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Second Appeal Letter
PA ID# 005-UOFZF-00; Columbus Regional Hospital
PW ID# 2181, 2182, 2194, 2195, 2199, 2201, 2203, 2197 & 2213; Equipment Replacement
May 12, 2010
Governor’s Authorized Representative
Indiana Department of Homeland Security
Indiana Government Center South
302 West Washington Street
Indianapolis, IN 46204
Re: Second Appeal–Columbus Regional Hospital, PA ID 005-UOFZF-00, Equipment Replacement, FEMA-1766-DR-IN, Project Worksheets 2181, 2182, 2194, 2195, 2199, 2201, 2203, 2197, and 2213
Dear Mr. Copeland:
This letter is in response to your letter dated September 22, 2009, which transmitted the referenced second appeal on behalf of the Columbus Regional Hospital (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of an additional $1,216,090 for equipment replacement.
Medical equipment at the Applicant’s facility was damaged beyond repair as a result of the declared flooding event. The Applicant replaced several damaged items with new equipment and requested reimbursement of $3,700,171 for the cost of new equipment. FEMA prepared nine (9) Project Worksheets (PWs) to provide $2,484,081 for the eligible cost for replacement of the damaged items. The PWs reflected the value of destroyed equipment based on a fair market value for units of similar age and capacity.
The Applicant submitted its first appeal to the Indiana Department of Homeland Security (IDHS) on June 8, 2009. In its appeal, the Applicant claimed that the Stafford Act allows for replacement of equipment with new comparable items, not used or refurbished items. The Applicant based its claim on the assertion that Title 44 Code of Federal Regulations (44 CFR) §206.226(h), Equipment and furnishings, uses the term “comparable items” with no mention of used equipment, depreciation schedules, actual cash value, or refurbished equipment. The Applicant also claimed that it is entitled to full reimbursement because a FEMA representative stated that if it “follow[ed] their own established procurement procedures in replacing equipment, there would be no issues of procurement to overcome at a later date.” The Regional Administrator denied the first appeal on July 7, 2009, stating that FEMA provides funding for replacement with similar equipment of approximately the same age, capacity and condition.
The Applicant submitted its second appeal to IDHS on September 4, 2009. In its appeal, the Applicant asserted that refurbished equipment could not safely and reliably be used in a health care facility and would not have been reasonably available to timely and adequately meet the Applicant’s needs. Furthermore, the Applicant claimed that the PWs do not provide funding for the full cost of quoted refurbished equipment. The Applicant reiterated its request for full reimbursement of the cost for replacement with new equipment. IDHS supported the Applicant’s appeal position.
The PA Guide (FEMA 322), Chapter 2, states “When equipment, including vehicles, is not repairable, FEMA will approve the cost of replacement with used items that are approximately the same age, capacity, and condition. FEMA may use "blue book" values or similar price guides to determine the eligible cost for used equipment and vehicles. Replacement of an item with a new item may be approved only if a used item is not available within a reasonable time and distance.” FEMA determined that used items were available within a reasonable time and distance. Although the Applicant disputed this determination in its appeal, it did not provide any information to demonstrate that used items were not reasonably available. Rather, the appeal argument was centered on the assumption that new equipment could be purchased and installed faster than refurbished items.
In its second appeal, the Applicant claimed that PW MDF-073 does not provide full funding for refurbished equipment. The PW states that refurbished items for replacement of four (4) damaged ultrasound units were quoted from $33,000 to $38,000, each. PW funding was approved for $132,000 ($33,000 x 4) and the Applicant requested funding of $152,000 ($38,000 x 4). It is FEMA policy to provide funding for the most cost-effective alternative for completing the eligible scope. FEMA staff appropriately estimated the cost of the PW at the lowest quoted cost for replacement of the damaged equipment.
Refurbished medical equipment is readily available in the marketplace and can be effectively used in a health care facility. The Applicant is not required to use refurbished equipment to receive FEMA funding. The Applicant may apply the approved funding toward its cost to purchase new equipment through the use of improved projects.
I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy. Furthermore, the statement above quoted from a FEMA representative addresses procurement procedures, such as contracting and purchasing, and does not conflict with FEMA policy regarding replacement of equipment. Accordingly, I am denying the second appeal.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
Elizabeth A. Zimmerman
cc: Ms. Janet Odeshoo
Acting Regional Administrator
FEMA Region V