Hospital Food Services
|Applicant||Hancock Medical Center|
Citation: FEMA-1604-DR-MS, Hancock Medical Center, Second Appeal, Project Worksheet 4191
Cross-Reference: Emergency Protective Measures
Summary: The Hancock Medical Center (Applicant) operates a 104 bed, Level 2, critical care hospital in Bay St. Louis, Mississippi. Hurricane Katrina damaged the hospital’s kitchen facilities, rendering them unusable. As an alternative, the Applicant’s staff prepared meals off-site at a local high school and transported the meals to the hospital for staff, emergency responders, and patients. FEMA prepared PW 4191 to document the Applicant’s request for $118,298, but upon review determined that under Response and Recovery Policy 9525.4, Medical Care and Evacuations the food preparation costs represented increased operating costs that were ineligible for reimbursement. At PW closeout, the Applicant claimed total project costs of $241,484. On September 16, 2010, the Final Inspection Report, signed by both the FEMA and Mississippi Emergency Management Agency Closeout Specialists, noted that the claimed costs were ineligible increased operating costs. The Applicant filed a first appeal of the Final Inspection Report on October 28, 2010, asserting that due to the circumstances at the time of the disaster, the food preparation qualified as eligible emergency protective measures and the incurred costs should be reimbursed. On March 23, 2012, FEMA denied the Applicant’s first appeal citing FEMA Policy 9525.4 which states that “When medical facilities in a disaster area experience increased patient loads and operating costs, FEMA generally does not reimburse them.” On May 23, 2012, the Applicant filed a second appeal asserting that the food costs were not due to increased patient loads, as contemplated by the FEMA policy, but were a direct result of the destruction of the hospital’s kitchen by Hurricane Katrina. Furthermore, the Applicant pointed out that the temporary use of the local high school’s food preparation facilities was the most immediate and cost-effective measure available to provide interim food service to hospital staff and patients.
Issue: 1) Does the feeding of patients constitute an increased operating cost?
2) Does the feeding of hospital staff and emergency responders constitute an increased operating cost?
2) No. Applicant does not normally incur costs for feeding staff. The costs were a direct result of the declared event.
Rationale: Robert T. Stafford Disaster Relief and Emergency Assistance Act, Section 403 Essential Assistance; Response and Recovery Policy 9525.4, Medical Care and Evacuations.
February 25, 2014
Mr. Robert Latham, Jr.
Mississippi Emergency Management Agency
220 Popps Ferry Road
Biloxi, Mississippi 39531
Dear Mr. Latham:
This is in response to your letter dated July 5, 2012, which transmitted the referenced second appeal on behalf of the Hancock Medical Center (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $241,484 for the temporary provision of food for patients and hospital staff.
As explained in the enclosed analysis, after reviewing the documentation submitted with this appeal, I have determined that the Applicant is eligible for reimbursement of food costs and overtime labor costs associated with providing meals to hospital staff following Hurricane Katrina. Therefore, I am partially approving the second appeal. By copy of this letter, I am requesting the Regional Administrator to award an additional $114,600 to the Applicant with an amendment of PW 4191.
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
Hurricane Katrina severely damaged the Applicant’s kitchen facilities, thereby preventing the Applicant from preparing meals on site. Because the Applicant’s hospital was the only one of its type and capability in Hancock County, the Applicant had to find alternative means of preparing meals until repair of the facility was completed. While the Applicant routinely provides meals to the hospital’s patients, the lack of available food services in the surrounding storm-damaged community following Hurricane Katrina compelled the Applicant to provide meals to critical staff that worked extended hours. In order to meet the need, the Applicant arranged for its dietary staff to use the kitchen facilities at a nearby public high school to prepare meals for patients and hospital staff. The Applicant transported the meals prepared at the school to the hospital for distribution.
On January 19, 2006, FEMA prepared PW 4191 to document the Applicant’s request for reimbursement of $118,298 for food supplies. Upon review, FEMA determined that the PW was ineligible as the food costs represented increased operating costs. During closeout of the PW, the Applicant claimed total costs of $241,484 for preparing, transporting, and distributing the meals. This total included $126,383 in force account labor straight time costs, $4,228 in force account overtime labor, and $110,874 in food costs. On September 16, 2010, FEMA and Mississippi Emergency Management Agency (Grantee) Closeout Specialists signed a Final Inspection Report which denied all claimed costs based on Response and Recovery Policy (R&RP) 9525.4, Medical Care and Evacuations, published August 17, 1999, which noted that “Ineligible costs include…[i]ncreased administrative and operational cost to the hospital due to increased patient load.”
In an October 28, 2010, first appeal letter to the Grantee, the Applicant asserted that FEMA initially assured the hospital that providing food to patients and staff was an eligible emergency protective measure. The Applicant claimed that R&RP 9525.4 does not apply to the Applicant’s circumstances, because providing meals to hospital staff are not a normal operating expense for the hospital. Furthermore, the Applicant stated that the preparation of meals for hospital staff became necessary due to the need for critical staff to remain on call at the hospital continuously and the unavailability of food sources in the area. In a December 16, 2010, letter forwarding the appeal to FEMA, the Grantee supported the Applicant’s arguments. The Grantee noted that while R&RP 9525.4 specifies that increased operating costs due to increased patient load are ineligible, the need to relocate food preparation to an alternate location and the need to feed staff did not result from an increase in patient load, but instead were wholly due to the effects of Hurricane Katrina.
In a letter responding to the first appeal, FEMA Region IV Regional Administrator’s stated that the Applicant did not provide documentation demonstrating that a policy or other provision required the Applicant to furnish free meals to hospital staff. The letter also noted the provision of meals to patients is one of the Applicant’s normal operating expenses and any additional costs to continue that service during and after a disaster qualify as increased operating costs as described in R&RP 9525.4. The Regional Administrator concluded that claimed costs were not eligible for Public Assistance funding.
The Applicant submitted a second appeal in a letter dated May 23, 2012, and reiterated that the meal costs were incurred as a direct result of Hurricane Katrina, not as a result of additional patient load. The Applicant stressed that the temporary relocation of the kitchen facilities to the nearby high school and the provision of meals to staff, which were on-site around the clock, were crucial to the hospital’s ability to continue to provide critical emergency services to the community after the event and should be recognized as eligible emergency work.
In a July 5, 2012, letter supporting the Applicant’s second appeal, the Grantee noted that FEMA is authorized by Section 403 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) to “provide assistance essential to meeting immediate threats to life and property resulting from a major disaster” and noted that eligible work to save lives and preserve public health and safety includes the “provision of food, water, medicine, durable medical equipment, and other essential needs…” The Grantee further stated that in denying the Applicant’s request, FEMA is misapplying R&RP 9525.4, because the claimed costs were a direct result of the declared event and were not due to an increased patient load, as contemplated in the policy. The Grantee pointed out that the background to the policy states that increased operating costs are generally not eligible for reimbursement, but that FEMA may fund costs associated with providing additional facilities for emergency treatment in extraordinary catastrophic disasters. Based on the conclusion that Hurricane Katrina qualified as a catastrophic disaster, the Grantee requested that FEMA reconsider the provision of the meals to be eligible emergency work and requested that FEMA approve reimbursement of the associated costs.
Following a conference call between the Grantee and FEMA’s Public Assistance Division Headquarters staff, the Applicant submitted a letter to the Grantee dated August 15, 2013, and enclosed additional documentation pertaining to the number of patients admitted by month, the salary and wages for dietary staff by month, and a worksheet for calculating a cost factor for patients’ meals. The Applicant also noted a $5,591 discrepancy between the $136,202 in total labor costs for preparing staff meals based on the Applicant’s monthly salary and wages statement, and the $130,611 for labor documented and previously requested on the Grantee’s cost documentation worksheet, PA-9 Summary of Documentation in Support of Amount Claimed for Eligible Disaster Work, and requested the Grantee consider $130,611 to be the claimed amount.
The Grantee forwarded the Applicant’s letter with a September 5, 2013, memorandum addressed to the Public Assistance Regulations and Policy Branch Chief that clarified the circumstances under which the Applicant incurred the food preparation costs. The memorandum also provided additional justification for the associated work and corrections to the claimed costs. The Grantee explained that the Applicant had inadvertently included meal costs for admitted patients in its request for reimbursement and conceded that the total amount requested should be reduced to include only the cost of meals for staff, emergency response personnel, and victims of the disaster that were treated but not admitted to the hospital. As many of the patients were evacuated from the hospital during the time covered by PW 9141, the documentation submitted stated that the admitted patients accounted for 6.7% of the meals prepared. The Grantee requested that FEMA fund the remaining 93.3% of the claimed costs as eligible emergency work.
FEMA recognizes the challenges faced by the Applicant when its food preparation facilities were damaged by Hurricane Katrina, and recognizes that the temporary use of a nearby school’s kitchen was likely the most immediate and cost-effective measure to continue providing meals to hospital patients and staff. As discussed in the Applicant’s second appeal and the Grantee’s letter forwarding the same, the Stafford Act authorizes FEMA to provide the work or services to save lives and preserve public health and safety through such actions as providing such assistance as food and water, and other items identified as essential assistance. Such emergency work costs may be eligible provided there is not a duplication of benefits and the incurred costs are not part of an applicant’s normal budget. For the costs of patients’ meals, the Applicant has other mechanisms for recoupment of those costs, such as billing and/or patients’ medical insurance. Therefore, as previously stated by the Regional Administrator, the preparation of patients’ meals constitutes increased operating costs, which are, in accordance with R&RP 9525.4, not eligible for reimbursement.
Conversely, the Applicant has demonstrated that the circumstances which compelled the Applicant to prepare and supply meals to staff, emergency responders, and non-admitted “patients”, justifies the argument that the work was necessary to save lives and preserve public health in accordance with the intent of Section 403 of the Stafford Act. As this work was not normally performed by the Applicant prior to the event, the eligibility of the work cannot be disqualified as an increased operating expense for the hospital under R&RP 9525.4. Through documentation of patient admittance records, the Grantee has shown that 6.7% of the $118,298 in food costs was for patients, resulting in $110,372 in eligible food costs for staff.
While it would seem that the same percentage should be applied to the total labor costs associated with the preparation, transportation, and distribution of the meals; however, Title 44 of the Code of Federal Regulation § 206.228 (a)(2) allows for reimbursement of only the overtime labor costs for the Applicant’s force account dietary staff in providing the emergency protective measures as described in Section 403 of the Stafford Act. Given that the Applicant incurred overtime labor costs at an inconsistent rate during periods when the hospital had no admitted patients, as well as later once recovery of the hospital progressed, it is impossible to discern whether 6.7% of the overtime labor was attributable to feeding patients. As the feeding of patients was the primary mission of the hospital’s dietary staff, it is a safe assumption that this mission was accomplished during regular duty hours and the auxiliary task of feeding staff was accomplished once the admitted patients were fed. Accordingly, the incurred overtime labor cost of $4,228 is eligible for reimbursement.
Due to the disaster damage to the kitchen facility and the fact that meals for staff were not a normal or budgeted cost to the Applicant, the claimed costs to prepare, transport, and distribute meals to the hospital’s critical staff that worked extended hours and remained on site following Hurricane Katrina are eligible. The eligible costs include $110,372 for food and supplies, and $4,228 in overtime force account labor.