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Second Appeal Analysis
PA ID# 000-UO50N-00; Oschner Clinic Foundation
PW ID# Project Worksheet 12157; Overtime
In the aftermath of Hurricane Katrina, Ochsner Clinic Foundation (Applicant) continued to provide emergency and routine medical care to patients at its Jefferson Highway facility. Due to a substantial loss in clinical and security staff and the dangers surrounding the facility following the disaster, the Applicant decided to lockdown its facility from August 29, 2005, to September 7, 2005. During this period, available employees worked 16-hour shifts. The Applicant is requesting reimbursement for these overtime costs.
FEMA prepared Project Worksheet (PW) 12157 for $1,949,243 to reimburse the Applicant for increased overtime expenses. FEMA denied funding for these expenses citing FEMA Response and Recovery Policy 9525.4 Medical Care and Evacuations,
dated August 17, 1999, which states that FEMA does not provide assistance for increased operational costs due to increased patient load. FEMA processed the PW for zero dollars on August 22, 2006.First Appeal
In its first appeal letter dated February 14, 2007, the Applicant argued that its increased operating costs were not due to increased patient load, but rather, to extra overtime expenses incurred during the facilitys lockdown mode in the post-Katrina crisis. The State supported the Applicants position and forwarded the first appeal to FEMA in a letter dated March 28, 2007. FEMA determined the costs to be ineligible operational expenses and denied the appeal in a letter dated May 18, 2007, stating, the increased expense of providing medical care to patients, regardless of the cause of the increase, is under no circumstances identified as an eligible emergency cost. FEMA also stated that all eligible work performed by the Applicant during this period was captured and funded on PW 15829 in the amount of $64,320.92 for the Louisiana Department of Health and Hospitals.Second Appeal
In its second appeal letter dated July 30, 2007, the Applicant contends the following:
(1) FEMA raised new issues for determining ineligibility in its first appeal decision;
(2) The Response and Recovery Policy 9525.4 cited in support of its determination is ambiguous and was not made available to the Applicant;
(3) The Applicant was not afforded notice through the general comments section of PW 12157 about Response and Recovery Policy 9525.4; and
(4) The pertinent Federal Public Assistance regulations do not reference Response and Recovery Policy 9525.4, nor do any of the OMB Circulars referenced in those regulations identify Response and Recovery Policy 9525.4.
The State transmitted the second appeal to FEMA in a letter dated January 18, 2008. In the accompanying appeal analysis, the State asserts that FEMA should have considered the Applicants activities in the context of sheltering under Disaster Specific Guidance # 2 Eligible Costs for Emergency Sheltering Declarations.Discussion
FEMA denied the Applicants initial request for assistance, stating that increased operating expenses related to increased patient load were not eligible pursuant to Response and Recovery Policy 9525.4. In the first appeal response, FEMA stated that increased operating expenses, regardless of the cause of the increase, were not eligible. The Applicant contends that FEMAs first appeal decision was not fair to the Applicant and denied it due process of the appeal process because FEMA changed the basis for the denial from increased expenses related to increased patient load to increased operating expenses regardless of cause. We do not agree with this assessment. While the first appeal response did not quote the specific language from Response and Recovery Policy 9525.4, it is nonetheless consistent with the policy and program regulations.
The Applicant states that Response and Recovery Policy 9525.4 is ambiguous. We believe that the section 7.A of the policy is clear: eligible costs must be associated with an eligible applicant providing temporary facilities for treating disaster victims when their existing facilities are overloaded and cannot accommodate the patient load. The policy does not authorize reimbursement for increased costs incurred in its regular facility.
The Applicant stated that FEMA did not inform the Applicant by referencing Response and Recovery Policy 9524.4 in the general comments section of PW 12157. It is not clear how this is relevant to the appeal decision. It appears that the Applicant reviewed the policy during the preparation of its first and second appeals.
The Applicant further states that Public Assistance regulations and OMB circulars do not mention Response and Recovery Policy 9525.4. In addition, it claims that 44 CFR Part 13 and OMB Circular A-87, Cost Principles for State, Local and Tribal Governments,
do not list increased operating cost as an unallowable cost. The hierarchy of program authority is statute, regulation, and then policy. Therefore, one would not expect to see a policy referenced in a statute or regulation. The fact that OMB Circular A-87 does not specifically list increased operating costs as an unallowable cost, does not make those costs eligible for reimbursement under the Public Assistance Program.
The State suggests that the increased operating expenses should be eligible pursuant to Disaster Specific Guidance #2,
because the hospital served as a shelter. This guidance document refers to cost related to sheltering evacuees. The Applicant incurred additional expenses in providing medical care to its own patients. Therefore, Disaster Specific Guidance #2 does not apply to the issue under appeal. CONCLUSION
The increased costs the Applicant incurred in providing medical care to its patients from August 29, 2005, to September 7, 2005, are not eligible. Therefore, the appeal is denied.