Duplication of Benefits

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4337
Applicant	Florida International University
Appeal Type	Second
PA ID#	086-U12NW-00
PW ID#	PW 6154/GMP 41743
Date Signed	2021-11-02T16:00:00

Summary Paragraph

 On September 10, 2017, Hurricane Irma damaged the Florida International University’s (Applicant) campus buildings, including attached radio transmission equipment.  After reviewing the Applicant’s insurance policy, damage inventories, and other supporting documents, FEMA issued its Determination Memorandum, denying Public Assistance (PA) funding because, after a reduction for anticipated insurance proceeds, the project value fell below the minimum project threshold.  The Applicant submitted its first appeal, disputing the denial.  FEMA issued a Request for Information seeking additional documentation showing that the appealed damage was excluded by the Applicant’s insurance policy.  The Applicant responded, providing supplemental claim information and damage location clarification.  FEMA Region IV denied the appeal because, after cost adjustments and a reduction for anticipated insurance proceeds, the costs did not meet the minimum project threshold.  The Applicant submitted its second appeal and included a corrected supplemental claim summary. 

Authorities and Second Appeals

• Stafford Act § 312.
• 2 C.F.R. § 200.406; 44 C.F.R. §§ 206.202, 206.250.
• PAPPG, at 40, 143.
• RP 206-086-1, PA Policy on Ins., at 9.

Headnotes

• FEMA is prohibited from duplicating benefits from other sources, and therefore reduces otherwise eligible costs by actual or anticipated insurance proceeds.  
• FEMA’s minimum project threshold for 2017 was $3,100.00.  If, after accounting for all project costs and adjusting for insurance proceeds, the cost of work on a project is less than the minimum threshold amount, that work is not eligible for PA funding.
  • The Applicant’s revised claim summary with supplemental invoices, purchase orders, and payment records and FEMA’s adjustment for all project costs to avoid duplication of benefits, demonstrate that the remaining costs meet the minimum project threshold and are eligible for PA funding.

Conclusion

The documentation submitted by the Applicant on second appeal demonstrates that, after a reduction for actual insurance proceeds to avoid a duplication of benefits, the remaining costs meet the 2017 minimum project threshold and are eligible for Public Assistance funding.  Therefore, this appeal is granted. 

Appeal Letter

Appeal Analysis

Background

On September 10, 2017, Hurricane Irma impacted Florida and damaged the Florida International University’s (Applicant) campus buildings and attached radio transmission equipment.  The Applicant requested Public Assistance (PA), and FEMA prepared Grants Manager Project (GMP) 41743/ Project Worksheet (PW) 6154 to document costs of $7,608.98 for equipment repairs.  After reviewing the Applicant’s insurance policy,[1] damage inventories, and other supporting documents, FEMA issued its Determination Memorandum on April 19, 2019, denying PA funding based on a reduction for anticipated insurance proceeds.  

First Appeal

On June 19, 2019, the Applicant submitted its first appeal, stating that its insurance did not cover the requested equipment repairs.  The Florida Division of Emergency Management (Grantee) transmitted the appeal with its concurrence on August 12, 2019.  On April 3, 2020, FEMA issued its first appeal decision, concluding that the appeal was not ripe for submittal.  Thereafter, on October 15, 2020, the Grantee resubmitted the Applicant’s first appeal with supporting documentation, including a claim summary, policy excerpts and insurance narrative, purchase orders, and invoices with proof of payments. 

On October 20, 2020, FEMA rescinded its April 3, 2020 decision and began reviewing the substantive issues on appeal.  FEMA also issued a Request for Information (RFI), seeking additional documentation from the Applicant to show that the appealed damage was excluded by the Applicant’s insurance policy.  The Applicant responded, providing supplemental claim information and damage location clarification.  On April 29, 2021, the FEMA Region IV Regional Administrator denied the appeal because, after cost adjustments and a reduction for anticipated insurance proceeds, the project’s costs did not meet the minimum project threshold. 

Second Appeal

On June 9, 2021, the Applicant submitted its second appeal and provides a corrected supplemental claim summary that shows a replacement cost of $7,608.98 and a revised insurance reimbursement amount of $3,043.59.  The Applicant states the remaining balance of $4,565.39 is not covered by insurance, is above the minimum threshold, and is eligible for PA funding.  On August 5, 2021, the Grantee transmitted the appeal to FEMA with its concurrence.

 

Discussion

FEMA is prohibited from duplicating funding from other sources, including insurance.[2]  FEMA therefore reduces otherwise eligible costs by actual or anticipated insurance proceeds.[3]  FEMA also has a minimum project threshold for each Federal fiscal year, and for Hurricane Irma, the minimum project threshold was $3,100.00.[4]  If, after accounting for all project costs and adjusting for anticipated or actual insurance proceeds to avoid a duplication of benefits, the cost of work on a project is less than the annual minimum threshold amount, that work is not eligible and FEMA will not approve a PW for that project.[5]  

In support of its second appeal, the Applicant provided a revised claim summary with supplemental invoices, purchase orders, and payment records to document an error in calculating the amount of reimbursable costs for this project.  The revised claim summary shows that the depreciation amount (i.e., the equipment’s loss in value over time, as determined by the Applicant’s insurer) is $4,565.39, and the actual insurance proceeds amount is $3,043.59.[6]  Accordingly, the amount of costs for eligible work was miscalculated when FEMA reduced eligible costs by the amount of depreciation rather than the actual insurance proceeds.  Utilizing the same total repair cost of $7,608.98[7] and adjusting based on actual insurance proceeds of $3,043.59[8] leaves a balance of $4,565.39 for repair costs.[9]  This balance is above the minimum threshold of $3,100.00, and is therefore, eligible for PA funding.

 

Conclusion

The Applicant’s supplemental documentation demonstrates that, after a reduction for actual insurance proceeds to avoid a duplication of benefits, the remaining costs associated with the repairs for GMP 41743/PW 6154 meet the 2017 minimum project threshold and are eligible for PA funding.  Accordingly, this appeal is granted.

 

 

[1]The Applicant, an institution of higher education, participates in the Florida State Risk Management Trust Fund (FSRMTF).   

[2] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 312, 42 U.S.C. § 5155 (2018).

[3] Title 44 Code of Federal Regulations (44 C.F.R.) § 206.250(c) (2016); Public Assistance Program and Policy Guide, FP 104-009-2, at 40 (Apr. 2018) [hereinafter PAPPG]; Recovery Policy (FP) 206-086-1, Public Assistance Policy on Insurance, at 9 (June 29, 2015); see also Title 2 Code of Federal Regulations § 200.406 (2017).

[4] PAPPG, at 143; FEMA, Per Capita Impact Indicator and Project Thresholds, https://www.fema.gov/assistance/public/applicants/per-capita-impact-indicator (last visited Sept. 17, 2021).

[5] 44 C.F.R. § 206.202(d)(2); PAPPG, at 143.

[6] DFS Div. of Risk Mgmt., Supplemental Claim Summary (Short Version Form) (Sept. 10, 2020) [hereinafter Supplemental Claim Summary].

[7] This amount is supported by an October 5, 2017 invoice for $5,088.98 and associated purchase order and voucher plus a December 14, 2017 invoice for $2,520.00 and associated purchase order and voucher.

[8] Supplemental Claim Summary.

[9] In the RFI response, the Applicant states FSRMTF applied 60 percent for depreciation.  Multiplying the $7,608.69 repair (replacement) cost by 0.60 for depreciation equals $4,565.39, the amount to be paid for repairs by the Applicant, as the insured.  Utilizing the $7,608.98 for replacement cost less the $4,565.39 depreciation amount equals $3,043.59, the actual amount of insurance proceeds (actual cash value).