance claims to Sandy victims.  

However, HUD now says that it will recoup new NFIP settlement funds from recipients that also received Community Development Block Grants (CDBG)-NY Rising grants for the portion of the settlement amount that it considers a “duplication of benefits”; therefore, HUD mandates that the NFIP insurance money must be recouped.

In their letter to HUD and FEMA, the Senators explained that many of the Sandy victims affected by this unfair policy have already been forced to wait for over two and half years to be appropriately compensated, and have had to endure significant hardship as a result of incompetence, and even potential fraud. Given these extraordinary circumstances, Schumer and Gillibrand are asking HUD to waive the “duplication of benefits” recoupment policy for Sandy victims that may receive an additional payment from FEMA.

In 2013, Schumer and Gillibrand successfully pushed HUD to provide additional flexibility to Sandy victims who declined a government loan immediately after Superstorm Sandy. Initially, HUD’s “duplication of benefits” policy negatively impacted these victims by requiring that CDBG assistance be reduced by the amount of any approved SBA loan – whether the homeowner accepted the loan of not. Similarly, Schumer and Gillibrand are now publicly urging HUD and FEMA to not require any additional NFIP insurance money paid to victims over two and a half years later to be considered as a “duplication of benefits.”

“Once again, the feds are penalizing our cash-strapped Sandy victims, who have already endured years of aggravation and unjustified denial of flood insurance claims, by requiring them to give back the belated NFIP settlement funds they so desperately need and deserve. We should be maximizing the support that homeowners receive and must use every tool in our toolbox to ensure that homeowners keep any aid they receive. I strongly urge HUD to waive its ‘duplication of benefits’ recoupment policy in this unique situation, given the circumstances surrounding these victims, including evidence of widespread fraud and years of hardship,” said Senator Schumer.

“New York homeowners are still working to rebuild nearly three years after Superstorm Sandy, and we need to make their work easier not add to the aggravation,” said Senator Gillibrand. “HUD should absolutely waive its policy so Sandy victims can keep the flood insurance money they desperately need.”

According to federal court records and news reports, evidence supports allegations that private insurance companies unjustly and arbitrarily denied the flood insurance claims of thousands of homeowners affected by Superstorm Sandy, many based on suspect engineering reports. More than 1,000 property owners filed lawsuits in U.S. Eastern District of New York against insurers over flood insurance claims that were denied or underpaid in the wake of Superstorm Sandy. Schumer and Gillibrand have been strong advocates for Sandy-victims impacted by the potentially fraudulent denial of their flood insurance claims. For instance, after their push, FEMA agreed to reopen and review any flood insurance claim—of the approximately 144,000—filed by Superstorm Sandy victims, in addition to the thousands already in litigation.

Despite the long battle of fighting for these desperately needed funds, Superstorm Sandy victims are now facing another hurdle involving the “duplication of benefits” policy that requires homeowners to use their FEMA NFIP insurance money to repay federally-financed CDBG funds they received via New York Rising and Build it Back. Under current law, “duplication of benefits” is not permitted in connection with the provision of supplemental disaster assistance such as CDBG. HUD regulations provide that CDBG disaster assistance is supplemental in nature, and designed to cover “unmet needs,” i.e., needs not otherwise covered by insurance.

Schumer and Gillibrand today said that NFIP settlement funds should not deemed as a “duplication of benefits.” Schumer and Gillibrand cited a federal statute that says, “The agency which provided the duplicative assistance shall collect such duplicative assistance from the recipient…when the head of such agency consider it to be in the best interest of the Federal Government.” Schumer explained that this statute gives the Secretary of HUD the ability to waive NFIP settlement funds as a “duplication of benefits.” Schumer said the Secretary of HUD should deem a waiver of this requirement because these homeowners have had to wait years for this funding due to fraudulent activity, in part by the Federal Government’s lack of oversight, and have to fight private insurance companies, leading to unnecessary aggravation. Schumer and Gillibrand said that these Sandy victims should be entitled to the full relief they desperately deserve.