From September 3, 2004 to October 8, 2004, wind and water from Hurricane Frances damaged several buildings owned by the Applicant. FEMA obligated Project Worksheet (PW) 6159 for $283,253.92 to repair a pair of docks, and PW 8367 for $438,489.12 to repair an office building and for approved hazard mitigation. A portion of the repairs under both PWs were performed by force account labor. At closeout, FEMA determined that the Applicant’s insurance should have covered these force account labor costs, and reduced PW 6159 by $3,598.18 and PW 8367 by $18,762.98. The Applicant appealed the reduced costs, arguing it did not receive, and did not anticipate receiving, insurance proceeds to cover the disputed costs. The Applicant explained that its insurance only covered what was over and above normal labor costs, and that a forensic accounting firm determined that the costs at issue were budgeted and not over and above normal labor costs. On June 14, 2018, the FEMA Regional Administrator (RA) found that it was unclear whether the Applicant received insurance proceeds for force account labor, how insurance funds were allocated across PWs, and whether the Applicant provided the insurer’s forensic accounting firm with the payroll data deemed necessary for an accurate determination of force account labor expenses. The RA concluded that the Applicant did not adequately pursue its insurance claim and denied all $22,361.16 in requested costs. On August 10, 2018, in its second appeal, the Applicant clarifies that it received $155,730.02 from its insurance company and that a site location spreadsheet provided with the first appeal shows the allocation of all insurance proceeds received, including those for PWs 6159 and 8367. The Applicant also maintains that the Stafford Act prohibits any reduction in assistance based on proceeds that are not available to applicants.
Authorities and Second Appeals
- Stafford Act §§ 312, 406.
- 44 C.F.R. § 206.250(c).
- PA Guide, at 35 and 95.
- Stafford Act § 312 prohibits FEMA funding for items of work covered by insurance.
- Upon review, the requested costs were not covered by the Applicant’s settlement with its insurer; and therefore, there is no duplication of benefits issue.
- FEMA’s PA Guide states that applicants must pursue payment under their insurance plans to maximize potential benefits or risk delays or loss of FEMA funding.
- In this case, the insurer’s forensic accounting firm determined that some claimed labor costs were not covered under the Applicant’s policy. The Applicant received proceeds for covered costs.
The Applicant agreed to a settlement with its insurer based on the coverage provided for in its policy. That settlement did not include funds for the costs requested by the Applicant. Therefore, there is no overlap in funding from the settlement that would prevent the Applicant from receiving FEMA Public Assistance funds. Accordingly, the claimed costs are eligible, and the appeal is granted.