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Codes and Standards – Equipment, Furnishings and Contents

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1603
ApplicantPlaquemines Medical Ctr Hospital Svc Dist #1
Appeal TypeSecond
PA ID#075-UWJE6-00
PW ID#PW 7457
Date Signed2021-03-18T16:00:00

Summary Paragraph

From August 29 to November 1, 2005, high winds and flooding from Hurricane Katrina caused damage in Plaquemines Parish, Louisiana.  The Applicant suffered flood and wind damage to its facility, including damage to medical equipment.  This equipment included a chemistry analyzer, a mobile x-ray unit and patient monitors and defibrillators.  Once the Facility was restored several years later, the Applicant purchased upgraded versions of the chemistry analyzer, mobile x-ray unit, four patient monitors, and two defibrillators.  In February 2018, FEMA found the additional costs for upgraded equipment ineligible.  The Applicant appealed, stating that applicable codes and standards justified the upgraded equipment and that comparable equipment was not available within a reasonable time and distance.  The FEMA Region VI Regional Administrator denied the appeal, determining the Applicant failed to demonstrate upgraded equipment was required under applicable codes and standards and failed to show that comparable, used equipment was not available within a reasonable time and distance.  Also, FEMA found the project was an improved project and limited federal funding to the approved estimate of eligible costs.  On second appeal, the Applicant renews its prior arguments and requests costs of the upgraded equipment.

 

Authorities and Second Appeals

  • Stafford Act § 406.
  • 44 C.F.R. §§ 206.221, 206.226.
  • American Recovery and Reinvestment Act, Pub. L. No. 111-5, 123 Stat. 226.
  • PA Guide, at 57.

Headnotes

  • FEMA will fund costs of new equipment if comparable used items are not available within a reasonable time and distance.
    • In the case of the mobile x-ray unit, patient monitors and defibrillators, the Applicant did not demonstrate that used comparable equipment was unavailable.  Conversely, the Applicant has demonstrated that a comparable used chemistry analyzer was not available.
  • FEMA may reimburse eligible applicants for the replacement of a facility damaged or destroyed by a disaster in conformity with current applicable codes, specifications and standards. FEMA regulations define “standards” as codes, specifications or standards required for the construction of facilities. 
  • Current FEMA policy provides for the replacement of equipment with new items in order to meet applicable consensus standards.
    • FEMA’s consensus standards policy was not in effect at the time of the disaster, and codes and standards upgrades do not apply to equipment. 

Conclusion

The Applicant has not demonstrated that comparable used monitors, defibrillators, or a mobile x-ray unit were not available within a reasonable time and distance.  However, the Applicant has demonstrated that comparable used equipment was unavailable for the chemistry analyzer.  Therefore, FEMA partially grants the appeal and awards $27,320.00 in funding. 

 

Appeal Letter

James B. Waskom

Director

Governor’s Office of Homeland Security and Emergency Preparedness

7667 Independence Boulevard

Baton Rouge, LA 70806

 

Re:  Second Appeal – Plaquemines Medical Ctr Hospital Svc Dist #1, PA ID: 075-UWJE6-00, FEMA-1603-DR-LA, Project Worksheet (PW) 7457 - Codes and Standards – Equipment, Furnishings and Contents

 

Dear Mr. Waskom:

This is in response to a letter from your office dated October 15, 2019, which transmitted the referenced second appeal on behalf of Plaquemines Medical Center Hospital Service District #1 (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $311,612.49 for the replacement of medical equipment damaged during Hurricane Katrina.

As explained in the enclosed analysis, I have determined that the Applicant has not demonstrated that comparable used monitors, defibrillators, or a mobile x-ray unit were not available within a reasonable time and distance.  However, in the case of the chemistry analyzer, the Applicant has demonstrated that comparable used equipment was unavailable.  Therefore, this appeal is partially granted and FEMA awards the additional cost of $27,320.00.  By copy of this letter, I am requesting the Regional Administrator to take appropriate action to implement this determination.

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

 

                                                                             Sincerely,

                                                                              /S/

                                                                             Ana Montero

                                                                             Division Director

                                                                             Public Assistance Division

 

Enclosure

cc:  George A. Robinson  

Regional Administrator

FEMA Region VI

Appeal Analysis

Background

From August 29 to November 1, 2005, high winds and flooding from Hurricane Katrina caused damage in Plaquemines Parish, Louisiana.  Plaquemines Medical Center Hospital Service District #1 (Applicant) suffered flood and wind damage to its medical facility, including damage to medical equipment.  The damaged medical equipment included a chemistry analyzer and mobile x-ray unit as well as four patient monitors and two defibrillators.

On July 6, 2006, FEMA prepared Project Worksheet (PW) 7457 to document the cost of the Applicant’s damaged facilities contents.[1]  In PW 7457, Version 1, FEMA identified comparable items to replace the damaged items and contacted vendors for prices and availability.  After completing construction of the Applicant’s replacement facility in August 2014, the Applicant purchased new medical equipment to furnish the facility, including replacements for the chemistry analyzer and the mobile x-ray unit and replacements for patient monitors and defibrillators.  In a July 2015 meeting with the Applicant and the Grantee, FEMA requested, and the Applicant provided in October 2015, the actual costs for all contents purchased for the new replacement facility to accurately align actual costs to the scope and cost funded in PW 7457 Versions 0 and 1.

After several additional meetings between October 2015 and March 2016, FEMA issued a Request for Information (RFI) seeking documentation to support the Applicant’s request for replacement items purchased at significantly higher cost or in higher quantities than those reflected in the obligated PW as well as additional purchases not previously funded.  The Applicant responded to FEMA’s RFI providing the makes and models of the equipment it purchased as replacements for the damaged items.[2]  The Applicant also provided an alignment spreadsheet reflecting the four patient monitors and two defibrillators omitted from FEMA’s initial assessment.[3]

In February 2018, FEMA amended PW 7457, and limited funding for the medical equipment to comparable used equipment identified by FEMA.[4]  FEMA determined the Applicant’s replacement mobile x-ray unit[5] costing $234,400.00 was not comparable to the disaster-damaged mobile x-ray unit, in which FEMA identified a comparable used unit for $10,018.00.  FEMA similarly identified comparable used equipment for the chemistry analyzer and estimated eligible costs at $16,500.00, finding the Applicant’s upgraded chemistry analyzer[6] costing $43,820.00 was not comparable.  FEMA identified used, comparable patient monitors as replacements for four monitors which had been omitted from the original assessment and funded them at a total of $11,323.00, finding the replacement DASH 5000 patient monitors costing $58,520 were not comparable.  Finally, FEMA identified used, comparable defibrillators (refurbished LifePak 15s) for the two defibrillators, which had been omitted from the original assessment, and provided funding at $5,995.00 each, and found the LifePak 20E defibrillators costing $9,354.18 each were of an increased condition and capacity compared to the disaster-damaged equipment.

 

First Appeal

The Applicant submitted a first appeal dated April 25, 2018[7] stating that the American Recovery and Reinvestment Act of 2009 (ARRA)[8] and the U.S. Food and Drug Administration’s (FDA) guidance on the interoperability of medical equipment[9] required the Applicant to purchase upgraded versions of both the mobile x-ray unit and the chemistry analyzer.  The Applicant also requested the additional costs for the four monitors and three defibrillators originally omitted from the PW.  The State of Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) forwarded the first appeal via letter dated June 22, 2018, and asked FEMA to allow the Applicant the opportunity to provide additional information and documentation to support its appeal.

FEMA sent an RFI dated September 17, 2018 seeking documentation demonstrating: (1) the Applicant made an effort to obtain comparable replacement equipment; (2) the Applicant’s claim that the new equipment was comparable in capacity and condition to the disaster-damaged equipment; (3) the Applicant’s position that a used item was not available within a reasonable time and distance; and (4) the FDA interoperability guidelines cited in the appeal fulfill the requirements of a code and standard as defined in Title 44 of the Code of Federal Regulations (44 C.F.R.), section 206.226(d).  On October 31, 2018, the Applicant provided its RFI response with information to support its position that it made a reasonable effort to locate items comparable in age, condition and capacity to those damaged in the disaster.

On June 25, 2019, the Region VI Regional Administrator denied the appeal, determining the Applicant did not demonstrate the ARRA and the FDA interoperability guidelines met the definition of a code or standard under 44 C.F.R. § 206.226(d) or that comparable, used items were not available within a reasonable time and distance.  Additionally, FEMA amended the project status to an improved project and limited federal funding to the approved estimate of eligible costs in accordance with 44 C.F.R. § 206.203(d).

 

Second Appeal

The Applicant appealed in a letter dated August 27, 2019, and requests that FEMA obligate funding for the additional costs of new, upgraded equipment to replace the disaster-damaged equipment.[10]  In its appeal, the Applicant states that it was not able to purchase comparable used equipment and FEMA is required to fund new, improved replacement equipment due to changes to federal industry standards from 2006 to 2014.  The Grantee submitted the second appeal via letter dated October 15, 2019, supporting the Applicant’s arguments and requesting FEMA review the Applicant’s additional documentation to determine an equitable determination of eligible costs.

 

Discussion

Medical Equipment Replacement Costs

If a disaster damages equipment and furnishings beyond repair, comparable items are eligible as replacement items.[11]  FEMA policy provides that when equipment is not repairable, FEMA will approve the cost of replacement with used items that are approximately the same age, capacity, and condition.[12]  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.[13]   

Guidance for Hurricanes Katrina and Rita reiterated FEMA’s policy stating that when a significant resale market exists for an item, including specialized items such as medical equipment, the item will be replaced with a comparable item of the same function, age and condition.[14]  In PW 7457, Version 1, FEMA identified comparable items to replace the damaged items and contacted vendors for prices and availability.[15]  Comments in the PW indicated that there was a robust market for refurbished medical equipment.  The PW stated that the Applicant would replace the equipment in-kind with a refurbished item, where a market replacement could be matched, and in the case where a refurbished item was not available on the market, replacement of the equipment with new items would be based on equivalent capacity and function, consistent with FEMA policy.[16]  It also stated that without adequate documentation of a good faith effort to acquire comparable refurbished items, FEMA would consider the purchase of new items to be ineligible improvements and only fund the estimate of the eligible cost to replace the damaged items with comparable refurbished items.

With regard to the mobile x-ray unit, FEMA identified a comparable, used item that was available for $10,018.00, but the Applicant chose to replace the disaster-damaged mobile x-ray unit with a new item of an improved condition and capacity.[17]  The Applicant’s replacement mobile x-ray unit, a Shimadzu DaRt EVO Mobile X-Ray Unit, which it purchased for $234,400.00, is not comparable in age, capacity and condition to the disaster-damaged mobile x-ray unit, and is thus ineligible for PA funding.

In the case of the chemistry analyzer, the Applicant states that no comparable used equipment was available within a reasonable time and distance.  The Applicant also notes the equipment FEMA used as comparable equipment was inapt due to the differences between a chemistry analyzer and a breathalyzer (which was used as a comparable piece of equipment by FEMA).  Here, the Applicant provides documentation to show that a used version of a chemistry analyzer of approximately the same age, capacity, and condition was not available in August 2014 when the Facility was reoccupied.[18]  The Applicant provided documentation to show that the replacement item it purchased, a Cobas Integra 400 Plus chemistry analyzer, was equivalent in capacity and condition to the disaster-damaged Ortho-Clinical Diagnostics Vitros 250/350 chemistry analyzer.[19]  Therefore, FEMA will approve an additional $27,320.00 in PA funding for the chemistry analyzer.

The Applicant purchased four new DASH 5000 monitors at a cost of $58,520.13.  FEMA funded the four monitors at a total of $11,323.00 based on comparable used equipment.[20]  FEMA finds the Applicant opted to replace the disaster-damaged monitors with new items of an increased condition and capacity.  Therefore, FEMA denies the increase in funding for new replacement monitors.

Similarly, the Applicant is seeking an additional $12,713.36 in costs incurred for two defibrillators.  At the time the facility was reoccupied, the LifePak 9 defibrillators FEMA identified as damaged in the disaster were no longer available.  FEMA therefore funded two LifePak 15 defibrillators for a total of $11,990.00, which were available and similar in age, condition, and capacity to the LifePak 9 defibrillators.  The Applicant purchased LifePak 20Es, which were new items of an increased condition and capacity compared to the disaster-damaged equipment.  Therefore, FEMA denies the increase in funding for the new replacement defibrillators.

 

Codes and Standards/Consensus-Based Standards

Under section 406(e)(1)(A) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, FEMA may reimburse eligible applicants for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster based on the design of such facility as it existed immediately prior to the disaster and in conformity with current applicable codes, specifications and standards.[21]  FEMA regulations define “standards” as codes, specifications or standards required for the construction of facilities.[22]  Regulations further provide five criteria such codes and standards must meet if they are to change the predisaster construction of a facility and be eligible for PA funding.[23]  Current FEMA policy provides for the replacement of equipment with new items in order to meet applicable consensus standards; however this policy was not in effect at the time of the disaster.[24]  

In its second appeal the Applicant states that FEMA is required to fund new, improved replacement equipment because used equipment would not have met federal industry standards,  FDA guidance, and consensus based standards.[25]  However, FEMA regulations regarding standards do not apply to equipment (i.e., they apply to the construction of facilities).  In addition, FEMA policy in effect at the time of disaster did not provide for the replacement of equipment with new items in order to meet applicable consensus standards.  Rather, the replacement of equipment was based on in-kind replacement and as stated previously, only provided for replacement of equipment with a new item if a used item was not available within a reasonable time and distance. 

 

 Conclusion

The Applicant has not demonstrated that comparable used monitors, defibrillators, or a mobile x-ray unit were not available within a reasonable time and distance.  However, in the case of the chemistry analyzer, FEMA finds the Applicant provided documentation showing that comparable used equipment was unavailable; therefore, FEMA partially grants the appeal and awards $27,320.00 in PA funding.

 

[1] Project Worksheet 7457, Plaquemines Med. Ctr. Serv. Dist. #1, Version 0 (July 6, 2006).

[2] Letter from Chairman of the Board, Plaquemines Med. Ctr. Hospital Serv. Dist. #1, to Asst. Deputy Dir., Disaster Recovery Division, GOHSEP, (June 14, 2016) (hereinafter Applicant’s 2016 RFI Response).

[3] In the Applicant’s Medical, Laboratory & Contents Equipment Damage Listing spreadsheet, attached to Project Worksheet 7457, Plaquemines Med. Ctr. Serv. Dist. #1, Version 7 (Feb. 28, 2018), the Applicant identified two Siemens monitors, one Welch Allyn monitor and one monitor of unknown brand as missing from FEMA’s list.  Although the spreadsheet lists five monitors as missing, the Applicant is seeking funding for only four replacement monitors.

[4] Project Worksheet 7457, Plaquemines Med. Ctr. Serv. Dist. #1, Version 7 (Feb. 28, 2018).

[5] The Applicant purchased a Shimadzu DaRt EVO Mobile X-Ray Unit for $234,400.00.

[6] The Applicant purchased a Cobas Integra 400 Plus Chemistry Analyzer, which it purchased for $43,820.00.

[7] Letter from Attorney, Law Office of Gaffney & Gaffney, to Asst. Deputy Dir., GOHSEP (Apr. 25, 2018) (hereinafter Applicant First Appeal).

[8] American Recovery and Reinvestment Act, Pub. L. No. 111-5, 123 Stat. 226 (2009) (codified in relevant part at 42 U.S.C. §§ 300jj, 17901 (Supp. III 2009)) (hereinafter ARRA).  The ARRA was a fiscal stimulus bill which included incentive payments for investments in health information technology.  The Applicant cites specifically to ARRA, Title IV of Division B.

[9] U.S. Department of Health and Human Services, Food and Drug Administration, “Design Considerations and Pre-market Submission Recommendations for Interoperable Medical Devices: Guidance for Industry and Food and Drug Administration Staff” (Sept. 6, 2017).

[10] In its first appeal, the Applicant sought funding for three defibrillators damaged during the disaster.  On second appeal, the Applicant requests funding for only two defibrillators but does not address the reason for the change.

[11] Title 44, Code of Federal Regulations (44 C.F.R.) § 206.226(h) (2004).  Generally, “[e]ligible costs are limited to the costs of replacing the destroyed equipment, vehicles, and supplies with the same number of items of approximately the same age, condition, and capacity.”

[12] Public Assistance Guide, FEMA 322, at 57 (Oct. 1999) [hereinafter PA Guide].

[13] Id.

[14] Hurricanes Katrina and Rita, FEMA-DR-1603/1607-LA, Information Sheet - # 013 (March 10, 2006, Version 2)

[15] PW 7457 (Version 1).

[16] Id.

[17] Applicant’s 2016 RFI Response, at Attachment 15c.

[18] Id. at Attachment 15a (screenshot of Dotmed website showing used Ortho-Clinical Diagnostics Vitros.250 Chemistry Analyzer item was no longer available as of June 25, 2014.).

[19] The Applicant purchased the Cobas Integra 400 Plus Chemistry Analyzer for $42,000.00 plus $1,820.00 for shipping, for a total cost of $43,820.00.  FEMA has already provided funding in the amount of $16,500.00.  The Applicant has requested the difference in cost of $27,320.00. 

[20] PW 7457 (Version 7); Applicant First Appeal, at Exhibit 7 (FEMA’s comment in the chart states: “not comparable, funded at estimate.”

[21] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 406 (e)(1)(A), Title 42 United States Code (U.S.C.) § 5172(e)(1)(A) (2000), 44 C.F.R. §206.226.

[22] 44 C.F.R. § 206.221(i).

[23] 44 C.F.R. § 206.226(d)

[24] FEMA Recovery Policy 9524.10, Replacement of Equipment, Vehicles, and Supplies (Sept. 8, 2009), issued four years after the declared event, includes a provision stating, “The cost to replace the same number of destroyed equipment, vehicles, and supplies with new items may be eligible if applicants can provide written justification that a used item is not reasonably available, or does not meet applicable national consensus standards.”

[25] U.S. Department of Health and Human Services, Food and Drug Administration, “Design Considerations and Pre-market Submission Recommendations for Interoperable Medical Devices: Guidance for Industry and Food and Drug Administration Staff” (Sept. 6, 2017), ASTM (formerly known as American Society of Testing and Materials) F2761-09 (2013): Medical Devices and Medical Systems - Essential Safety Requirements for Equipment Comprising the Patient-Centric Integrated Clinical Environment (2013).

Last updated March 24, 2021