Road Home smooths way to appeals

The state Friday will unveil a new way to appeal Road Home grants, promising to lift thousands of disgruntled applicants out of a "black hole" of languishing complaints about lowball grants while putting the brakes on plans to collect overpayments.


The move is part of a larger effort by the newly combined Louisiana Recovery Authority and state Office of Community Development to assume direct control of certain procedures once left to Road Home contractor ICF International.

For example, LRA director Paul Rainwater has stepped in to stop ICF from hiring a collection agency for grant overpayments, which the state is required to recover under federal housing rules. A month ago, ICF moved to hire a subcontractor to retrieve excessive payments ICF believes it made to as many as 5,000 of the estimated 135,000 to 140,000 Road Home grant recipients.

But Rainwater now says he wants ICF to freeze collections work and wait for state officials to review each case. The LRA wants to make sure it's cost-effective to seek a repayment and to collect money only when it seems absolutely necessary under federal rules, using special caution in circumstances where the homeowner has already applied the money to rebuilding costs.

"We realize we can't get blood out of a turnip," Rainwater said.

He went a step further and said he didn't want liens placed on properties where overpayments have been made, promising instead that the state would set up flexible, no-interest repayment plans.

Rainwater also said he would abolish a policy of fining ICF the full amount of any overpayment and find another way to fine the company for mistakes made in bulk, hoping that will take away an incentive for the Virginia-based firm to aggressively pursue homeowners.

Rainwater, Gov. Bobby Jindal's recently empowered point man for recovery, said it was time for the state to "take ownership" of a Road Home process that ICF has driven since it was hired two years ago.

Rainwater said he recently replaced Office of Community Development officials who were too chummy with ICF, a process he called the "de-Baathization of OCD," in reference to bans on members of Saddam Hussein's Baath Party after the U.S. invasion of Iraq.

"It's been like hitting someone with an umbrella; what I need is a bat," he said.

Jindal gave him that figurative bat through an executive order in January, and he has responded by putting state officials in ICF's housing centers and by revamping the much-criticized appeals process.

According to protocols released early to The Times-Picayune, ICF will no longer use informal "dispute resolution," and any complaint not resolved within 60 days automatically gets a formal appeal review by a panel that will include three state officials, in addition to ICF employees. And state legislators will be allowed to sit on the panel, providing more transparency for the lawmakers who have been some of ICF's strongest critics.

Unlike in the past, when rules prevented Road Home from talking to a homeowner once he filed a formal appeal, an appeals adviser will be required to contact the applicant within 15 days to make sure the process is clear and that the applicant understands file details.

Some homeowners have expressed concern that they could lose the right to appeal by signing a new document to collect a $30,000 elevation grant. The Road Home Elevation Incentive Agreement, a document sent in recent weeks to about 115,000 applicants in flooded areas, says the home-raising grants can't be appealed and asks applicants to acknowledge that the elevation money is their "FINAL disbursement of Road Home funds" and "that all resolutions and appeals regarding my Road Home compensation have been concluded."

Rainwater said that language was never intended to quash pending appeals or to keep people from appealing other Road Home grant calculations. He said the section was put in the agreement to show that the elevation grant has to be the last dose of financial help provided, so the state can be sure it doesn't exceed the maximum of $150,000 in total Road Home money to each applicant.

Asked whether the agreement could be used to shut down some appeals, Rainwater said, "Over my dead body." But some homeowners say they still are afraid to sign a legal agreement until the language is changed. State officials said they would look into the possibility of sending an amended agreement or advisory to allay those fears.

FEMA parks closing June 1

BILOXI --Residents living in FEMA trailer parks are panicking about where they will live when the temporary housing program ends June 1.

Some residents have flooded a local mission group with phone calls, asking for help finding and moving into new homes. Roughly 6,800 families in South Mississippi still live in the temporary trailers, as the third anniversary of Katrina nears.

"There's just an outpouring from the community of people desperate to try to scrape together dollars here and there to pay deposits on rentals to move out of their FEMA trailers," said Dena Wittmann of Back Bay Mission. The United Church of Christ group is focusing on emergency housing assistance.

The residents, Wittmann said, have been told by their housing advisers that they will be evicted, and the trailers will be removed, by June 1. They want to know where they can get the money for a deposit on a rental, which usually is the cost of one month's rent.

"These deposits are the largest impediment to people moving into more permanent housing," she said.

FEMA has provided the residents with a list of rental properties available, and other resources, including nonprofit agencies that assist with deposits.

Back Bay Missions was on that list, but Wittmann said the group could not afford to cut families a check for more than $800 each - the average cost of a two-bedroom apartment.

"If we were to pay 10 families (the deposit), that would eat into our entire budget for the month," she said. "It's just gotten really scary for a lot of these families that are coming to us and are just desperate for help."

Road Home slows insurance claim payoffs

Richard Barker reached a $60,000 settlement for wind damage on a home near Six Flags on Dec. 12, but his eastern New Orleans client hasn't seen a dime of the insurance money five months later because the Road Home hasn't signed off on the paperwork.

Hundreds of homeowner insurance settlements are on hold because of a bottleneck at the Road Home program, and more are piling up every day, plaintiffs and defense attorneys say, because of the state's diligent checks to make sure that people aren't being overpaid and insurance companies aren't being subsidized.

"You can leave a voice mail once a day, and you're never going to get a return call. This is just an exercise in futility," said Barker, who plans to approach a judge with the insurance defense attorney on the case to see whether they can route around the grant program so the company can cut a check and close the claim.

As lawyers across the city grow exasperated, Soren Gisleson, head of the insurance section at the Louisiana Association for Justice, said several plaintiffs attorneys will meet with Louisiana Recovery Authority Executive Director Paul Rainwater and Office of Community Development Executive Counsel Dan Rees today to look for a way to break the logjam on insurance settlements.

"The problem is there's no time limit for Road Home to respond to the request," Gisleson said. "It's killing the homeowners. It's delaying all settlement checks."

Careful reviews required

Federal law requires Louisiana to make sure there is no duplication of benefits between Road Home grants and insurance payments. Although only additional insurance payments on structures are deducted from Road Home rebuilding grants, the program requires grant recipients to provide detailed information on any additional payments on structural damage, lost contents and displaced living expenses and send it to the state for a signature. If overpayments are discovered, the grant program must be repaid.

Recovery authority spokeswoman Christina Stephens said the state needs to review all of that information to watch for suspicious classifications of damage, such as putting everything on contents and living expenses to avoid having a grant reduced.

"They want to look at how the settlements are structured and to look at what funds are included in the settlement," Stephens said. "Sometimes we'll have questions for the insurance companies and questions for the homeowner."

The state Office of Community Development has six people working on the issue, two of them full time, and ICF International, the company that runs the Road Home program, has two people on insurance issues, one of them full time, Stephens said.

They have approved about 450 insurance settlements, and another 420 are pending, but the program is getting 10 to 15 new settlement approval requests a day as the pace of litigation settlements increases. "Our goal is to turn them around as quickly as possible," Stephens said.

Homeowners wait

The bottleneck is creating the unusual situation in which the grant program that was supposed to help homeowners is preventing them from collecting insurance coverage they paid for, in some cases even though the insurance settlement is worth more than the Road Home grant.

Barker's colleague, David Bernberg, has another eastern New Orleans case in which the Road Home gave his client a $600 grant, but won't sign off her insurance settlement of $55,000 in contents and $18,000 in additional living expenses.

While that type of case might set off a red flag with the recovery authority, from the plaintiffs attorney perspective, the settlement should just be waved through because there's no new money for structural damage that should affect the Road Home grant. "This poor lady can't get paid," Barker said.

While some note that every delay allows insurance companies to keep settlement money in their bank accounts, companies say they're eager to clear out Katrina claims.

"We've had some significant delays with getting settlements into the hands of our customers," said Phil Supple, a spokesman for State Farm, Louisiana's largest residential insurer. "I understand that they are woefully understaffed. We would be supportive of any efforts by the Road Home to resolve these issues to get settlements into the hands of policyholders."

Seeking a solution

To get around the Road Home inertia, some insurance companies have allowed homeowners to sign affidavits agreeing that they're responsible for repaying the Road Home if they collected too much money on their grants. In other cases, plaintiffs and defense attorneys are filing joint motions in court asking judges to declare that after, say, 30 days, the settlement can proceed without the Road Home's signature and the program will have to pursue any overpayments individually. Another idea has been to haul the Road Home into court for an answer and allow settlements to proceed if the program doesn't send anyone.

When plaintiffs attorneys meet with the recovery authority today, Gisleson said, they will ask the Road Home to allow homeowners to cash checks if the program hasn't flagged a problem in 30 days or accept settlements that have been approved by a third party such as a magistrate judge or a licensed mediator.

"We're talking about thousands and thousands of people" as settlements are reached, Gisleson said.

Army Corps says Condition of many levees a mystery

ST. LOUIS (AP) -- Across America, earthen flood levees protect big cities and small towns, wealthy suburbs and rich farmland. But the Army Corps of Engineers, the federal agency that oversees levees, lacks an inventory of thousands of them and has no idea of their condition, the corps' chief levee expert told The Associated Press.

The uncertainty, amid an unusually wet spring that has already caused significant flooding across many states, is creating worry even within the corps.

''We have to get our arms around this issue and understand how many levees there are in the country, who's watching over them, what populations and properties are behind them,'' Eric Halpin, the corps' special assistant for dam and levee safety, said in an interview last month. ''What is the risk posed to the public?''

Critics are troubled that the government doesn't know the answer.

Robert Bea, a University of California at Berkeley levee expert, said many levees are old, with rusting infrastructure and built to protect against relatively common floods -- not the big ones like the Great Flood of 1993, when 1,100 levees were broken or had water spill over their tops.

''Once they do get an inventory,'' Bea said, ''I think we're not going to like what we find.''

Residents along the Mississippi River have been fighting floods with levees since the 19th century. After a devastating 1927 flood, Congress got involved, approving construction of levees and reservoirs along the Mississippi and Missouri river basins.

Today, about 2,000 levees are either operated by the corps or by local entities in partnership with the corps, generally protecting major population areas such as St. Louis and New Orleans.

Thousands of others -- no one is sure how many -- are privately owned, operated and maintained. The majority of those are ''farm'' levees keeping water out of fields, but some protect populated areas, industries and businesses.

For example, flooding in March breached private levees near the southeastern Missouri towns of Dutchtown and Poplar Bluff.

In 2006, prompted in part by the devastation wrought by Hurricane Katrina in New Orleans the year before, Congress provided funding for the corps to inventory the levees it maintains or helps fund. That initial inventory is complete, Halpin said.

Some of what was found was troubling. For example, corps levees in Missouri and Illinois that are supposed to protect against a 500-year flood fall short of even 100-year protection, said Col. Lewis Setliff III, commander of the corps district in St. Louis. Getting those nine levees up to standard would cost an estimated $200 million.

Last year, Congress passed the National Levee Safety Act, which for the first time directed the corps to inventory all private levees. But so far, Congress hasn't provided funding and won't likely do so until 2009 at the earliest.

Still, the project is long overdue, said Susan Gilson, executive director of the Washington-based National Association of Flood & Stormwater Management Agencies.

''No. 1, we have to identify all the levees,'' Gilson said. ''We need to identify where there are problems with the levees. Then the next stage will be repairs.''

Flooding in March killed nearly two dozen people and damaged or destroyed thousands of homes across a swath of Midwestern states. With the ground saturated and rivers still running high, some worry that more flooding is on the way.

Just across the Mississippi River from St. Louis is the Wood River levee in Illinois, which protects a ConocoPhillips refinery. Flooding there could spell an environmental and economic disaster.

Water seeped through the levee in 1993, but it held. Levee district commissioner Leroy Emerick worries that the next big test might not go as well.

Residents of the tony St. Louis suburb of Chesterfield, Mo., already know what happens if the Monarch Levee breaks.

It happened in 1993, sending the Missouri River surging into the region known as the Chesterfield Valley. Within hours, muddy water reached the rooftop at the popular Annie Gunn's restaurant -- seven miles from the river.

In those days, Annie Gunn's was among a few businesses in the valley. Today, the area is home to dozens of big box stores, shopping centers and high-end restaurants.

The development came after the Monarch levee was rebuilt to protect against a 500-year flood, meaning an area has a 1-in-500 chance of being flooded to a certain level in any given year. But David Human, a lawyer for the Monarch district, said there are still small sections of the levee that fall short.

''By fall, we expect 98 percent of the levee system will be at the 500-year level of protection. But guess what? That's not 100 percent,'' Human said.

Flooding in March nearly wiped out tiny Dutchtown, a community of 99 residents in southeast Missouri. Several waterways -- the Castor and Whitewater rivers and Hubble Creek -- flow into what's known as the diversion channel there. Torrential rain caused a quick rise in water that tore through a small, private levee.

Weeks after the flood, residents are still ripping out water-soaked carpet and ruined furniture, cleaning debris from their yards, and power-washing mud caked from cars and siding.

''It was so much water at one time, and the levee couldn't handle it,'' resident Robert Reed, 72, said.

Halpin knows that another major flood would be more than many levees could handle.

''It's not a question of if it will happen. It's a question of when and where it will happen,'' he said. ''There are a lot of vulnerable spots in this country.''

Texas firm taking over Katrina insurance cases

The Provost-Umphrey Law Firm based in Beaumont, Texas, is now representing about 200 policyholders whose disputes with State Farm were being handled by Dickie Scruggs and associated law firms.

Provost-Umphrey attorneys met with ex-Scruggs clients Thursday in Gulfport, said senior partner Bryan O. Blevins Jr.

"Hopefully, we can get this litigation back on track to benefit the clients and, ultimately, the courts," Blevins said Friday.

Scruggs had to relinquish the cases after he was charged in December with conspiring to bribe a North Mississippi judge. He subsequently pleaded guilty in the case. Once Scruggs was charged, State Farm asked a federal judge to dismiss other attorneys who had worked with him. A federal judge agreed to dismiss those lawyers, known as the Katrina Litigation Group.

Lexington attorney Don Barrett, who headed the Katrina Litigation Group, on April 18 wrote to the firm's 400 clients suggesting they hire Provost-Umphrey and also saying the new firm would be sending them contracts at Barrett's request.

Barrett said Friday he met managing partner Walter Umphrey during tobacco litigation. Umphrey's firm had represented the state of Texas during the 1990s lawsuits over what states spent on health-care costs related to smoking; Barrett had worked with Scruggs on Mississippi's case.

Umphrey's firm also subleases office space in Nashville from Barrett's nephew, who has a law firm there. Barrett is listed as an attorney with his nephew's firm. Barrett said he recommended the firm because it has the resources to handle the cases and Umphrey agreed to take them on, large or small.

Also on April 18, State Farm sent letters to Scruggs clients saying their attorneys had been disqualified and that any new attorney hired should contact one of the insurer's lawyers in Oxford.

The letter also said: "We would like to see if we can resolve any remaining issues without the need for further litigation" and gave policyholders a telephone number to call.

About 15 cases have since been settled out of the 178 the Katrina Litigation Group had pending in federal court. Barrett said the group had a total of 400 clients, not all of whom had filed lawsuits yet.

One couple who has settled with State Farm, Thomas and Ann Arnold, were plaintiffs in a racketeering lawsuit filed against the company by multiple policyholders. The lead plaintiff, Glenda Shows, has signed up with Provost-Umphrey, as have some other parties to that lawsuit.

Other policyholders have found their way to Coast law firms that handle insurance cases, some of whose members were miffed by the Katrina Litigation Group's decision to recommend a personal-injury law firm based in Texas.