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Second Appeal Summary
PA ID# 037-90329-00; Santa Monica Hospital Medical Center
DSR ID# DSR 60526, 60527, 60528, 60529, 60530, 60531; Office of the inspector General's Audit
Citation: FEMA-1008-DR-CA, Santa Monica Hospital Medical Center, Medical Center, Damage Survey Reports 60526, 60527, 60528, 60529, 60530, 60531Cross-reference:
Office of Inspector General (OIG) Audit ReportSummary:
Following the Northridge earthquake on January 17, 1994, the Santa Monica Hospital Medical Center (Applicant) received $8,078,262 in funding from FEMA for the repair of its facilities. OIG conducted an audit of the Applicant and recommended de-obligation of $1,584,565 based on four Findings:
(A) some work was not disaster-related; (B) the Applicant failed to recover the full $50M face amount of its insurance policy and failed to equitably allocate proceeds to all insured properties; (C) pre-disaster use of the facility was subject to limited use requirements; and (D) various ineligible project costs were found. FEMA agreed with the audit recommendations and de-obligated $1,584,565 in funding on DSRs 60526 through 60531.
In its first appeal, the Applicant argued that the audit was not conducted within a permissible timeframe. The Applicant also claimed that the decision to negotiate an early settlement with its insurance carrier was commercially reasonable and the settlement amount should be used by FEMA for insurance reduction. The Deputy Regional Administrator denied the appeal.
In its second appeal, the Applicant stated that, pursuant to 44 Code of Federal Regulations (CFR) §13.42(c), funding was continued or renewed at numerous intervals, corresponding to each of the multiple DSRs. Therefore, the Applicant argued that the 3-year document retention period(s) for audit began in 1997 when the Applicant submitted the last expenditure report, not when the Governors Office of Emergency Services (State) submitted the final expenditure report to FEMA. The Applicant reiterated its argument that FEMA has improperly valued the insurance benefits at $50M and argued that FEMA has not sufficiently substantiated its own challenges to expenditures. The State did not support the Applicants appeal.Issues:
Did the Applicant provide documentation showing why FEMAs decisions were in conflict with federal laws, regulations, or policy?Findings:
44 CFR §206.206