Immediate Threat

Appeal Brief

Summary Paragraph

On March 27, 2020, the President issued a major disaster declaration for the State of Michigan with an incident period of January 20, 2020, to May 11, 2023, for the Coronavirus (COVID-19) pandemic. The Applicant requested Public Assistance funding for $3,450,766.57 in costs related to emergency medical care and to safely operate its primary medical care facilities in a COVID-19 environment. This included medical directors who reviewed the Centers for Disease Control recommendations, presented best practices, and developed safe and reasonable use guidelines for the Applicant’s Incident Management Team. FEMA transmitted a Request for Information (RFI) to clarify if the medical directors were hired specifically for work related to COVID-19 or were reassigned from other roles. The Applicant clarified the medical directors were continuing their existing, pre-pandemic roles, but that the costs at issue related to COVID-19 specific work. FEMA denied the $76,825.61 in straight-time costs finding they were ineligible for reimbursement. The Applicant filed a first appeal, reclassifying the medical officers’ labor from employee pay to contract services. The Michigan State Police Emergency Management and Homeland Security Division (Recipient) forwarded the Applicant’s appeal to FEMA with its support. FEMA issued an RFI on a new eligibility issue, seeking information that the work the Applicant’s medical directors conducted was an eligible emergency protective measure in response to COVID-19 and requested substantiating documentation. In response, the Recipient forwarded the medical directors’ timesheets. The FEMA Region 5 Regional Administrator, in a letter dated April 26, 2023, denying the Applicant’s first appeal, finding the Applicant did not demonstrate the work was an eligible emergency protective measure in response to COVID-19. The Applicant filed a second appeal, reiterating its first appeal arguments. The Recipient forwarded the appeal with a letter of support.

Authorities and Second Appeals

• Stafford Act §403(a)(3).
• 44 C.F.R. §§ 206.223(a)(1), 206.225(a), 206.225 (a)(3)(i).
• PAPPG, at 19, 21, 57. 
• FP 104-21-0004, at 3-4.

Headnotes

• Labor costs associated with medical staff providing treatment to COVID-19 patients may be eligible. For primary medical care facilities, increased operating costs for administrative activities are not eligible.
  • The labor costs are associated with administrative duties including reviewing CDC recommendations, presenting best practices, and developing safe and reasonable use guidelines. As these are not directly tied to medical staff providing treatment to COVID-19 patients, they are not eligible for PA under the applicable FEMA COVID-19 medical care policy.

Conclusion

The Applicant has not demonstrated the requested labor costs are directly tied to the treatment of COVID-19 patients, rather than ineligible increased operating costs for administrative activities. Therefore, this appeal is denied. 

Appeal Letter

Appeal Analysis

Background

On March 27, 2020, the President issued a major disaster declaration for the State of Michigan with an incident period of January 20, 2020 to May 11, 2023, for the coronavirus (COVID-19) pandemic. Bronson Healthcare Group (Applicant) requested $3,450,766.57 in Public Assistance (PA) funding for work related to emergency medical care and work to operate its primary medical care facilities in a COVID-19 environment.[1] FEMA prepared Grants Manager Project 168950 to document work and costs. As part of the costs for this project, the Applicant requested $198,718.28 for medical director consultants who reviewed Centers for Disease Control and Prevention (CDC) recommendations, presented best practices, and developed safe and reasonable use guidelines for the Applicant’s Incident Management Team. 

On June 30, 2021, FEMA issued a Request for Information (RFI) seeking information on whether the medical directors were specifically hired to respond to COVID-19 or were reassigned to the positions. The Applicant responded on July 1, 2021, stating that the medical directors were not specifically hired for COVID-19 related work, and instead they were in existing roles prior to COVID-19. However, the Applicant stated that the hours it submitted for the work performed by the medical directors were specifically for COVID-19 activities which the Applicant considered to be unbudgeted.

On January 26, 2022, FEMA issued a Determination Memorandum partially granting the costs. In its determination, FEMA denied $419,762.77 in costs related to information technology equipment, remote work, and the straight-time force account labor worked by the medical directors.[2] In its determination, FEMA found that straight-time for budgeted employees was not eligible for reimbursement even if they were performing eligible emergency protective measures. 

First Appeal 

The Applicant appealed on March 23, 2022, requesting FEMA approve $76,825.61 for the medical directors’ labor that the Applicant reclassified from employee pay to contracted services based on language in the physicians’ contracts.[3] In support, the Applicant cited to a FEMA COVID-19 policy[4] that it states authorizes straight-time costs for contract medical staff providing treatment to COVID-19 patients. The Michigan State Police Emergency Management and Homeland Security Division (Recipient) forwarded the Applicant’s appeal on May 18, 2022, to FEMA with its support.

On July 6, 2022, FEMA identified a new eligibility issue, expressing concern that the Applicant did not demonstrate the work performed by the medical directors was an eligible emergency protective measure in response to COVID-19 and issued an RFI. FEMA requested the Applicant or Recipient provide any additional information or documentation to demonstrate the activities were eligible emergency protective measures. In response, the Recipient, on September 1, 2022, forwarded timesheets for the medical directors.

The FEMA Region 5 Regional Administrator, in a letter dated April 26, 2023, denied the Applicant’s first appeal. FEMA found that the Applicant did not demonstrate that general administration and COVID-19 planning performed by the medical directors are eligible emergency protective measures necessary to save lives or protect public health and safety.

Second Appeal

The Applicant’s submitted its second appeal on June 22, 2023, reiterating its first appeal arguments that the activities conducted by the medical directors were eligible emergency protective measures. The Recipient forwarded the Applicant’s appeal with a July 14, 2023 letter to FEMA supporting the appeal.

Discussion

FEMA is authorized to provide PA funding for emergency protective measures to save lives and protect public health and safety.^[5] For emergency protective measures to be eligible, the applicant is responsible for showing the work is required due to an immediate threat resulting from the declared incident.^[6] For medical care provided in a primary medical care facility to be eligible, the work must be directly related to the treatment of COVID-19 patients, both confirmed and suspected cases.^[7] Certain labor costs associated with medical staff providing treatment to COVID-19 patients may be eligible.^[8] For primary medical care facilities, increased operating costs for administrative activities are not eligible.[9] Costs must be directly tied to the performance of eligible work.[10]

Here, the Applicant requests PA funding for costs incurred for medical directors in carrying out administrative duties related to COVID-19. However, under FEMA’s COVID-19 policy related to medical care, the tasks performed by the medical directors are not eligible. FEMA’s COVID-19 medical care policy cited above only authorizes labor costs associated with medical staff providing treatment to COVID-19 patients. The administrative duties performed by the Applicant’s medical directors, including reviewing CDC recommendations, presenting best practices, and developing safe and reasonable use guidelines are not eligible emergency protective measures under that policy. Therefore, the work is not eligible for PA.

Conclusion

The Applicant has not demonstrated the requested labor costs are directly tied to the treatment of COVID-19 patients, rather than ineligible increased operating costs for administrative activities. Therefore, this appeal is denied.