Result of Declared Incident

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4332
Applicant	Baptist Hospitals of Southeast Texas
Appeal Type	Second
PA ID#	000-UTFZB-00
PW ID#	GMP 11147
Date Signed	2021-05-11T16:00:00

Summary Paragraph

From August 23 to September 15, 2017, rainfall from Hurricane Harvey impacted the roof of Medical Office Building 740 (Facility), a building owned by Baptist Hospitals of Southeast Texas (Applicant).  A contractor hired by the Applicant assessed that rain from the disaster overwhelmed the roofing system, recommended replacing the roof, and prepared a hazard mitigation proposal (HMP).  FEMA created Grants Manager Project 11147 to document the restoration, but denied funding in a June 17, 2019 Determination Memorandum.  On June 18, 2019, the Applicant appealed, arguing that documented predisaster inspections demonstrated the roof was maintained and in good condition prior to the disaster.  It also noted that FEMA’s Site Inspector (SI) determined interior damages at the Facility were caused by water infiltration during the disaster.  At a second site inspection on October 8, 2019, FEMA found evidence of some interior damage due to wind during the disaster.  The FEMA Region VI Regional Administrator (RA) partially denied the appeal on January 3, 2020, finding that the available documentation did not support disaster-related damage to the Facility.  However, based on the second site inspection, the RA remanded the eligibility of interior damages and the Applicant’s HMP to the Texas Recovery Office (TRO) for further evaluation.  The Applicant submitted a second appeal on February 20, 2020, reiterating its first appeal arguments and requesting $3,463,278.91 to replace the Facility roof, restore interior spaces, and implement hazard mitigation measures.

Authorities and Second Appeals

• Stafford Act § 406.
• 44 C.F.R. § 206.223(a)(1).
• PAPPG v3.1, at 19-20, 118.
• El Paso Cty., FEMA-4229-DR-CO, at 8.
• Republic Cty. Highway Dep’t, FEMA-4230-DR-KS, at 4.

Headnotes

• To be eligible for Public Assistance (PA) funding, an item of work must be required as a direct result of the disaster.
  • Predisaster records do not demonstrate the condition of the Facility’s roof at the time of the disaster.  Further, assessments of the roof indicate a potentially significant predisaster issue with the function of the roof’s surface membrane.  Therefore, the Applicant has not demonstrated the disaster caused the claimed damage to the Facility’s roof.
• On first appeal, the RA remanded items of work to repair interior damages, and the Applicant’s HMP, to the TRO for further evaluation; the eligibility of these items is not ripe for decision in the present appeal.

Conclusion

The Applicant has not demonstrated that work to replace the Facility’s roof is required as a direct result of the disaster, rather than the result of predisaster conditions or deferred maintenance.  Therefore, as it pertains to the replacement of the Facility roof, the appeal is denied.  The Applicant’s appeal related to interior restoration work and hazard mitigation measures is not ripe for decision at this time.

Appeal Letter

Appeal Analysis

Background

From August 23 to September 15, 2017, wind-driven rain from Hurricane Harvey impacted the roof of Medical Office Building 740 (Facility), located in Beaumont, Texas.  The Facility is owned and maintained by Baptist Hospitals of Southeast Texas (Applicant), a Private Nonprofit.  The Facility’s roof has a total surface area of 24,738 square feet.

The Applicant hired Zero/Six Consulting (Zero/Six) to inspect and assess various properties, including the Facility.  On March 5, 2018, Zero/Six published a report finding that rainfall from the disaster overwhelmed the Facility’s “building envelope systems … allowing for water infiltration beyond the building envelope, damaging both building systems and the building interior.”[1]  Zero/Six found that more than 50 percent of the roof had been compromised, and recommended completely replacing the roof.  It also recommended replacing metal roof flashings, remediating interior areas damaged by water infiltration, and repairing a damaged window.  Zero/Six recommended hazard mitigation measures to add new sealants, coatings, and flashings to walls and resealing the Facility’s windows.  Zero/Six prepared scopes of work (SOWs) with estimated costs totaling $3,463,278.91.[2]

On March 13 and 19, 2018, FEMA conducted a site inspection of the Facility.  The Site Inspector (SI) noted that the roof dated to 2004 and was approximately 13 years old.  The SI documented “delamination and blisters … in perpetually wet areas” near roof-mounted air conditioning units, and noted that sealant in the joints of the roof’s surface membrane appeared “brittle and cracked due to loss of plasticity and aging.”[3]  The SI did not find any damage to the roof attributable to the disaster.  However, regarding interior spaces, the SI found that wind-driven rain during the disaster had penetrated the Facility’s exterior and damaged various interior features and some contents.  FEMA created Grants Manager Project (GMP) 11147 to document permanent work to restore the Facility.  The Applicant disagreed with FEMA’s inventory of the damages, and requested a Determination Memorandum for the project.

The Applicant’s insurer[4] hired Envista Forensics (Envista) to inspect and assess various properties, including the Facility.  Envista issued a report of findings dated August 20, 2018.  In general, Envista found evidence of predisaster deterioration in roof assemblies, and reasoned that these conditions had allowed for water intrusion, accumulation, and retention.  Consequently, Envista determined that, for many of the Applicant’s properties, “where moisture is currently present in the affected roof assemblies, some of that moisture has been present since before [the disaster] and their respective contributions cannot be quantified.”[5]  Referring specifically to the Facility, Envista disagreed with the Zero/Six recommendation that the roof required replacement.  Instead, Envista found that, with “a few isolated exceptions … around roof drains and mechanical penetrations,” the subsurface of the roof was dry.[6]  Moreover, core samples taken from the roof only indicated moisture present between the top of the surface membrane and the walkpads surrounding roof-mounted air conditioning units.

The Applicant’s insurer also hired In-Line Forensics, Inc. (In-Line) to estimate disaster-related repair costs for the Applicant’s properties.  On August 24, 2018, In-Line issued a report detailing the estimated costs of repair, based on Envista’s determinations.  In-Line noted Zero/Six’s recommendation to replace the roof and restore interior spaces at the Facility.  However, as Envista did not substantiate disaster-related damages to the Facility, In-Line did not include any estimated costs for the Facility in its report.

On September 11, 2018, FEMA issued a critical infrastructure analysis comparing the Zero/Six, Envista, and In-Line assessments of the Applicant’s properties.[7]  Based on their “general age, condition, and pliability,” FEMA reasoned that the Applicant had “attempted to extend the roofs beyond the manufactures [sic] useful life.”[8]  Further, FEMA found that a comparison of the various assessments demonstrated that water infiltration and accumulation in roofing surfaces was due to pre-existing damage and deferred maintenance.

In a Determination Memorandum dated June 17, 2019, FEMA denied Public Assistance (PA) funding for the project.  FEMA noted that the SI “did not find visible storm-related damage to the roof or exterior of the Facility,” and had observed signs of aging in the roof.[9]  FEMA determined that information presented in the Envista report and critical infrastructure analysis demonstrated an issue with predisaster deterioration in the Facility’s roof.  Therefore, the Applicant had not supported its claim for disaster-related damage.

 

First Appeal

The Applicant submitted a first appeal dated June 18, 2019, requesting FEMA approve PA funding totaling $3,463,278.91, in accordance with the SOWs and cost estimates prepared by Zero/Six.  The Applicant noted that the Facility roof was 13 years old and asserted that the roof was well within its useful service life at the time of the disaster.  The Applicant stated that it previously provided a predisaster Facility assessment (COPE report), prepared in July 2015 by American International Group, Inc. (AIG), which FEMA had not considered in the initial eligibility determination.  It stated that the COPE report found the Facility roof was routinely maintained and in good condition, with no previous damage, prior to the disaster.  Additionally, FEMA’s SI confirmed that damage to interior spaces was caused by water infiltration during the disaster.  The Applicant asserted that maintenance reports would have recorded predisaster moisture infiltration if it had been present.  The Applicant argued that both the predisaster COPE report and the post-disaster Envista report were prepared by or for AIG; therefore, conflicting assessments between the two reports demonstrate that Envista’s findings were “without basis and are invalid.”[10]

Finally, the Applicant noted Zero/Six’s assessment that the disaster produced an unprecedented amount of rainfall, which overwhelmed the roof and allowed water to infiltrate the Facility.  It stated that the Facility’s roof held standing water for 96 hours during the disaster, and pointed to post-disaster photographs taken by Zero/Six[11] depicting water blisters near roof-mounted drains as proof that the roof flooded during the incident.  The Applicant quoted a roofing industry article attached to the Zero/Six report,[12] and argued that if the roof had been subject to ongoing water infiltration prior to the disaster, the roof “would have had a history of leaks and the texture of beach sand.”[13]  In a transmittal letter dated June 19, 2019, the Texas Division of Emergency Management (Grantee) expressed support for the first appeal.

At the Applicant’s request, FEMA conducted an additional inspection of the Facility on October 8, 2019.  FEMA found that there was “no visible evidence of wind damage to the roof from the event.”[14]  FEMA concurred with the Envista report and critical infrastructure analysis, finding that work to replace the roof was not necessary as a result of the disaster.  Additionally, FEMA examined the drainage system installed on the roof, comparing it to industry requirements and hourly rainfall data recorded in the local area.  FEMA determined that the drainage capacity of the roofing system met or exceeded industry standards, and the amount of rainfall impacting the roof during the incident did not exceed the roof’s capacity.  Regarding interior spaces, the inspectors noted some damage “near windows and along exterior walls” that may have been “wind related.”[15]  The damage included one broken window, leaks in the ceiling (one location) and windows (two locations), and damaged tiles.

On January 3, 2020, the FEMA Region VI Regional Administrator partially denied the appeal.  FEMA determined that nothing in the Zero/Six report or other available information established visible damage to the roof “such as tears, detachment, or deformation” caused by the disaster.[16]  Further, though the COPE report contained assessments of the roofs on other buildings, it did not include a predisaster assessment of the Facility’s roof.  In contrast, the Envista report, critical infrastructure analysis, and FEMA site inspections noted that complete replacement of the roof was unnecessary as a result of the disaster.  Therefore, FEMA found that the Applicant had not demonstrated “disaster related damage to the Facility roof or interior damage from water intrusion from the roof.”[17]

However, based on the second site inspection, FEMA determined that “some interior damage could have been caused by disaster related water infiltration around the windows and along exterior walls.”[18]  FEMA remanded the issue to the Texas Recovery Office (TRO) for evaluation.  Consequently, FEMA stated that an eligibility determination regarding the Applicant’s hazard mitigation claim was premature.  It directed the TRO to examine the eligibility of mitigation measures as part of the evaluation of damage to the Facility’s walls, windows, and interior.

 

Second Appeal

The Applicant submitted a second appeal via letter dated February 20, 2020, again requesting FEMA provide PA funding totaling $3,463,278.91.  The Applicant reiterates its first appeal arguments regarding the age of the Facility’s roof at the time of the disaster and its predisaster condition as recorded in maintenance records and the COPE report.  Further, it disputes FEMA’s finding that the COPE report did not address the Facility.

Additionally, the Applicant disputes the findings in the Envista and site inspection reports.  It asserts that FEMA’s inspectors were not roofing experts, and that the inspectors only recorded the roof’s visible condition without performing testing or core sampling.  The Applicant states that Envista was unaware of the COPE report and had no knowledge of the roof’s predisaster condition.  Consequently, when informed of the COPE report during insurance settlement arbitration, the Applicant’s insurer changed its position on the presence of disaster-related damage.[19]  In a transmittal letter dated March 12, 2020, the Grantee expressed support for the second appeal.

 

Discussion

Result of Declared Incident

FEMA provides PA funding to eligible applicants for the repair, restoration, reconstruction, or replacement of facilities damaged or destroyed by disasters.[20]  To be eligible for PA funding, an item of work must be required as a direct result of the disaster.[21]  FEMA does not provide PA funding for repair of damage caused by deterioration, deferred maintenance, the applicant’s failure to take measures to protect a facility from further damage, or negligence.[22]  For buildings and building systems, distinguishing between damage caused by the incident and pre-existing damage may be difficult.[23]  Before making an eligibility determination, FEMA considers each of the following: the age of the building and building systems; evidence of regular maintenance or pre-existing issues; and the severity and impacts of the incident.[24]  It is the applicant’s responsibility to demonstrate that damage was caused directly by the declared incident, and where pre-existing damage exists, to distinguish that damage from the disaster-related damage.[25]

In its report, Zero/Six indicated that the Facility’s roof dates to 2004;[26] this was confirmed by FEMA’s SI at the first site inspection.  Therefore, the record establishes that the Facility’s roof was approximately 13 years old at the time of the disaster.  Nothing in the record (e.g., a manufacturer’s warranty, professional engineer’s assessment, etc.) documents the expected service life of the roof.  Nevertheless, considering its age at the time of the disaster, it is reasonable to conclude that the Facility roof was within its functional service life when the incident period began.

The Applicant provides the COPE report and maintenance and inspection records to establish the predisaster condition of the Facility’s roof.  The COPE report, based on a Facility inspection that occurred on July 14, 2015, provided an indication of predisaster conditions, stating that the roof coverings on all of the Applicant’s properties were in “good condition,” without providing further details or explanation specific to the Facility.[27]  The Applicant’s work log and inspection record, dated closer to the incident period, do not provide details as to the observed condition of roofing surfaces at the time of the inspection (e.g., the condition of the surface membrane at the March 2017 inspection).

As above, Zero/Six assessed that more than 50 percent of the Facility’s roof was compromised by rainfall during the disaster.  Post-disaster photographs in the Zero/Six report show subsurface moisture in one location, and blistering in the surface membrane in another.[28]  However, Envista found that the roof’s subsurface was generally dry; in core samples taken from the roof, Envista did not locate moisture below the surface membrane.  Additionally, at the first site inspection, FEMA’s SI noted evidence of significant pre-existing deterioration due to aging of the surface membrane.  Photographs from the first site inspection depict significant damage to the roof’s surface membrane.  The photographs show widespread cracking and disintegration of the sealant between seams in the membrane and around roof-mounted drains, and standing water and discoloration or deterioration in surface areas around rooftop air-conditioning units.[29]

Eligible work must be required as a result of the declared event and the Applicant has the burden to demonstrate that the requested work is necessary.[30]  Here, the Applicant relies on its predisaster records, however, the Applicant’s records do not indicate the predisaster condition of the Facility’s roof.  The contrary assessments, particularly FEMA’s findings at the first site assessment, indicate a potentially significant predisaster issue with the function of the roof’s surface membrane.  Therefore, the available information does not enable FEMA to determine whether work to restore the Facility’s roof was required as a result of disaster-caused damages, or the result of pre-existing deterioration.  Consequently, work to replace the roof is ineligible for PA funding.

 

Interior Damage and Hazard Mitigation

The Applicant’s claim on second appeal includes work to repair interior spaces in the Facility, and for hazard mitigation.  On first appeal, the RA remanded these items and their associated costs to the TRO for further evaluation.  Therefore, the eligibility of the requested work to repair interior damages, and for the Applicant’s hazard mitigation measures, is not ripe for decision in the present appeal.

 

Conclusion

The Applicant has not demonstrated that work to replace the Facility’s roof is required as a direct result of the disaster, rather than the result of predisaster conditions or deferred maintenance.  Therefore, as it pertains to the replacement of the Facility roof, the appeal is denied.  The Applicant’s appeal related to interior restoration work and hazard mitigation measures is not ripe for decision at this time.

 

[1] Zero/Six Consulting, Post Disaster Facility Evaluation of Baptist Hospitals of Southeast Texas, Beaumont, Orange, and Silsbee Campuses, at 60 (Mar. 5, 2018) [hereinafter Zero/Six Report (All Campuses)].

[2] Id. at 60, 130-31, 153.  Zero/Six estimated $1,760,259.05 for recovery costs and $1,703,019.86 for hazard mitigation costs, and developed an itemized scope of work (SOW) for each.

[3] FEMA Region VI, Damage #21958, MOB 740, Damage Description and Dimensions (DDD), at 1 (Mar. 13, 2018).

[4] The Applicant’s insurer, American Home Assurance Company, Inc., is a subsidiary of American International Group, Inc. (AIG); see Am. Home Assurance Co., Commercial Property Policy Declarations, Community Hospital Corp., at 1 (Nov. 15, 2016).

[5] Envista Forensics, Report of Findings, Community Hospital Corporation, Baptist Hospital [sic] of Southeast Texas, at 5 (Aug. 20, 2018) [hereinafter Envista Report].

[6] Id. at 10.

[7] In its analysis, FEMA refers generally to the various properties owned by the Applicant, but does not specifically reference the Facility; see FEMA Region VI, Critical Infrastructure – Comparative Analysis, Baptist Hospital (BHSET), at 3 (Sept. 11, 2018).

[8] Id.

[9] FEMA Region VI, Eligibility Determination Memorandum, Project No. 11147, at 5-6 (June 17, 2019).

[10] Letter from Chief Exec. Officer, Baptist Hosps. of Se. Tex., to Acting Pub. Assistance Branch Chief, FEMA Region VI, at 2 (June 18, 2019) [hereinafter Applicant First Appeal].

[11] Zero/Six Report (All Campuses), at 63.

[12] Id. at 202.  The Applicant quoted a passage from the article that “[l]ong-term exposure to entrapped water will reduce [lightweight insulating concrete] to beach sand.”

[13] Applicant First Appeal, at 3.

[14] FEMA Region VI, Project 11147 Business Office Site Inspection Summary, at 1 (Oct. 8, 2019).

[15] Id. at 2.

[16] FEMA First Appeal Analysis, Baptist Hosps. of Se. Tex. (GMP 11147), FEMA-4332-DR-TX, at 4.

[17] Id. at 5.

[18] Id.

[19] Letter from Chief Exec. Officer, Baptist Hosps. of Se. Tex., to FEMA Headquarters, at 2 (Feb. 20, 2020) (claiming “the insurance company changed their earlier stance that relied heavily on the Envista report to the statement in the settlement document that ‘WHEREAS, it is [the insurer’s] position that there is no covered property damage resulting from [the disaster] that exceeds [the] applicable deductible’”); see also Am. Home Assurance Co., Inc., Confidential Settlement Agreement and Mutual Release, at 1 (Mar. 27, 2019).

[20] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 406, 42 U.S.C. § 5172 (2012).

[21] Title 44 Code of Federal Regulations § 206.223(a)(1) (2016); Public Assistance Program and Policy Guide, FP 104-009-2, at 19 (Apr. 1, 2018) [hereinafter PAPPG].

[22] PAPPG, at 19-20.

[23] Id. at 118.

[24] Id.

[25] Id. at 19; FEMA Second Appeal Analysis, El Paso Cty., FEMA-4229-DR-CO, at 8 (Apr. 4, 2019).

[26] Zero/Six Report (All Campuses), at 60.

[27] AIG, VHA Southwest Community Health Commercial Property COPE Report, at 13 (July 14, 2015).  AIG also noted that “[a] complete roof maintenance … and replacement program is established.”  The COPE report assessed the Applicant’s Main Hospital Building, but also covered several separate structures, including the Facility.

[28] Zero/Six Report (All Campuses), at 63.

[29] FEMA Region VI, Site Inspection Photo Page, Baptist Hosps. of Se. Tex., Damage No. 21958, at 5-9, 12-13, 15-18 (Mar. 13, 2018).

[30] 44 C.F.R. § 206.223(a)(1); FEMA Second Appeal Analysis, Republic Cty. Highway Dep’t, FEMA-4230-DR-KS, at 4 (July 26, 2017).