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Ineligible Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4394
ApplicantBerkeley Citizens Inc.
Appeal TypeSecond
PA ID#015-058D7-00
PW ID#PW 124
Date Signed2021-02-03T17:00:00

Summary Paragraph

From September 8, through October 8, 2018, Hurricane Florence caused damage to Berkeley County, South Carolina.  Berkeley Citizens Inc. (Applicant), in response to the Governor’s executive order evacuated its residents, who required specialized care, to another facility from September 11 to September 16, 2018.  The Applicant requested costs for evacuation as well as force account labor overtime, meals, and supplies for evacuees once they were at the shelter in the amount of $151,959.30.  FEMA denied $133,178.68 in Public Assistance (PA) funding finding the costs post-evacuation were increased operating costs.  The Applicant appealed the determination stating that FEMA classified it as a Private Nonprofit (PNP) when it should be treated as a special purpose district (quasi-state agency).  In addition, the Applicant stated that given the specialized care required for the evacuated patients, the costs claimed were necessary due to the emergency.  FEMA Region IV denied the Applicant’s first appeal, noting both publicly available documentation and the Applicant’s own Request for Public Assistance classifies it as a PNP.  Furthermore, FEMA found the costs incurred for operating the temporary facility are ineligible increased operating expenses.  The Applicant filed a second appeal reiterating prior arguments.

Authorities and Second Appeals

  • Stafford Act §403.
  • PAPPG, at 42, 60-61.  
  • Roper Hospital, Inc., FEMA-4286-DR-SC, at 2.

Headnotes

  • Increased costs of operating a facility or providing a service are generally ineligible, even when directly related to the incident.  Ineligible operating costs include, but are not limited to, costs for: patient care; administrative activities; provision of food; and obtaining electrical power or water from an alternate source.
    • Here the Applicant incurred costs for providing meals and supplies for patients at a temporary facility, as well as incurring costs for overtime for staff providing patient care.  These costs are considered increased operating costs related to operating a facility which is not eligible for PA funding.

Conclusion

The Applicant’s costs incurred at a temporary facility are increased operating costs and are not eligible for PA.  Therefore, this appeal is denied.

Appeal Letter

Mr. Kim Stenson                   

Director                                                                      

South Carolina Emergency Management Division               

2779 Fish Hatchery Road                                          

West Columbia, South Carolina 29172         

 

Re:  Second Appeal – Berkeley Citizens Inc., PA ID: 015-058D7-00, FEMA-4394-DR-SC, Project Worksheet 124 - Ineligible Costs  

 

Dear Mr. Stenson:

This is in response to a letter from your office dated December 18, 2020, which transmitted the referenced second appeal on behalf of Berkeley Citizens Inc. (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 $133,178.68 for force account overtime, meals, and supplies for patients and staff evacuated to a temporary facility.  

As explained in the enclosed analysis, I have determined the costs claimed by the Applicant are increased operating costs and not eligible for Public Assistance.  Therefore, this appeal is denied. 

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:  Gracia B. Szczech  

Regional Administrator

FEMA Region IV

Appeal Analysis

Background

From September 8 through October 8, 2018, Hurricane Florence’s hurricane force winds, rain and flooding caused damage to Berkeley County, South Carolina.  Berkeley Citizens Inc. (Applicant), a Private Nonprofit (PNP) that provides specialized care,[1] initiated evacuations of its patients and staff to a temporary facility after a mandatory evacuation order issued by the Governor.  Specifically, the Applicant relocated 94 residents and 60 staff to the temporary facility, with beds provided per a mutual support agreement.[2]  On September 16, 2018, staff and patients returned to the Applicant’s facility. 

FEMA prepared Grants Manager Project 66841/Project Worksheet 124 to account for the Applicant’s requested emergency protective measure costs, which included force account labor overtime, meals, and supplies for patients and staff while at the temporary facility.[3]  FEMA issued a Determination Memorandum (DM) on August 22, 2019 which denied $133,178.68 in Public Assistance (PA) funding as ineligible increased operating costs.[4]  FEMA found that while $18,780.62 in costs for evacuation were necessary to reduce the immediate threat to patients’ health and safety, the $133,178.68 were normal operating costs for operating a facility and providing non-emergency services, and thus were ineligible.       

 

First Appeal

The Applicant appealed on October 21, 2019.[5]  First, the Applicant asserted that it has always been considered a special district or quasi-state agency and therefore should receive the requested costs as an eligible (state or local government type) applicant, rather than being classified as a PNP.[6]  Second, due to the unique needs and continuity of care necessary for the patients, constant care in the evacuation and temporary sheltering was required.  Therefore, the costs incurred were not “normal operating costs” and should be reconsidered as necessary due to the extraordinary circumstances created by the event.  The South Carolina Emergency Management Division (Grantee) forwarded the appeal on December 20, 2019 in support of the Applicant’s position.

The FEMA Region IV Regional Administrator on August 26, 2020, determined that the $133,178.68 in costs for labor, housing staff and patients, meals and supplies for patients are ineligible increased operating expenses.[7]  Furthermore, the Applicant did not provide documentation supporting classification as a special district or other form of local government; stating instead that documentation available classified the Applicant as a PNP.[8] ­­­­­

 

Second Appeal

The Applicant’s second appeal dated October 22, 2020 reiterates arguments from its first appeal letter regarding its PNP status and the extraordinary circumstances leading to the claimed costs.  The Grantee forwarded the Applicant’s second appeal on December 18, 2020 reiterating its prior concurrence.

 

Discussion

Eligible emergency work includes emergency protective measures that are necessary to save lives and protect property or public health and safety.[9]  For PNPs, eligible emergency protective measures are typically limited to activities associated with preventing damage to an eligible facility and its contents.[10]  Increased costs of operating a facility or providing a service are generally ineligible, even when directly related to the incident.[11]  For PNPs, operating costs are generally ineligible even if the PNP provides emergency services.[12]  For all applicants, ineligible operating costs include, but are not limited to, costs for: patient care; administrative activities; provision of food; and obtaining electrical power or water from an alternate source.[13]  PNPs that own or operate a medical or custodial care facility are eligible for direct reimbursement of costs related to patient evacuation, but not costs related to the subsequent sheltering of patients after evacuation.[14] 

Here, the Applicant, a PNP,[15] responded to an evacuation order by relocating staff and residents to a temporary facility within the same network under a mutual support agreement.  The evacuation costs incurred to address an immediate threat to the health and safety of the patients and staff were eligible.  However, once the relocation was completed, the costs incurred for providing housing and care of patients at the temporary facility are considered normal operating costs.  FEMA’s PA program treats those costs as ineligible increased operating costs.  Furthermore, overtime costs for the staff are likewise ineligible increased operating costs.[16]  In sum, the Applicant requested costs related to patient care, which is considered an increase operating expense and not eligible under PA policy.

 

Conclusion

The Applicant’s costs incurred are increased operating costs and are not eligible for PA.  Therefore, this appeal is denied.

 

[1] The Applicant provides specialized care to individuals with intellectual and cognitive disabilities, brain and spinal cord injuries, cerebral palsy, autism, epilepsy, and other disabilities.  The Applicant contracts with the South Carolina Department of Disabilities and Special Needs (SCDDSN) for services including residential custodial care programs and receives 90 percent of its funding from SCDDSN.  On May 1, 2018, the Applicant renewed its Memorandum of Agreement (MOA) with Newberry County Disabilities and Special Needs Board (NCDSNB) to provide temporary emergency sheltering for individuals served by each other’s services. 

[2] The evacuation to an in-network facility is required under SCDDSN regulations for facilities operating within South Carolina.

[3] See Grants Manager Project (GMP) 66841, identified in EMMIE as Project Worksheet (PW) 124. 

[4] Letter from Infrastructure Branch Dir., FEMA, to Public Assistance Officer, SCEMD., Exec. Dir., Berkeley Citizens Inc. (Aug. 22, 2019).

[5] Letter from Exec. Dir., Berkeley Citizens, Inc., to Dir., SCEMD (Oct. 21, 2019).

[6] This point is further emphasized that in past events the Applicant has been treated by both SCDDSN and FEMA as a stand-alone applicant.  In this case, SCDDSN did not apply for PA funding.

[7] Letter from Reg’l., Adm’r., FEMA, to Dir., SCEMD., Exec., Dir., Berkeley Citizens, Inc., (Aug. 26, 2020). 

[8] Id. at 4-5.  Specifically, FEMA found the Applicant’s documentation, such as sections of the South Carolina code, and directories for nonprofit org. and local governments, all list the Applicant as a nonprofit, not a special district or local government. 

[9] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act §403, Title 42, United States Code (42 U.S.C.) §5170b (2018).

[10] Public Assistance Program and Policy Guide, FP 104-009-2, at 60 (Apr. 2018).   

[11] Id., at 42  

[12] Id., at 60-61.

[13] Id.

[14] Id.

[15] The Applicant has claimed that it qualifies as a special purpose district, a state classification, and as such should receive direct reimbursement for costs normally not eligible to PNPs.  However, after reviewing the Applicant’s RPA information on two past disasters, its PNP questionnaire, 501c3 tax letter, it is properly classified here as a PNP.  The State of South Carolina has a publicly available directory identifying special purpose districts, the Applicant is not listed among them.  Even if classified as a quasi-state agency, the costs are still increased operating costs and not eligible. 

[16] See FEMA Second Appeal Analysis, Roper Hospital, Inc. PW 890, FEMA-4286-DR-SC at 2 (Dec. 9, 2019).  Specifically, where overtime hours were determined to be routine patient care for the PNP, not emergency protective measures, and therefore ineligible.

Last updated February 3, 2021