Force Account Labor & Equipment Costs, Immediate Threat

Appeal Brief

Appeal Letter

Appeal Analysis

Background

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the state of New York on March 20, 2020, with an incident period of January 20, 2020, through May 11, 2023. On August 15, 2022, Northwell Health, Inc. (Applicant), a Private Nonprofit organization that operates more than 20 hospitals throughout the state of New York, requested Public Assistance (PA) reimbursement for $134,878,167.39 in force account labor (FAL) crisis payments it made to 56,000 employees who worked at the Applicant’s various hospital locations from March 8 through May 10, 2020. In support of its claim, the Applicant provided a copy of an April 19, 2020 email with a subject line of “your recognition award,” announcing the crisis payment program (COVID-19 Crisis Award Announcement).[1] The COVID-19 Crisis Award Announcement confirmed the Applicant would issue a lump sum payment and one week of paid time off/vacation.[2] The Applicant also provided Frequently Asked Questions (FAQ) dated April 19, 2020, which stated the people eligible for recognition were those who worked during March 8 through May 10, 2020, and included team members who provided direct patient care in the Applicant’s hospitals and in post-acute settings, frontline team members who worked on-site or in post-acute settings where patients were seen, and team members in ambulatory and corporate shared services who went above and beyond in their role to provide support. In addition, the Applicant transmitted a project narrative and a spreadsheet listing the FAL crisis payments made to each employee. 

On September 13, 2023, FEMA denied the requested funding, finding that the Applicant did not provide a predisaster pay policy and that the payment of the FAL crisis payments (a type of premium pay) was discretionary. FEMA also found that because the Applicant did not provide details of what work the employees performed, the costs could not be tied to eligible emergency work. 

First Appeal

In a letter dated November 13, 2023, the Applicant filed a first appeal, reiterating its request for $134,878,167.39 in FAL crisis payments.[3] First, the Applicant stated that the FAL crisis payments addressed the immediate threat of COVID-19 and reduced threats to public health by ensuring there was adequate staffing to care for COVID-19 patients. Second, the Applicant provided its predisaster pay policy with an effective date of 1999 but stated its pay policy in place before the disaster was not applicable to the FAL crisis payments, which it specifically created in response to COVID-19. Third, the Applicant explained that the FAL crisis payments were not discretionary. It stated that managers had to validate that the employee receiving the FAL crisis payment met the Applicant’s criteria for receiving the payment, specifically, that an employee must have been involved in the COVID-19 response effort between March 8 and 

May 10, 2020. The Applicant explained that most employees were involved in COVID-19 response activities during this time period as the hospital system had paused all non-essential activities. Fourth, the Applicant provided a list of some of the typical activities its employees were involved in, including expanding bed capacity, expanding morgue capacity, triaging patients, distributing personal protective equipment, relocating non-COVID patients, and procuring critical supplies.

The Applicant submitted two New York State Executive Orders, information on its predisaster pay policy, including employee garnishments and wage assignments, mealtimes and rest periods, overtime, wage payments, shift differentials, and a staffing alert, copies of FEMA policies, and information on nurse shortages and healthcare employee retention initiatives. In a letter dated January 9, 2024, the New York State Division of Homeland Security and Emergency Services (Recipient) transmitted the first appeal to FEMA with its support.

On April 8, 2024, the FEMA Region 2 Regional Administrator denied the appeal, finding the Applicant’s crisis pay policy was created in response to COVID-19, rather than before the COVID-19 incident. Moreover, FEMA found the Applicant had not substantiated that its applicable pay policy was non-discretionary, citing language from the April 19, 2020 FAQ pertaining to non-union employees that stated “[b]ased on manager discretion, selected team members [were] eligible to receive a lump sum payment of $2,500[.00].”[4]

Second Appeal

On June 3, 2024, the Applicant submitted a second appeal, reiterating its previously raised arguments and disputing certain findings in the first appeal decision. The Applicant states it created the crisis payment program in response to COVID-19 to curb its healthcare worker attrition rate, noting its employees were performing a significant volume of COVID-19 work from March 8 through May 10, 2020. The Applicant states that none of the COVID-19 responses were usual and customary and that if FEMA applied the approach that written policies had to be in place prior to the COVID-19 pandemic, then most of the nation’s COVID-19 expenses would not have been deemed eligible. The Applicant then addressed FEMA’s prior finding regarding the non-discretionary nature of the crisis payments, stating that the FAQ language “based on manager discretion” was not created with federal nomenclature in mind, and a more accurate wording that reflects what occurred is “based on manager validation.” The Applicant states that “[t]he program criteria were simple, each employee engaged in COVID-19 related work during the first wave of the pandemic, March 8, 2020, through May 10, 2020, received a $2,500[.00] disbursement (prorated based on hours worked, such as for a part-time employee).”[5] Lastly, the Applicant states that almost 100 percent of its employees’ efforts during this period were related to COVID-19 such as patient care, setting up expanded capacity efforts, and re-directing non-COVID-19 patients. On July 22, 2024, the Recipient transmitted the appeal with its support.

Discussion

FEMA is authorized to provide assistance for emergency protective measures to save lives and protect public health and safety.[6] FEMA determines the eligibility of overtime, premium pay, and compensatory time costs based on the Applicant’s predisaster written labor policy, provided the policy: (1) does not include a contingency clause that payment is subject to Federal funding; (2) is applied uniformly regardless of a Presidential declaration; and (3) has set non-discretionary criteria for when the applicant activates various pay types.[7] To be eligible, costs must be directly tied to the performance of eligible work and adequately documented.[8] It is the applicant’s responsibility to provide documentation to substantiate its claim as eligible and to clearly explain how those records support its appeal.[9]

Here, the Applicant requests reimbursement for FAL crisis payments it made to employees who worked during March 8 through May 10, 2020. However, the Applicant’s predisaster pay policy, with an effective date of 1999, does not specifically mention or provide for crisis payments. Instead, the Applicant acknowledges that it instituted the crisis payments specifically in response to COVID-19; the COVID-19 Crisis Award Announcement was dated April 19, 2020, months after the start of COVID-19’s incident period. Therefore, the Applicant did not issue the FAL crisis payments in accordance with a predisaster written labor policy.[10] 

Notwithstanding the above, the Applicant has also not demonstrated that these payments were non-discretionary and uniformly applied as FEMA policy requires. The Applicant’s COVID-19 Crisis Award Announcement stated that “[b]ased on manager discretion, selected team members are eligible to receive a lump sum payment of $2,500[.00].”[11] While the Applicant asserts in its second appeal letter that the phrase “based on manager discretion” means “based on manager validation,” the policy as written does not establish non-discretionary criteria for when the Applicant would activate the crisis payments at issue. Additionally, the Applicant acknowledges it instituted the crisis payments specifically to respond to this federally declared disaster; it therefore is not uniformly applied regardless of a Presidential declaration.[12]

Additionally, the Applicant has not provided documentation that demonstrates the FAL crisis payments are directly tied to the performance of eligible work. For example, the April 19, 2020 FAQ pertaining to non-union team members states that employees eligible for recognition (i.e., payments) are “[t]eam members providing direct patient care in our hospitals and in post-acute settings between March 8 and May 10 (i.e., the COVID recognition period), and team members in ambulatory and corporate shared services who went above and beyond in their role to provide support during this COVID recognition period.”[13] The plain language of the FAQ shows that employees who may not have been engaged in COVID-19 tasks (i.e. direct patient care unrelated to COVID-19 and team members in ambulatory and corporate shared services) were also eligible to receive the crisis payments. Although the Applicant states the employees who received crisis payments were engaged COVID-19 activities, the Applicant does not provide specific task descriptions to demonstrate the activities were in response to COVID-19 nor does it provide specific time sheets for specific employees. For instance, the project narrative that the Applicant previously provided simply lists, generally, the types of activities its employees performed, including purchasing additional PPE and medical supplies, and enhancing infection control protocols. Finally, FEMA notes that the Applicant’s COVID-19 Crisis Award Announcement characterized each FAL crisis payment as a “recognition award” for employees who worked during a specific time period of great need, rather than payments that were directly tied to the performance of specific eligible emergency work. 

Conclusion

The Applicant has not demonstrated that its FAL crisis payments were provided in accordance with a predisaster written labor policy that meets FEMA policy requirements. In addition, the Applicant has not provided documentation that demonstrates the FAL crisis payments are directly tied to the performance of eligible emergency work. Therefore, this appeal is denied.