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Second Appeal Letter
PA ID# 127-07668-00; Daytona State College
PW ID# 1852, 1871, and 3550; Duplication of Benefits
October 11, 2011
Division of Emergency Management
2555 Shumard Oak Boulevard
Tallahassee, Florida 32399-2100
Re: Second Appeal–Daytona State College, PA ID 127-07668-00, Duplication of Benefits, FEMA-1539-DR-FL, Project Worksheets (PWs) 1852, 1871, and 3550
Dear Mr. Koon:
This letter is in response to the letter from your office dated March 16, 2010, which transmitted the referenced second appeal on behalf of Daytona State College (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) deduction of anticipated insurance proceeds from PWs 1852, 1871, and 3550 in the amount of $446,102.
In August 2004, Hurricane Charley damaged roofing on Buildings 100 and 140 on the Applicant’s campus. The Applicant contracted for its roof replacement projects and the work was completed in February 2006 at a cost of $823,448. FEMA, the State, and the Applicant agreed that 100 percent of the damage to the roofs was caused by the storm event.
The Applicant had an all-risk insurance policy obtained through the Florida Community Colleges Risk Management Consortium (FCCRMC). The FCCRMC was created to obtain and administer third party commercial insurance coverage for Florida’s Community Colleges. In accordance with 44 CFR §206.250(c), FEMA deducted anticipated insurance proceeds in the amount of $446,102 from PWs 1852, 1871, and 3550.
York Insurance Services Group handled the claim adjustment and determined that the insurance company was not obligated to fully cover the Applicant’s incurred cost because the roof replacement was completed in accordance with current Florida Building Code 2001 not the codes that were in place at the time of roof installation. The insurer made an initial settlement offer of $126,767 which the FCCRMC rejected. The FCCRMC then agreed to a negotiated settlement in the amount of $367,346 on behalf of the Applicant.
At final inspection, FEMA deducted the full actual and anticipated insurance proceeds from each PW (1852 - $ 270,621; 1871 - $201,433; and 3550 - $341,394) totaling $813,448 on the basis that the Applicant accepted an insurance settlement for an amount less than what was covered under the terms of the insurance policy. However, FEMA did reimburse the Applicant for $10,000 on PW 1852, the amount of its deductible under this policy.
On July 28, 2008, the Applicant submitted its first appeal requesting that FEMA re-obligate anticipated insurance proceeds in the amount of $446,102 that were deducted from the PWs. The Regional Administrator denied the appeal on August 13, 2009, because the Applicant’s insurance policy provided for full coverage of the roof damage but the Applicant and FCCRMC accepted a negotiated settlement of a lesser amount from the insurer.
The Applicant submitted its second appeal on January 11, 2010. In the appeal, the Applicant asserted that it had protested the insurance settlement amounts to the FCCRMC. On
February 6, 2008, the FCCRMC replied to the Applicant that the FCCRMC would not:
1. pay the balances due on the claim out of its reserves;
2. file suit against the Applicant’s insurance carrier for fear of jeopardizing coverage for all members of the consortium;
3. seek binding arbitration as it was not part of the policy language; nor
4. review the appraisal process since it believed that there was no further documentation to be considered.
The Applicant asserts that it exhausted all remedies available to it to obtain a full settlement; and therefore contends that FEMA should re-obligate the anticipated insurance recovery that was deducted from the PWs.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) Section 312(a) states, “… no such person, business concern, or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program or from insurance or any other source.” The 44 Code of Federal Regulations
(44 CFR) §206.250(c) states, “Actual and anticipated insurance recoveries shall be deducted from otherwise eligible costs, in accordance with this subpart.” Under the Applicant’s insurance policy, it was entitled to full recovery of damages to the roofs caused by Hurricane Charley. However, the FCCRMC accepted a negotiated settlement amount of $367,346 on behalf of the Applicant even though the total eligible damages were $823,448. The Public Assistance Guide, FEMA 322, October 1999, page 94 states, “FEMA may limit funding if the applicant’s policy provides coverage which should be pursued from the insurer.” The FCCRMC did not take all measures available, including legal action, to recover the full payment owed by the insurer. Therefore, the Applicant is not eligible to receive FEMA assistance for the damages covered under the policy, but not compensated for by the insurance company ($446,102). FEMA reimbursed the Applicant $10,000 for its insurance deductible.
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. 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.
cc: Major P. May
FEMA Region IV