Ineligible Costs, Force Account Labor & Equipment Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4337
Applicant	North Broward Hospital District
Appeal Type	Second
PA ID#	011-URI4B-00
PW ID#	PW 4196
Date Signed	2022-03-30T16:00:00

Summary Paragraph

From September 4 - October 18, 2017, Hurricane Irma caused damage in Florida.  North Broward Hospital District (Applicant) utilized Force Account Labor (FAL) and contractors to perform emergency actions at its facilities.  FEMA prepared Project Worksheet 4196 to document the project and later issued a Determination Memorandum, partially approving the project in the amount of $41,358.48.  FEMA found that the Applicant adequately documented the contract work; however, the Applicant did not provide documentation that FEMA could validate for its $3,008,315.05 in FAL costs.  The Applicant appealed, stating that overtime costs were incurred from requiring staff to remain onsite during the event, as well as overtime expenses to care for the children of staff.  The FEMA Region IV Regional Administrator denied the first appeal, finding that the claimed FAL hours were for work to ensure the continued operations of the Applicant’s facilities, not eligible emergency protective measures.  Therefore, the costs constituted an ineligible increased operating expense.  The Applicant submits a second appeal, stating that overtime costs were incurred due to its legal responsibility to provide emergency medical services during the disaster.  The Applicant asserts that its request only includes the overtime costs for employees who performed emergency protective measures and who would not have worked overtime but-for the hurricane.

Authorities and Second Appeals

• Stafford Act § 403(a).
• 44 C.F.R. §§ 206.223(a)(1), 206.225(a).
• PAPPG, at 19, 24, 60-61, 63.
• Dep’t of Transp., FEMA-4068-DR-FL; City of Sweetwater, FEMA-1345-DR-FL; Georgetown Hosp. Sys., FEMA-4394-DR-SC.

Headnotes

• Per the PAPPG, at 60, increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident.  Additional costs related to operating a facility are only eligible if the services are specifically related to eligible emergency actions to save lives or protect public health and safety or improved property.

• The Applicant’s FAL costs associated with general patient care and routine tasks are ineligible increased operating costs.

Conclusion

FEMA finds that the Applicant has not demonstrated that the costs were incurred during the performance of eligible emergency protective measures.

 

Appeal Letter

Appeal Analysis

Background

From September 4 - October 18, 2017, Hurricane Irma caused damage in Florida.  North Broward Hospital District (Applicant) utilized Force Account Labor (FAL) and contractors to perform emergency actions at its facilities in order to protect life, property and prevent immediate threats to public safety.  The Applicant’s contract costs consisted of fueling services for the hospital’s power system, installation of accordion shutters for anticipated storm surge, and the provision of plumbing and water restoration services.  The total cost of the contract work was $41,358.48.  The Applicant also claimed $3,008,315.05 in FAL overtime hours for employees performing emergency protective measures.

FEMA prepared Project Worksheet (PW) 4196 to document the project.  FEMA issued a Request for Information on November 24, 2020, seeking time sheets, payroll records, activity logs, hourly rates, and a breakdown of fringe benefits regarding the Applicant’s FAL costs.  On December 10, 2020, the Applicant responded, providing payroll records and a spreadsheet accounting of the FAL hours.

On February 19, 2021, FEMA issued a Determination Memorandum, partially approving the project in the amount of $41,358.48.  FEMA found that the Applicant adequately documented the contract work for emergency protective measures; however, the Applicant did not provide documentation that could be validated for the claimed FAL costs.  FEMA explained that the Applicant did not provide activity logs for each employee, so there was no way to validate if the time was spent completing eligible emergency protective measures or was related to the increased costs of operating the facility.  FEMA noted that overtime hours that are incurred from an employee performing its normal duties are not eligible.

First Appeal

On April 21, 2021, the Applicant submitted a first appeal, stating that $3,008,315.05 in overtime costs were incurred from requiring staff to remain onsite during the event due to closures of primary health care facilities, physician practices, and pharmacies, as well as overtime expenses to care for the children of staff.  The Applicant explained that it had to place sufficient staff on standby prior to the event to have proper coverage.  The Applicant provided job descriptions and sign in sheets, as well as the previously provided spreadsheet accounting of FAL hours.  The Florida Division of Emergency Management (Grantee) transmitted the first appeal to FEMA, recommending its approval.

On September 16, 2021, the FEMA Region IV Regional Administrator denied the first appeal, finding that the claimed FAL hours were for work to ensure the continued operations of the Applicant’s facilities, not eligible emergency protective measures.  Therefore, the costs constituted an ineligible increased operating expense.  FEMA explained that the time sheets and work logs document that the Applicant’s employees completed regular, everyday tasks, such as providing food, patient care, and administrative duties, as opposed to any eligible emergency protective measures.

Second Appeal

On November 15, 2021, the Applicant submitted its second appeal, asserting that $3,008,315.05 in overtime costs were incurred due to its legal responsibility under state and local emergency management plans to ensure that it had enough resources to provide emergency medical services during the disaster and mandatory county-wide lockdown.  The Applicant explains that it was required to coordinate with state and county governments to execute the State’s Comprehensive Emergency Management Plan.  The Applicant, following its own internal emergency management policies, assembled the necessary staff prior to the lockdown.  The requested costs were only incurred during the lockdown and were to pay for unbudgeted replacement workers.

The Applicant states that it is requesting reimbursement for employees who, but-for the disaster, would not have worked overtime, that the costs are adequately documented, and that employees performed work consistent with their regular job descriptions or were reassigned to perform tasks necessary for saving lives and protecting public health and safety.

The Applicant asserts that FEMA failed to consider that the Applicant’s facility serves an important governmental role, providing medical care necessary to save lives and protect public health and safety during disasters.  The Applicant provides spreadsheets accounting for its FAL costs and other exhibits, such as its emergency plans, staffing compensation practices, and emails.  The Grantee transmitted the second appeal to FEMA, recommending its approval.

 

Discussion

FEMA is authorized to provide Public Assistance funding for emergency protective measures necessary to save lives, protect public health and safety, and to protect improved property.[1]  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.[2]  In addition, costs must be directly tied to the performance of eligible work, adequately documented, and necessary and reasonable to accomplish the work properly and efficiently.[3]  Increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident.[4]  Additional costs related to operating a facility are only eligible if the services are specifically related to eligible emergency actions to save lives or protect public health and safety or improved property.[5]  Examples of ineligible operating costs include, but are not limited to, costs for administrative activities and patient care, with the exception of extraordinary costs associated with emergency medical care of survivors.[6] 

On second appeal, the Applicant provides the same spreadsheet that it did previously, and FEMA is unable to validate that any of the work constituted eligible emergency protective measures.  The spreadsheet accounts for the overtime hours, but does not document that the employees performed eligible work.  Instead, the administrative record shows that the vast majority of the claimed costs are for work unrelated to the disaster, that is, employees performing their regular duties, albeit in an overtime status.  And while some employees performed disaster-related tasks, they were generally performed to ensure that the Applicant’s facilities remained open during the storm.  These tasks are not emergency protective measures due to an immediate threat resulting from the declared incident, but instead related to increased operating expenses.[7]  While a few employees potentially performed emergency protective measures such as staffing the Applicant’s Emergency Operations Center, the work logs did not clearly separate the costs or hours associated with any potentially eligible task or specify whether the task was performed for the full duration of an employee’s shift.  Accordingly, the Applicant has not shown that the costs were incurred during the performance of eligible emergency protective measures.

 

Conclusion

FEMA finds that the Applicant has not demonstrated that the costs were incurred during the performance of eligible emergency protective measures.  Therefore, this appeal is denied.

 

[1] Robert T. Stafford Disaster Relief and Emergency Assistance Act § 403(a), 42 United States Code § 5170b(a) (2012); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.225(a) (2016). 

[2] 44 C.F.R. §§ 206.223(a)(1), 206.225(a)(3); Public Assistance Program and Policy Guide, FP 104-009-2, at 19 (Apr. 1, 2018) [hereinafter PAPPG].

[3] Title 2 Code of Federal Regulations § 200.403 (2017); PAPPG, at 21-22

[4] PAPPG, at 42.

[5] Id. at 60-61.

[6] Id. at 60-61, 63.

[7] FEMA Second Appeal Analysis, Georgetown Hosp. Sys., FEMA-4394-DR-SC, at 3 (Mar. 3, 2021).