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The millions of Federal Emergency Management Agency dollars given to help local tornado victims recover from the recent storms come with a word of warning: If you receive money from FEMA and insurance agencies for the same losses, you will be asked to repay FEMA.

“In a perfect world, it wouldn’t happen,” FEMA spokesmen Greg Hughes said. “But we absolutely tell them there is that possibility.”

Known as recoupment, the process can happen more than a year after the event, if FEMA receives information that duplicate benefits were paid.

To avoid duplication, applicants are asked at registration if they have insurance. Generally, applicants are asked to submit a copy of their insurance settlement or their denial letter in writing before they are eligible for FEMA assistance.

Hughes said disaster victims can help by making sure they have all their insurance paperwork with them when they file for claims.

These days, FEMA has changed its processes to avoid such duplication, spokeswoman Rachel Racusen said. Most of the notices now being sent are for disasters that happened years ago, she said.

“Recoupment is a process that Congress requires FEMA and other federal agencies to undertake, and we understand it raises many concerns, especially among current disaster survivors,” Racusen said.

“But in recent years, we have worked to fix many of the errors that led to recoupment actions in previous disasters. Under our current leadership, strong protections have been put in place to greatly reduce the error rate of improper disaster payments.”

WASHINGTON — After Robert and Eloise Taylor’s two-story condominium in the Bellevue area of Nashville was destroyed during the May 2010 flooding, the elderly couple was just able to scrape together the $60,966 it cost to rebuild their home of more than two decades.

Robert, 84, and Eloise, 83, cashed in some retirement accounts and insurance policies on their children and received $26,517.56 from the Federal Emergency Management Agency.

After spending about five months living in his brother’s house, they moved back home a few days after Labor Day, thinking that, except for the health problems Eloise has had that they think are related to stress, the nightmare was behind them.

But in mid-March the Taylors received a letter from FEMA saying they had to repay $10,500 of the assistance they received because they had received that amount through a homeowners insurance policy. That is considered double payment, FEMA said.

The Taylors are among 403 Tennesseans, mostly Nashville-area flood victims, who have received letters in recent weeks from FEMA telling them they have to return assistance payments totaling $1.6 million that the agency says were improper.

Nationwide, 5,650 recipients of federal assistance are being told to return about $22 million. And this is just the first batch of letters that FEMA plans to send out as it plows through a backlog of 168,000 improper payments totaling $643 million going back to Hurricanes Katrina and Rita in 2005.

A federal court suspended FEMA’s efforts to recoup improper payments in 2007 in response to a class-action lawsuit filed by people who applied for assistance after the two hurricanes.

Partly in response to the lawsuit, FEMA revised its procedures for recovering improper payments, and the court dissolved the injunction in August 2009.

Anita DePasquo and her husband, Tony, got a letter from FEMA three weeks ago telling them to repay $27,700 of the $29,900 grant they received.

Their home on Newsom Station Road ended up almost completely underwater last May. They put all but $2,200 of their FEMA grant toward buying a house in Bellevue, which they are renovating while they rent another home.

DePasquo said the Small Business Administration required the couple to put the money into buying the Bellevue home.

But the letter from FEMA said the money was for repairing the exterior of their house on Newsom Station Road. The letter also noted that the couple received an insurance payment from State Farm.

“Now they’re saying we’re not eligible because of duplication of benefits,” DePasquo said. “Why they didn’t tell us that at the beginning, I don’t know.

“It just doesn’t seem like FEMA is trying to help people get through this. They’re making it worse.”

DePasquo, a Realtor, said she and her husband, an information technology contractor for the Air Force, are trying to figure out how to repay.

“We feel there’s no choice because it’s the government,” she said. “They’re going to look at my husband’s income and say we have the ability to pay, even though we have so much debt.”

Tony DePasquo is working 84 hours a week at an Air Force base in Qatar to generate more income so the couple, who have two children, can pay off other flood-related debts.

WAIVER PROPOSAL

Some Democratic members of Congress who represent states where the disasters have occurred are pushing legislation that would give the FEMA administrator the authority to waive repayment in cases where the agency was in error.

Republican opponents say that would set a bad precedent at a time when the federal government is facing massive deficits.

Twelve declared disasters have occurred in Tennessee dating back to the 2005 hurricanes. Besides the flooding, one of the most severe occurred on April 27 when tornadoes ripped through the Chattanooga area, killing nine people in Apison and nine in Bradley County, along with dozens more in Georgia and Alabama.

As of May 19, more than 5,000 people in East Tennessee had registered for FEMA disaster assistance as a result of those storms. They had received more than $3 million.

U.S. Sen. Mark Pryor, D-Ark., proposed the bill that would allow waivers in cases where the collection would be “against equity and good conscience.”

Committee member U.S. Sen. Susan Collins, R-Maine, said every federal agency has some discretion to cancel repayments and that the bill would send the wrong message at a time when the federal government is trying to recover improper payments that totaled $120 billion just last year.

“We’re fixing the wrong problem,” said U.S. Sen. Tom Coburn, R-Okla. “We need to fix FEMA.”

Rep. Jim Cooper, D-Nashville, cut the middle between those two positions, saying that he didn’t think flood victims should have to pay for mistakes by FEMA.

A DUTY

FEMA officials say it is their legal duty to collect the improper payments, and emphasized that the amounts sought are just a small portion of the total disaster assistance that was paid.

Taylor isn’t concerned about the philosophical arguments going on in Washington. He just doesn’t think he should have to repay the federal assistance.

He appealed the order and received a letter last month that, without explanation, reduced his obligation to about $2,800. That’s almost exactly the couple’s monthly income from a combination of their Social Security and two small pensions.

Taylor was supposed to receive a letter from FEMA outlining a payment plan, but never did. So he contacted Cooper’s office, hoping he could receive a waiver on what he owes.

“I’ve been going through this since last May,” Taylor lamented.