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Increased Operating Expenses

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4081-DR-MS
ApplicantMemorial Hospital at Gulfport
Appeal TypeSecond
PA ID#047-UHJ7Y-00
PW ID#PW 631
Date Signed2015-05-11T00:00:00

Conclusion:  Pursuant to 44 C.F.R. § 206.225, the work performed by the Applicant’s staff during and following Hurricane Isaac is not emergency work.  Therefore, the costs reflected in PW 631 for force account labor overtime and meal vouchers for staff are considered increased operating expenses and ineligible for PA funding.

Summary Paragraph

Following Hurricane Isaac, FEMA drafted Project Worksheet (PW) 631 to capture the costs associated with the actions taken by the Applicant during and after the disaster.  FEMA obligated PW 631 for $40,516.56 to reflect costs incurred to operate and maintain generators.  However, FEMA determined that $410,665.61 for force account labor overtime and $24,845.00 for meals to feed staff were ineligible for PA funding because FEMA considers these costs increased operating expenses.  In the first appeal, the Applicant asserted that the force account labor overtime was used to continue a critical public service, provide medical care and emergency medical care services to patients, and maintain functional generators to ensure electricity throughout the hospital.  In addition, the Applicant asserted that, due to a “lock down” situation, the Applicant had to feed its staff while they were confined to the hospital.  The FEMA Region IV Regional Administrator (RA) determined that the cost associated with PW 631 was an increased operating expense, and as such, was not an eligible emergency cost.  In the Applicant’s second appeal, it requests $435,510.61 for costs incurred during and after Hurricane Isaac, again asserting the force account labor overtime costs reflected eligible emergency work and FEMA should reimburse them. 


Authorities and Second Appeals

  • 44 C.F.R. § 206.225.
  • DAP 9525.4, Emergency Medical Care and Medical Evacuations, at 1-3.
  • Ochsner Clinic Foundation, FEMA-1603-DR-LA, at 2 (Oct. 3, 2008).
  • PA Guide, at 54.

Headnotes

  • Pursuant to 44 C.F.R. § 206.225, emergency protective measures to save lives, to protect public health and safety, and to protect improved property are eligible for PA funding. 
  • According to DAP 9525.4, costs associated with providing temporary facilities for emergency medical care of disaster survivors when existing facilities are destroyed or severely impacted are eligible for PA funding.  However, increased administrative and operating costs to a hospital due to increased or anticipated increased patient load, labor costs for medical staff, and increased costs for feeding residents and staff of critical facilities are ineligible for PA funding.
  •  The Applicant required staff to stay onsite and provided meal vouchers during a “lock down” period during and following Hurricane Isaac.  The Applicant claimed costs for this work as emergency protective measures.

FEMA policy explicitly states costs associated with this type of work are ineligible for PA funding because they are increased operating expenses

Appeal Letter

May 11, 2015

Mr. Robert Latham, Jr.
Executive Director
Mississippi Emergency Management Agency
220 Popps Ferry Road
Biloxi, Mississippi  39531

Re: Second Appeal – Memorial Hospital at Gulfport, PA ID 047-UHJ7Y-00, FEMA-4081-DR-MS, Project Worksheet (PW) 631 – Increased Operating Expenses

Dear Mr. Latham:

This is in response to a letter from your office dated September 17, 2014, which transmitted the referenced second appeal on behalf of Memorial Hospital at Gulfport (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $435,510.61 in Public Assistance (PA) funding for force account labor overtime and meals provided to staff.

As explained in the enclosed analysis, I have determined that the activities conducted by the Applicant following Hurricane Isaac and addressed in PW 631 are ineligible for PA funding because they are increased operating expenses.  Therefore, I am denying the appeal. 

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/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Garcia Szczech
     Regional Administrator
     FEMA Region IV

Appeal Analysis

Background

In August 2012, Hurricane Isaac caused street flooding, downed trees and power lines, and power outages throughout Gulfport City, Mississippi.  Gulfport City and Harrison County imposed a curfew causing a “lock down” scenario at Memorial Hospital at Gulfport (Applicant).  As a result, the Applicant initiated a Hurricane Alert Status (HAS) plan that included keeping medical staff at the hospital for approximately 72 hours in anticipation that the next regularly scheduled shift would be unable to report due to the storm, authorizing meal vouchers to employees, and operating and maintaining four generators.  FEMA drafted Project Worksheet (PW) 631 to capture the costs associated with the actions taken by the Applicant during and after the disaster.  FEMA obligated PW 631 for $40,516.56 to reflect costs incurred to operate and maintain the generators.  However, FEMA determined that $410,665.61 for force account labor overtime and $24,845.00 for meals to feed staff were ineligible for PA funding because FEMA considers those costs increased operating expenses.

First Appeal

In the first appeal dated January 31, 2013, the Applicant asserted that the force account labor overtime was used to continue a critical public service, provide medical care and emergency medical care services to patients, clean up and remove water infiltration, relocate patients, ensure security, and maintain functional generators.  In addition, the Applicant asserted that the City and Harrison County imposed curfew during the disaster, prevented staff from leaving the hospital, and necessitated the Applicant feeding them for the duration of the curfew.

In a letter dated May 23, 2014, the FEMA Region IV Regional Administrator (RA) determined that the cost associated with PW 631 was an increased operating expense, and as such, was not an eligible emergency cost.  The RA cited to the second appeal determination for Ochsner Clinic Foundation[1] in which FEMA concluded that overtime labor costs of medical staff are not eligible for PA funding.

Second Appeal

In its second appeal dated July 23, 2014, the Applicant requests $435,510.61 for costs incurred during and after Hurricane Isaac.  The Applicant states Hurricane Isaac created a “lockdown” situation that was extraordinary in nature.  The Applicant asserts the force account labor overtime costs reflected eligible emergency work and FEMA should reimburse them.  In a letter dated September 17, 2014, the Grantee elaborates by explaining the Applicant’s staff ensured that normal medical services would continue, assisted with securing the facility, helped stabilize and relocate patients, helped to ensure that generators were running, and ensured that critical equipment maintained power and continued to function.   

Discussion

Pursuant to 44 C.F.R. § 206.225, emergency protective measures to save lives, to protect public health and safety, and to protect improved property are eligible for PA funding.[2]  This includes measures, such as emergency medical care, that eliminate or lessen immediate threats to life, public health or safety, or additional damage to improved public or private property through cost effective means.[3]  FEMA DAP 9525.4, Emergency Medical Care and Medical Evacuations, provides that PA funding may be available to eligible applicants for the extraordinary costs associated with providing temporary facilities for emergency medical care of disaster survivors when existing facilities are overwhelmed if the costs are reasonable and customary for the emergency medical services provided.[4]  However, increased administrative and operating costs to a hospital due to increased or anticipated increased patient load, labor costs for medical staff, and increased costs for feeding residents and staff of critical facilities are ineligible for PA funding.[5]

In supporting its appeal, the Applicant cites to FEMA DAP 9525.4 as allowing for reimbursement of force account labor overtime when personnel are performing eligible work.  However, this policy specifically states that eligible work includes assistance for emergency medical care and medical evacuations of disaster survivors from a public or private nonprofit medical facility that has been destroyed or severely compromised by the disaster.[6]  In addition, this policy applies to temporary medical facilities, not facilities that normally operate as hospitals.[7]  Here, the Applicant’s facility still operated as a regular hospital at the time of the disaster.   Therefore, DAP 9525.4 does not apply.

The Applicant also argues that, due to Hurricane Isaac and the city-issued curfew that followed, it initiated a HAS plan that required physicians, nurses, and other medical staff to stay onsite beyond their normal work schedules.  The Applicant contends the disaster and subsequent curfew mandated a “lockdown” of the facility which was “extraordinary in nature.”  However, the Ochsner Clinic Foundation second appeal also involved a facility that was “locked down” during a declared disaster.  In that case, FEMA determined that the overtime paid to medical personnel was an increased operating expense regardless of cause.[8]  Pursuant to FEMA policy, requiring medical personnel to stay onsite to perform their normal work duties during an emergency is not an emergency protective measure.[9]  While the Grantee argues that the staff performed some duties that may be eligible work, the Applicant did not sufficiently substantiate this assertion.[10]  Finally, FEMA guidance explicitly states increased costs for feeding hospital staff is ineligible for PA funding.[11]  Therefore, FEMA policy prohibits granting relief with respect to the meal vouchers provided to the Applicant’s staff during and after Hurricane Isaac. 

Conclusion

The costs reflected in PW 631 for force account labor overtime and meal vouchers for staff are considered increased operating expenses. As such, the work performed by the Applicant’s staff during and following Hurricane Isaac is not emergency work, and consequently ineligible for PA funding. 



[1] FEMA Second Appeal Analysis, Ochsner Clinic Foundation, FEMA-1603-DR-LA, at 2 (Oct. 3, 2008).

[2] 44 C.F.R. § 206.225(a)(1).

[3] See 44 C.F.R. § 206.225(c); see also Disaster Assistance Policy 9525.4, Emergency Medical Care and Medical Evacuations, at 1 (Jul. 16, 2008).

[4] DAP 9525.4, Emergency Medical Care and Medical Evacuations, at 2.

[5] Id. at 3; see also Public Assistance Guide, FEMA 322, at 54 (June 2007) [hereinafter PA Guide].

[6] See DAP 9525.4, Emergency Medical Care and Medical Evacuations, at 1.

[7] Id. at 2-3; see also Ochsner Clinic Foundation, FEMA-1603-DR-LA, at 2 (stating “[w]e believe that the section 7.A of the policy is clear: eligible costs must be associated with an eligible applicant providing temporary facilities for treating disaster victims when their existing facilities are overloaded and cannot accommodate the patient load.  The policy does not authorize reimbursement for increased costs incurred in its regular facility.”).

[8] Ochsner Clinic Foundation, FEMA-1603-DR-LA, at 2.

[9] See PA Guide, at 54 (stating the costs for providing a service, including increased hospital patient care costs, are ineligible for PA funding).

[10] On December 17, 2014, FEMA sent a Request for Information (RFI) to the Applicant and Grantee requesting sufficient documentation, including but not limited to, an applicable salary/pay policy, fringe benefits plan, timesheets, and a detailed record of work performed, including the name and title/position of each employee, hours worked, demonstrating the type and extent of work completed by its employees during the disaster.  As of the date of issuance of this appeal, FEMA had not received a response to its RFI. 

[11] PA Guide, at 54.

Last updated February 4, 2020