FEMA reaches $1 billion in payouts, settles seven lawsuits for northern NM fire victims

The Hermits Peak-Calf Canyon Fire burn scar viewed from the Hermits Peak summit in May 2023. FEMA last week announced it had paid about $1 billion of nearly $4 billion awarded by Congress more than two years ago to victims of the wildfire. (Photo by Patrick Lohmann / Source New Mexico)

The federal agency tasked with distributing nearly $4 billion to victims of the Hermits Peak-Calf Canyon Fire announced a milestone last week: $1 billion in compensation paid for the April 2022 fire.

The Hermits Peak-Calf Canyon Claims Office also recently settled seven lawsuits with several law firms representing thousands of claimants. The lawsuits dealt with a variety of topics, including claims that took the office longer than 180 days to complete, alleged pressure from federal employees telling claimants to ditch their lawyers, and a dispute over the way the office cut compensation checks.

The settlement agreement signed last week, which was provided to Source New Mexico, shows that neither the office nor the law firms suing it admitted any wrongdoing, and no party owes the other any money. The office agreed to meet more regularly with lawyers, and the parties expanded guidance on what should happen if a fire victim reaches out to the office directly for updates on their claims.

Both the firms and the office are touting the agreement as a way to improve communication and get claims resolved more quickly, especially with the application period ending soon. The deadline to file a claim is Nov. 14, 2024.

“It will start the flow of communication,” said Antonia Roybal-Mack, a lawyer representing hundreds of victims, about the settlement agreement.

The settled lawsuits affect only victims who hired attorneys to represent them in the claims process. Lawyers accused Federal Emergency Management Agency employees of trying to undermine or ignore them, misinterpreting the law, and letting their cases languish beyond the 180-day deadline required by law to make a payment offer.

New lawsuits accuse FEMA of blowing deadlines for northern New Mexico wildfire victims

The fire began in spring 2022 as a result of two botched federal prescribed burns, going on to become the state’s biggest-ever wildfire and destroying hundreds of homes. Congress in September 2022 tasked FEMA with setting up a claims process that members hoped would “fully compensate” victims of the fire. Congress eventually awarded FEMA $3.95 billion to pay victims with, minus administrative costs.

The pace of payments frustrated residents, as did some of the things FEMA said it was not allowed to pay for. About a year after the fire started, FEMA officials set an internal target of spending $1 billion by January 2025. They reached that target Aug. 1 of this year, according to the office.

“While we acknowledge this milestone, we recognize there is more work ahead,” said Jay Mitchell, who was recently hired to lead the office and the federal disaster response across the state, in a news release. “Our commitment remains steadfast to provide comprehensive resources and support beyond financial assistance to help our community recover, rebuild and thrive,” he said.

An Aug. 1 news release does not break down exactly how the $1 billion had been spent as of that date, but a July 31 infographic from the office does. Of $985.9 million paid by July 31, $750.5 million went to individuals and households, $187.9 million to businesses, $5.1 million to governments, $10.3 million to tribal nations, $10.6 million to nonprofits and $21.4 million to “other.”

The office also noted in a separate news release that, of that money, it has so far paid out $162.9 million in 318 claims to parties represented by lawyers. There are 1,071 more claims “awaiting claimant response” that total $91.2 million, according to a news release.

The seven settled lawsuits are among at least 13 filed against FEMA or other federal agencies regarding the fire or its aftermath. Other pending lawsuits relate to how claimants can appeal payment offers they disagreed with and to force the office to pay for “ non-economic damages ,” which are payments for the annoyance and inconvenience the fire caused. FEMA lawyers have argued the agency is not allowed to make those payments under the law.

In the scar of New Mexico’s largest wildfire, a legal battle is brewing over the cost of suffering

The lawsuit about appeals will likely go to mediation, Roybal-Mack said, meaning it will be resolved out of court. The “non-economic damages” lawsuit could go before a judge in October, she said.

Another pending lawsuit, which is against the United States Forest Service, is on behalf of three people who died in post-fire flooding. Two other filed recently against FEMA are on behalf of local public entities, like a school district and electrical co-op, who accuse the agency of throwing up unnecessary hurdles that could prevent them from accessing the $4 billion fund.

Mitchell said the lawsuits being settled will mean payments to be processed more efficiently and for relationships with lawyers to improve.

“The resolution of these lawsuits allows the Claims Office to more efficiently process claims and speed up claimants’ post-fire recovery,” he said in the news release.