The state will take over an effort to collect grant money from Hurricane Katrina victims who got too much, citing a lack of confidence in a private contractor's ability to determine who owes money, a Louisiana official said Thursday.

Paul Rainwater, executive director of the Louisiana Recovery Authority, said the state will establish a panel to hear the cases of people believed to owe money to a $10.3 billion recovery program called Road Home.

The program was designed to provide as much as $150,000 to each storm-affected homeowner to either rebuild or relocate.

The panel will review the documentation of applicants who believe they owe no money, Rainwater said. It will not include a representative of ICF International, the Virginia company whose plans to hire a collection agency were first reported by The Associated Press.

Those who were the victims of gross errors by ICF will probably owe nothing, Rainwater said, stressing that the new approach will be "compassionate."

But if ICF made a technical error in the myriad of rules that determine the size of a grant, the state must recover that money from applicants under federal law, he said. They will be offered a payment plan that takes into account their financial struggles in rebuilding from hurricanes Katrina or Rita, both of which struck in 2005.

"An 85-year-old woman who may have received too much, are we going to actually go out and collect money and have a collections agency hound that person?" said Rainwater, empowered by Gov. Bobby Jindal to make the changes. "I don't think that's the right thing to do, and neither did the governor think that's the right thing to do."

Those suspected of outright fraud will be referred to law enforcers, said Rainwater. So far, there are about 45 known cases being investigated, said Recovery Authority spokeswoman Christina Stephens. Continued...