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Second Appeal Summary
PA ID# 037-90568-00; Santa Clarita Health Care Association
DSR ID# DSRs 05638, 92013, 92014, 01032, 48030; Office of the Inspector General's Audit
FEMA-1008-DR-CA, Santa Clarita Health Care Association, Hospital, Damage Survey Reports 05638, 92013, 92014, 01032, 48030Cross-reference:
OIG Audit Report, Grant Acceleration Program (GAP)Summary:
Following the Northridge earthquake on January 17, 1994, the Santa Clarita Health Care Association (Applicant) received FEMA funding for the Henry Mayo Newhall Memorial Hospital. The Office of Inspector General (OIG) conducted an audit of the Applicant and recommended de-obligation of $2,290,275 based on four Findings:
(A) $1,525,901 for a duplication of benefits, (B) $353,726 for ineligible project costs, (C) $311,309 for excessive construction management costs, and (D) $99,339 for unsupported project costs. FEMA de-obligated $2,104,418 based on the audit findings and the Applicants audit response.
In its first appeal, the Applicant requested reinstatement of all funding de-obligated as a result of the audit. The Applicant claimed that Finding A of the audit was invalid and FEMA was obligated to fund the total amount of all DSRs included in the GAP settlement, or $21,502,371. The Applicant also asserted it was not required to pay any claim that arose before the date it filed for bankruptcy. The Acting Regional Director denied the appeal stating that the GAP offer provided the Applicant with a fixed level of funding of $19,929,469 based on accepted industry cost estimating practices, net of any insurance recovery. The total funding obligated on multiple DSRs incorrectly exceeded the GAP offer resulting in an overpayment of $1,525,901. The Applicant did not provide any information on appeal that justified eligibility of items or costs addressed in Findings B-D.
In its second appeal, the Applicant claimed that FEMA contractually agreed to a
78 percent allocation of insurance benefits to the GAP DSRs and $1,525,901, or the remaining 22 percent of insurance proceeds, should not have been de-obligated. The Applicant asserted that FEMA violated 44 Code of Federal Regulations (CFR) §206.206(c), which required resolution of appeals within 90 days following receipt and thereby prejudiced the Applicants right to a speedy resolution of the first appeal. OES did not support the Applicants appeal.Issues:
Did the Applicant provide information to document why FEMAs decisions were in conflict with federal laws, regulations, or policy?Findings:
44 Code of Federal Regulations (CFR) §206.206