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Second Appeal Letter
PA ID# 037-90636; Facey Medical Foundation
DSR ID# N/A; Authority of the FEMA Director
Ms. Rebecca J. Wagoner
Public Assistance Officer
Gove1rnors Office of Emergency Services
Disaster Assistance Programs Branch
P.O. Box 419023
Rancho Cordova, California 95741-9023
RE: Second Appeal - Facey Medical Foundation, PA ID 037-90636, OIG Audit, FEMA-1008-DR-CA
Dear Ms. Wagoner:
This is in response to your letters dated October 5 and 14, 2004, pertaining to an appeal on behalf of the Facey Medical Foundation (Applicant). This appeal originated with FEMAs 1998 de-obligation of $224,181 in funding for repair of the Applicants Mission Hills Medical Office Building after it was determined that the building was leased and the Applicant was not legally responsible for repairs to the building.
The FEMA Regional Director denied the Applicants first appeal in February 1999 and the FEMA Executive Associate Director denied the second appeal in February 2000. This second appeal decision, per 44 CFR § 206.206, constituted the "final administrative decision of FEMA."
Thereafter, by letter dated January 11, 2001, FEMA's then Director, James Lee Witt, stated that the Applicant had demonstrated that it had legal responsibility for the damaged facilities, it could be considered a direct health care provider, and the Applicants appeal would be settled in the amount of $224,181. The FEMA Office of Inspector General (OIG) then audited the Public Assistance award to Facey and concluded that "[t]he former Director's reversal of the former Executive Associate Director's decision contravened Federal regulation 44 CFR § 206.206(e)(1) and (e)(3), which gave the former Associate Director the last word on funding decisions that are appealed." The OIG audit went on to state that regulations have the force and effect of law "and may not be waived on a retroactive or ad-hoc basis." FEMA Region IX agreed with this audit finding and de-obligated $224,181. The foundation appealed again, arguing that the former Director's decision was entitled to a presumption of regularity and his decision was correct and lawful. FEMA Region IX denied this appeal on June 16, 2004 stating, "FEMA cannot pay for activities that are not eligible under the Stafford Act and FEMA's implementing regulations." The Applicants current appeal again argues that it was legally responsible for the work and that the former Director's decision is binding and correct.
The issues of legal responsibility and the profit status of the foundation were addressed by FEMA during the two-level appeal process allowed by FEMA's regulations at 44 CFR § 206.206. This regulation, implementing 42 U.S.C. § 5189a to ensure the fair and impartial consideration of appeals, requires that a second level appeal determination be the final administrative decision of FEMA. Constituting a properly promulgated substantive rule, authorized by a specific congressional grant of authority, this rule has the force and effect of law. See Chrysler Corp. v. Brown, 441 U.S. 281, 295-303 (1979). If FEMA only selectively enforced the definitive two-level appeal process required by this regulation, it would violate the fair and impartial standard required of it by the Stafford Act. FEMA has previously determined that funds were obligated to the Applicant contrary to the Stafford Act and its implementing regulations. FEMA is compelled to seek reimbursement of those funds. The appeal is denied.
Please inform the Applicant of my determination. My determination constitutes the final decision on this matter, as set forth in 44 CFR § 206.206.
Daniel A. Craig
Emergency Preparedness and Response
cc: Karen E. Armes
Acting Regional Director
FEMA Region IX