Document Restoration

Citation:  FEMA-1603-DR-LA, N’R Peace, Inc., Document Restoration, Project Worksheet (PW) 1676

Cross-Reference:  Work Eligibility

Summary:   Hurricane Katrina resulted in flooding of the HIV medical care clinics operated by N’R Peace, Inc. (Applicant) and destruction of Applicant’s case management files.    The files, which contained patient medical data necessary for the operation of the organization, were completely destroyed.  In December 2005, FEMA obligated funds, totaling $105,600, to recreate the records in PW 1676.  The Applicant requested additional funding.  FEMA determined that the Applicant’s request and the original obligated amount were ineligible because there was no data in the medical records that could be salvaged or stabilized.  In the first appeal, the Applicant asserted that FEMA did not notify it that the work and labor costs associated with the completed work were ineligible until six years after the work was completed.  The Applicant noted that it worked closely with FEMA during the restoration process and submitted documents requested by FEMA.  Accordingly, the Applicant requested $385,000 in FEMA funding for force account labor, purchased items, and items yet to be purchased.  The Regional Administrator granted the appeal with regard to the materials and supplies that the Applicant lost relative to the medial records but denied it with regard to the labor costs associated with recreating the medical records.  In the second appeal, the Applicant contends that it has not received any of the $385,000 that it requested in the first appeal.  This amount includes the $105,600 in force account labor costs that FEMA de-obligated, an additional $105,000 for force account labor associated with restoring the medical files, and costs related to materials and supplies.  Moreover, the Applicant asserts that the force account labor associated with the recreation of its medical records is eligible for FEMA funding.  FEMA obligated funding for supplies and materials in PW 1733. 

Issues:   1.   Are labor costs associated with the restoring of data in patient records eligible for FEMA funding?

                2.  May FEMA de-obligate funds after the Applicant has completed the work that was approved by FEMA and for which the funds were initially obligated?

Findings:   1. No.

                   2. Yes.

Rationale:  44 CFR §206.226, Restoration of damaged facilities, Response and Recovery Policy (RRP) 9524.6, Collections and Individual Objects, dated August 17, 1999; 44 CFR 13.22(b), Allowable costs, OMB Circular A-87, Attachment A (Section C), dated May 10, 2004.

Background

Hurricane Katrina resulted in the flooding of HIV medical care clinics operated by N’R Peace, Inc. (Applicant) and destruction of Applicant’s case management files.  These files included essential patient information, including HIV/AIDS status, residency verification, income verification, lab work, and nurse notes.  This data was housed in paper files only.  The Applicant determined the cost to recreate these medical files by estimating the time an average staff member needed to restore each record.  The Applicant estimated that it would require three staff members on average 12 months to complete the restoration.  The average annual salary of the staff members is $31,500, plus 26 percent fringe benefits.  FEMA prepared Project Worksheet (PW) 1676 on December 13, 2005, in the amount of $105,600 and prepared Version 1 on the same day to increase the Federal share.  FEMA also obligated funds, in the amount of $46,260 to replace destroyed contents in PW 1733, based on an estimated value of these contents by researching prices at Office Max, Office Depot, and other medical supply stores.  FEMA held a meeting on August 17, 2011, at the request of the Applicant and the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee), at which the Applicant requested an additional $105,000 in funding to recreate its medical files.  During this meeting, FEMA determined that the Applicant’s request for additional funding and the original obligated amount were ineligible for Public Assistance funding because there was no data in the medical files that could be salvaged or stabilized.  In January 2012, FEMA prepared Version 2 to PW 1676 de-obligating the full amount, $105,600, previously awarded to the Applicant.

First Appeal

The Applicant submitted a first appeal to the Grantee on March 8, 2012.  With the appeal, the Applicant requested reimbursement of $385,000, or 85% of the expenses incurred, including force account labor, purchased items, and items yet to be purchased.  This amount includes the original $105,600 that FEMA obligated in PW 1676, the additional $105,000 that the Applicant requested in the August 2011 meeting, and costs to cover materials and supplies (contents).  The Applicant asserted that, in response to being recognized as a HIV and AIDS organization, FEMA approached it as a private non-profit (PNP) organization that was eligible for FEMA funding.  Further, the Applicant claimed that throughout the process of completing the initial stages of records recovery, it was in constant communication with FEMA and was never advised that the work was ineligible for FEMA funding.  Finally, the Applicant stated that it routinely submitted “Justification of Documents and Services” forms requested by FEMA.

On January 25, 2013, the FEMA Region VI Regional Administrator (RA) partially approved the first appeal with a letter explaining that replacing the materials and supplies (contents) that the Applicant lost relative to the records were eligible for funding; however, the RA did not specify the eligible amount for contents.  The RA denied the Applicant’s request for labor costs associated with recreating the medical records, stating “the destroyed medical records… were unique and not eligible for restoration.”