Direct Result of Disaster – Negligence – Mold Remediation – Codes and Standards – Support Documentation – 50 Percent Rule

Appeal Brief

Summary Paragraph

More than two feet of rainfall fell over the course of several weeks in early October 2015 overwhelming the roof drains of Williamsburg Regional Hospital (Facility), resulting in water intrusion and mold growth.  Both the Applicant and FEMA completed assessments of the damage which resulted in conflicting information.  FEMA eventually determined that the total approved repair costs for Project Worksheet (PW) 718 (prior to insurance deductions) were $1,393,512.36.  The Applicant appealed, stating that FEMA’s repair scope of work (SOW) was grossly inadequate, and if corrected, would result in $33 million to replace the Facility, based on the 50 percent rule.  FEMA Region IV forwarded the appeal documentation to an independent technical group, Nationwide Infrastructure Support Technical Assistance Consultants (NISTAC) for evaluation of the Applicant’s claim.  NISTAC determined that although initial damage was disaster-related, the Applicant had not demonstrated it took timely action to protect the Facility from further damage post-disaster.  NISTAC also prepared an estimate using the cost estimating format (CEF) that contained the same base costs (Part A) determined by FEMA, but estimated an additional $159,357.00 in soft costs for the repair work.  The FEMA Region IV Regional Administrator (RA) denied the Applicant’s appeal for replacement costs, but increased the approved project costs (pre-insurance deductions) to reflect NISTAC’s additional estimated expenses.  In its second appeal, the Applicant disputes the finding it did not make timely repairs, states all mold remediation was required as a the direct result of the disaster, asserts upgrades associated with repair work are required by codes and standards, and reiterates that if FEMA increases the repair SOW to reflect the Applicant’s estimates, the costs would exceed 50 percent of the replacement value.

Authorities and Second Appeals

• Stafford Act § 406(e); 44 C.F.R. §§ 206.206(a), 206.223(a), 206.223(e), 206.226(d), 206.226(f); PA Guide, at 2, 29, 31-32, 36; FEMA Fact Sheet 9580.100, Mold Remediation, at 1; Dep’t of Transp., FEMA-4068-DR-FL, at 4-5; Univ. of N.D., FEMA-1174-DR-ND, at 4-5.

Headnotes

• To be eligible for PA grant funding, an item of work must be required as a direct result of the disaster.  It is the Applicant’s responsibility to demonstrate that the damage claimed is disaster-related.  FEMA may not provide assistance if an applicant’s negligence causes damages, such as when an applicant fails to take prudent measures to protect a facility from further damage.
  • Certain work, such as the repair of the initial water damage, mold remediation, and necessary abatement due to contamination, were the direct result of the disaster.  However, in the aftermath of the disaster, the Applicant failed to take prudent measures to prevent continued water intrusion into the Facility and to stop the spread of mold contamination, despite recommendations to that effect from its contractor.
• FEMA may reimburse upgrade costs associated with the repair or replacement of disaster damaged elements, if the upgrades are required by applicable codes, standards, or specifications. 
  • Here, the Applicant cited to general code authorities, but did not explain or detail what specific code section(s) apply to specific items of work.

Conclusion

There are no compelling grounds to reverse the RA’s decision.  FEMA affirms total project costs (pre-insurance deductions) in the amount of $1,552,869.36.  Since this amount is less than 50 percent of the replacement value, the Applicant’s request for replacement costs is denied.

Appeal Letter

Appeal Analysis

Background

From October 1 through 23, 2015, severe storms and heavy rains resulted in flooding that impacted Kingstree, South Carolina.  The Williamsburg Regional Hospital (Applicant), a private nonprofit entity, owned and operated the Williamsburg Regional Hospital (Facility) in Kingstree.  During the incident, rainfall overwhelmed the roof-mounted drains, allowing water to enter the Facility and damage the interior.      

During and immediately following the incident period, the Applicant completed certain emergency protective measures to address the water intrusion.  The Applicant purchased 10 packs of “mold-resistant” ceiling tiles to replace damaged items; two dehumidifiers and a High Efficiency Particulate Air filter; and plastic sheeting to isolate and seal off flood-damaged rooms.  Employees assisted in mopping up the rain water from leaks, drying and dehumidifying the Facility, and cleaning mildew.  FEMA obligated emergency work costs through Project Worksheet (PW) 109.

            Insurance Proceeds

On November 29, 2015, the Applicant’s insurer (CNA) sent a letter confirming the Applicant reported the loss approximately 30 days after it occurred.  CNA noted that the Applicant had not yet repaired the roof, and the interior of the Facility was not being protected from any further weather-related damage.  CNA advanced $50,000.00 for the Applicant to secure the roof to avoid further damage.  CNA issued the following payments through March 2016, most of which were earmarked specifically for the building or roof, and one of which represented a general advance:

Following litigation against CNA, the Applicant received an additional $18,950,000.00 in insurance proceeds, with $10,784,328.00 allocated for the building.

Roof Evaluations

Multiple contractors evaluated the roof, post-disaster.  On November 9, 2015, CentiMark prepared an estimate totaling $276,167.00 for roof replacement/repair that divided the roof into seven sections, noting multiple leaks associated with each section.  Through a report dated December 15, 2015, Nelson Forensics noted that the Applicant’s representatives described persistent leaks at numerous locations.  The contractor recorded that a majority of the sealant at seams between roofing materials was deteriorated or missing entirely, and mortar was missing in places from rooftop brickwork.  Nelson Forensics estimated that the entrapped moisture within the roof assembly exceeded 33 percent of the total roof area at each level/section.  While Nelson Forensics stated that the disaster contributed to the entrapped moisture, it noted the moisture was also the result of ongoing penetration through multiple, long-term openings in the roof attributable to a combination of age and deferred maintenance.

On December 28, 2015, two contractors provided the Applicant with roof estimates.  Gardner Roofing provided a quote of $28,356.00 to construct a temporary roof over the Facility’s operating room (OR).  Commercial Roofing Associates, Inc. (CRA) provided a quote of $498,690.00, to install a new roof over the entire Facility.

By January 18, 2016, Gardner Roofing completed installation of a temporary roof over the OR, Recovery Room and Computerized Tomography (CT) Room (identified as roof section number two of seven).  It sent the Applicant an invoice for $28,356.00.  In addition, the Applicant performed repairs to the roof exhaust fan, funded in PW 109.  However, as discussed below, the Applicant acknowledges it did not perform any further repairs to the roof.

            Mold/Asbestos Evaluations

According to minutes from an October 27, 2015 board meeting, an Applicant representative was aware that parts of the Facility had water leaking down interior concrete walls post-disaster and expressed concern regarding the possibility of moisture behind the walls.  A different representative noted that moisture could be a large expense.

In November and December 2015, multiple contractors completed mold inspection assessments and asbestos evaluations of the Facility.  AirMD observed mold, and recorded interior air humidity measurements of 85 percent in some areas (higher than the recommended mold prevention threshold of 60 percent).  AirMD listed various rooms/areas as showing visible water damage and/or visible mold growth, and recommended a general remediation protocol (e.g., containment, removal of affected materials, and the implementation of engineering controls).  In addition, AirMD noted the mold sampling lab results showed higher than normal spore counts and that there were ongoing active leaks in certain areas of the Facility, such as the Intensive Care Unit hallway.  It also indicated that the Facility’s ceiling plaster contained chrysotile (a form of asbestos).

In a December 7, 2015 letter to the Applicant, the South Carolina Department of Health and Environmental Control (SCDHEC) expressed concerns for the life and safety of patients, staff, and public, and stated that the Applicant needed to undertake immediate remediation actions.  It offered priority service and assistance to address all outstanding issues.  The SCDHEC transmitted a follow-up letter dated January 4, 2016, confirming that the water damage, asbestos, and mold issues in the OR and prep/recovery bays required abatement, cleanup, and air monitoring before reopening. 

On January 5, 2016, Belfor Property Restoration (Belfor) provided a $1,922,830.92 quote to the Applicant addressing all necessary asbestos abatement and mold remediation.  The quote expressly did not include roof repairs, which it noted were necessary prior to performing the abatement and remediation.  Belfor subsequently completed $104,899.43 in remediation and associated abatement work to the OR ceiling.  The Applicant informed the SCDHEC via a February 3, 2016 letter, that an abatement team attempted to wash off the mold that was on pipes above the OR ceiling, but the asbestos began to flake off and became friable.  Because of this, the work immediately stopped. 

On February 4, 2016, the SCDHEC directed the Applicant to implement an immediate evacuation of the Facility and have the Facility go to zero census (i.e., no patients), because of worsening conditions and concerns over mold and asbestos contamination.  Following this, both FEMA and the Applicant requested additional mold and asbestos assessments.  FEMA solicited ARM Environmental Services, Inc. (ARM), which completed assessments in April and May 2016.  In the April report, ARM documented that 50 rooms/areas had water damage and 21 had visible mold.  The next month, it documented an increase of 27 rooms/areas with mold since the previous visit.  Regarding asbestos, ARM corroborated the presence of asbestos, but found the fiber concentrations were below the method detection limit.

At the Applicant’s request, AirMD re-examined the Facility in August 2016, and compared the results to its November 2015 assessment.  It documented that the current mold issues were more extensive, likely due to deterioration over time, and recommended extensive remediation.

Notwithstanding additional evaluations/assessments, the administrative record does not contain documentation demonstrating the Applicant performed additional remediaton or abatement work beyond that previously described.

            Repair/Replacement Estimates for the Entire Facility

In February 2016, the Applicant obtained repair and replacement estimates from GMK Associates Design Build Division, Inc. (GMK): 

Both estimates generally included costs for codes and standards upgrades without identifying what specific work was required by what specific codes or standards.  The first GMK estimate, dated February 1, 2016, pertained to replacement costs, but did not itemize the proposed items of work.  In contrast, GMK attached an itemized list of proposed work items as well as a project narrative to its February 18, 2016 repair estimate.  Most of the work discussed in the narrative, however, involved functional improvements due to age and deterioration, to satisfy code requirements, or for new additions, such as new surgical services and a recovery center for $9,446,475.00 included in the total repair costs.  GMK did not indicate such work was necessary as a result of disaster-related damage.  Many of the work items, such as replacing and updating certain aspects of the mechanical, electrical, and plumbing systems, had been recommended years earlier, in a predisaster assessment of the Facility completed by GMK in April 2013. 

In February 2016, FEMA prepared its initial cost estimate for the Facility using a Cost Estimating Format (CEF) worksheet.  It calculated the disaster-related Part A repair costs were $8,117,592.80, with Part A replacement costs estimated at $15,154,210.50.  Thus, the Part A repair costs exceeded 50 percent of the replacement costs.  FEMA calculated the total project replacement costs (including base and soft costs) as $31,713,816.00.  The Agency incorporated much of the same scope of work (SOW) that was contained in GMK’s repair estimate into the CEF repair estimate, with a few alterations.  For instance, it: (1) included mold/mildew decontamination and asbestos abatement for the ceilings, floors, and walls; (2) excluded installation of heating, ventilation, and air conditioning (HVAC) air handling equipment and HVAC hydronic piping, modification of stairwell rails, implementation of seismic retrofitting, installation of a new sanitary service, and the mounting a fire protection sprinkler head system; and, (3) amended the quantities and unit prices of certain items as compared to the amounts proposed by GMK. 

Based on the first CEF, FEMA originally drafted PW 718 (the PW documenting the Facility’s disaster-related damages and permanent restoration work), for replacement costs in the amount of $31,713,816.00.  However, because FEMA was only able to examine 45 percent of the Facility’s interior (the Applicant had already sealed off many of the rooms at the time of FEMA’s inspection due to mold and asbestos contamination), FEMA re-evaluated the project before proceeding with an obligation.  It requested that ARM perform surveys of the previously uninspected areas.  These were conducted in April and May 2016.  The conclusions of those ARM reports are discussed above in the mold/asbestos evaluations’ section. 

Due to the supplemental reports, FEMA decreased the nature and extent of the proposed repair work to be completed in the second CEF.  It calculated the disaster-related Part A repair costs were $720,562.90, with Part A replacement costs estimated at $15,154,210.50.  Thus, the Part A repair costs did not exceed 50 percent of the replacement costs.  FEMA calculated the total project costs as $1,579,766.00.

Following the preparation of the second CEF, representatives from FEMA, the South Carolina Emergency Management Division (Grantee), and the Applicant performed a Joint Task Force Damage Assessment (JTFDA), inspecting the Facility and recording eligible damages.  FEMA removed work that it determined was not disaster-related (e.g., the roof replacement), but also noted the presence of additional water and mold damage, and asbestos abatement, beyond that stated in the second CEF.  The Applicant, however, disagreed with FEMA’s assessment, stating more damage was observed during the visits than noted.  FEMA prepared a third CEF based on its assessment following the JTFDA site visit, which estimated $547,531.09 as the Part A repair costs, and $1,075,701.00 for total project costs.

In a fourth CEF, FEMA increased the repair estimate, including $13,226.40 in additional costs associated with cleaning HVAC ductwork.  The rest of the Part A costs identified in this CEF mirrored the estimated costs included in the third CEF.  But as a the result of the additional HVAC-related work, the total project costs increased to $1,100,365.00.

For clarity, all FEMA CEF versions documenting proposed work to be completed, are outlined below:

On March 16, 2017, FEMA obligated PW 718 with total eligible project costs of $1,393,512.36.  This amount represented: (1) work completed for AirMD’s November 2015 assessments and the temporary roof over the OR; (2) the estimate of work to be completed per the fourth CEF; and (3) direct administrative costs (DAC).  However, because the Applicant received actual insurance proceeds exceeding this total, FEMA reduced eligible funding to $248,691.36 for the DAC. 

First Appeal

The Applicant appealed FEMA’s obligation of PW 718 in an undated letter, requesting $33,778,500.00 for replacement costs.  The Applicant stated FEMA severely underreported disaster-related damages, leading to an incorrect SOW.  First, water intrusion during the incident period caused more damage to the ceiling, walls, floor, and interior cavities than noted in the PW, leading to increased humidity and widespread mold growth and contamination.  Second, the Applicant stated it did not know the full extent of the damage until several weeks after the incident period, when staff noticed plaster walls blistering and flaking, indicating mold growth.  Once it discovered the additional damage, it implemented remediation efforts and took preventative steps to stop the mold from worsening (e.g., running an HVAC system).  Third, the Applicant argued the Facility contained a significant amount of building materials containing asbestos fibers that needed to be addressed through additional abatement measures.  Last, the Applicant asserted that FEMA should revise the disaster-related damages and SOW to reflect the March 2016 draft PW, which would satisfy the 50 percent rule and lead to approval of replacement costs.  The Grantee forwarded the Applicant’s appeal to FEMA in a May 23, 2017 letter, recommending FEMA conduct a thorough review of all documentation and render a determination as soon as practicable.

On December 28, 2017, FEMA transmitted a Request for Information (RFI), seeking documentation demonstrating: (1) that the claimed damage and requested repair work were the direct result of the disaster; and (2) that the Applicant took reasonable post-disaster protective actions to prevent further damage to the Facility. 

The Applicant responded in a February 26, 2018 letter.  First, it stated that it did not repair the roof immediately after the disaster because town administrators advised it to wait until FEMA assessed the Facility.  While it eventually completed the temporary repair over the OR, it affirmed it did not complete any additional roof repairs as it presumed FEMA would approve a replacement facility, based on the March 2016 draft of the PW.  Regarding mold, the Applicant noted it completed remediation efforts through cleaning and wiping various surfaces as documented in PW 109.  After mold reappeared, the Applicant contracted Belfor to conduct destructive remediation, which it performed in the OR.  However, it became evident that destructive remediation measures were not effective because mold reappeared in the OR and various locations throughout the Facility.  Lastly, the Applicant submitted a repair estimate that excluded costs associated with codes and standards upgrades. 

On April 30, 2018, FEMA notified the Applicant that it had submitted the appeal for review by an independent party with expertise in the technical matters at issue.  On June 22, 2018, Nationwide Infrastructure Support Technical Assistance Consultants (NISTAC) issued its assessment report stating the initial damage was disaster-related but the Applicant could have done more to prevent mold growth.  As such, it recommended that the Applicant bear responsibility for the extensive required remediation.  It determined that although the Applicant took some actions to mitigate the impacts of water leaks, it may not have addressed all the active leaks because the temporary roof was only over part of the roof.  In addition, Belfor’s activities began two months after the disaster and were limited to two rooms, rather than the entire Facility.  NISTAC noted that the results from the November 2015 AirMD evaluation showed mold growth as “moderate/borderline,” but the May 2016 ARM testing showed mold growth had increased and was in the “active growth” category.  In addition, it attached photographs taken after the May 2016 ARM report that documented interior Facility temperatures in the high 80s (conducive to mold growth).[1]  Thus, NISTAC found the Applicant had not established which damage was eligible as a direct result of the disaster and had not established it took sufficient, timely actions to protect the facility.  Similarly, NISTAC found it could not determine that the roof needed replacement as a result of the disaster.  Ultimately,  NISTAC transmitted a CEF repair estimate prepared by a professional engineer.  NISTAC’s estimate recommended an additional $159,357.00 in soft costs to repair the Facility.

On June 29, 2018, the FEMA Region IV Regional Administrator (RA) partially granted the appeal, approving the additional $159,357.00 in repair costs for work to be completed, resulting in total project costs (prior to any insurance deduction) of $1,552,869.36.  The RA first concluded the Applicant: (1) did not take reasonable and prudent measures to fully address ongoing moisture issues after the disaster; (2) did not demonstrate the claimed work was solely attributable to the disaster, rather than elevated moisture levels or untimely remediation actions; and (3) did not exclude any other potential causes, such as prior water leaks, continuing damage due to additional rainfall, or insufficient protective measures after the disaster. 

Next, the RA determined the Applicant did not specify whether costs were attributable solely to eligible repairs, for upgrades to disaster-damaged items, or for upgrades to non disaster-related items.  Therefore, the RA found the request for funding for code requirements was not eligible.  Further, the RA concluded FEMA had overstated the damage directly attributable to the disaster in the March 2016 draft PW, and the Agency had lowered the base cost estimate to an accurate amount after additional assessments of the Facility.  Consequently, although FEMA increased eligible costs to reflect the additional soft costs in NISTAC’s revised CEF, the new total still did not enable FEMA to fund the replacement of the Facility through application of the 50 percent rule.  Finally, the RA noted that even with the additional approved repair costs, the amount of insurance proceeds exceeded the eligible repair costs; therefore, FEMA did not obligate additional funding.

On August 28, 2018, the Applicant submitted its second appeal letter, requesting an opportunity to fully review and respond to NISTAC’s report and CEF estimate with additional information relevant to those documents.  Per the Applicant’s request, FEMA rescinded the first appeal decision on August 31, 2018, and issued a second RFI requesting the Applicant submit any additional relevant information.  The Applicant responded in a September 28, 2018 letter, listing previously raised arguments and emphasizing its belief that FEMA’s SOW was wholly deficient; it alleged that NISTAC confirmed FEMA’s current repair SOW was not sufficient and stated that FEMA failed to properly consider the damages observed during the JTFDA site visit.  In response, the RA issued an amended first appeal decision on October 31, 2018, reiterating the findings present in the previous decision.

Second Appeal

On December 28, 2018, the Applicant filed another second appeal, requesting replacement costs for the Facility.[2]  It raises, among other arguments, four major assertions.  First, the Applicant states it did everything a reasonably prudent person could have done under the circumstances to timely repair disaster damage and mitigate further loss.  For instance, the Applicant engaged experts in the field of mold remediation and air quality testing almost immediately after the disaster.  But requirements for the asbestos and mold abatement differed such that the Applicant could not remediate the contamination in emergency fashion.  Mold growth continued while contamination sampling and evaluation, structural evaluation, and cost estimating were conducted.  In January 2016, the Applicant engaged Belfor to begin complex mold remediation efforts.  However, it was immediately apparent that the efforts were futile.  During a January 21, 2016 meeting with FEMA, and in a March 2016 draft PW, FEMA advised the Applicant that the Facility would be a replacement project and repairs would not be adequate to bring the Facility to pre-existing condition.  Even after this point, the Applicant continued its efforts to control the mold growth, but these efforts eventually proved useless and it was prudent to suspend any subsequent major financial outlays to save the Facility.

Second, the Applicant states that mold contamination was a direct result of the disaster, so mold remediation costs should be included in the repair estimate and used as part of the 50 percent rule analysis.  Moreover, because the area received less than 10 inches of rain between November 11, 2015 and February 4, 2016, it is unreasonable to conclude additional water intrusion post-disaster had any tangible impact on the extensive mold contamination.  Alternatively, even if FEMA finds the Applicant’s efforts were deficient, mold remediation costs may still be eligible if extenuating circumstances impact an applicant’s ability to fully remediate.  The Applicant references examples from FEMA policy, asserting disaster-related damage to the Facility’s HVAC equipment, which may have spread mold spores, and insufficient resources, constituted such extenuating circumstances.

Third, the Applicant disputes FEMA’s denial concerning the costs associated with code upgrades.  The Applicant argues it previously provided citations to the codes/standards that required upgrades to the damaged elements only.  Finally, the Applicant asserts that FEMA was wrong to dismiss the Applicant’s estimates, as they were prepared by licensed professional engineers with codes/standards knowledge for healthcare facilities.  It points to FEMA’s September 14, 2015 clarification memorandum for the 50 percent rule, which confirms that FEMA should give deference to licensed professionals and their estimates, if adequately supported.  Moreover, it directs FEMA’s attention to the $10,784,328.00 insurance settlement allocated for the Facility, which it states demonstrates the gross inadequacy of FEMA’s repair estimate. 

Discussion

Direct Result of Disaster/Negligence/Mold Remediation

Under the Code of Federal Regulations, an item of work must be required as a direct result of the disaster to be eligible for PA funding.[3]  Assistance is not available if damage is caused by an applicant’s negligence.[4]  Applicants should not delay in taking necessary response and recovery actions.[5]  The issue of negligence often arises when an applicant fails to take prudent measures to protect a facility from further damage.[6]  For mold remediation to be eligible, the mold must not be the result of a failure to take protective measures in a reasonable time after the event.[7]  If an applicant fails to take reasonable measures to prevent the spread of mold contamination, the repair of the additional contaminated area will not be eligible.[8]  However, if an applicant can document and justify why it did not take reasonable measures to prevent further contamination, remediation measures may be eligible.[9]  

Through document reviews and the JTFDA, FEMA noted initial disaster-related damages that resulted from rainfall overwhelming the Facility’s roof drainage system.  It awarded repair costs for water damage, mold remediation, and necessary asbestos abatement due to contamination.  However, the Applicant disputes FEMA’s determinations concerning the extent of the disaster-related damages and therefore the nature and extent of the previously approved SOW. 

The Applicant claims significantly more damages are the direct result of the disaster, as evidenced by GMK’s estimates.  For instance, GMK’s February 2016 repair estimate included costs associated with a full roof replacement.  But NISTAC could not determine that the work was disaster-related.  Prior to the disaster, the Applicant performed multiple repairs to the roof.  In 1998, CentiMark installed a rubber-adhered roof system totaling $54,613.20, and in 2012, the Applicant replaced leaking couplings on two roof drains.  According to the board meeting minutes, the Applicant also started soliciting quotes for a roof replacement in 2012.  Thus, there is considerable evidence of predisaster deterioration in the Facility’s roof, which would preclude FEMA from using the GMK cost estimate for full roof replacement in any determination of eligible funding.

In contrast, even though GMK’s 2016 repair estimate did not include any costs for asbestos abatement, the Applicant argues FEMA should award even more than the 57,000 SF of abatement work it approved in the fourth CEF.  However, FEMA notes that NISTAC’s CEF estimate, prepared by a professional engineer as part of an independent evaluation, reiterated the base costs calculated by the Agency, including the 57,000 SF of asbestos abatement.[10]  Generally, FEMA did not rely on GMKs estimates since FEMA found them non-specific with regard to disaster-related damages.  For example, many of the same problems/issues present in GMK’s predisaster April 18, 2013 report were also in GMK’s post-disaster February 18, 2016 narrative.  In addition, most of the recommendations in the 2016 narrative were based on function or age, not specific disaster damage. 

The emergency protective measures documented in PW 109 support the Applicant’s assertion that it implemented prudent measures immediately after the disaster to address disaster-related damage.  However, the Applicant did not take prudent and reasonable measures to prevent either additional water intrusion or the spread of mold contamination occurring beyond those initial disaster-related damages.  The Applicant implies that FEMA bears responsibility for any untimely repairs, as the March 2016 draft of PW 718 allowed for replacement costs.  FEMA policy in effect at the time of the disaster was clear though that applicants should not delay in taking necessary response and recovery actions.  As demonstrated by the timeline outlined below, the Applicant did not implement timely measures to prevent further damage either prior to March 2016 or thereafter.

Within a month of the disaster, CentiMark recommended the Applicant complete repairs to seven sections of its roof due to multiple leaks.  However, it wasn’t until mid-January 2016 (three months post-disaster) that the Applicant installed the temporary roof over the OR, Recovery Room, and CT Room – one section out of the seven recommended for repairs.  By December 31, 2015, CNA had issued more than $450,000.00 to the Applicant for building/roof damages.  Yet, the Applicant only hired Gardner Roofing to repair one of the roof sections, with an invoice totaling $28,356.00.  Even though CentiMark and AirMD noted ongoing leaks in multiple locations, the Applicant did not attempt to mitigate further damage.  Therefore, the Applicant failed to take prudent measures to protect the Facility from further water damage.  This left the Facility susceptible to additional water intrusion that was not disaster-related. 

Although the Applicant engaged contractors within one to three calendar months of the disaster to perform mold and asbestos assessments, the Applicant did not then follow through on their recommendations.  Belfor provided a quote on January 5, 2016 for $1,922,830.92 to address all necessary asbestos abatement and mold remediation.  Within two weeks of this quote, CNA issued the Applicant an advance payment of $1,500,000.00 for building damage incurred (totaling $1,950,000.00 when combined with the prior $450,000.00 in insurance payments).  Yet, the Applicant only had Belfor complete work to the OR, for $104,899.43 of its $1.9 million estimate for abatement and remediation work.  The Applicant states Belfor stopped the work when it became evident that destructive remediation measures were not effective, but has not provided documentation to support this assertion.  In fact, Belfor’s initial report confirmed the entirety of the work could not be completed until the roof was repaired, which never occurred beyond the work done by Gardner Roofing to the OR roof.  

After AirMD examined the Facility in November 2015, it recommended a general remediation protocol.  When it re-examined the Facility in August 2016, it noted the issues had worsened to the point that the Facility required extensive remediation.  The Applicant states it ran a ductless HVAC system at a cost of $4,000.00 per month from at least February 2016 through December 2016 to remove moisture, circulate and filter the air within the Facility, and inhibit mold growth.  However, photographs of the Facility’s interior taken in August 2016 show interior temperatures in the mid to high 80s, which is at odds with the Applicant’s stated goal of preventing mold contamination.  In addition, purchase orders in the administrative record only demonstrate the use of two dehumidifiers, even though the Facility measures 57,495 SF.  Based on the above, the Applicant did not take reasonable measures to prevent the spread of mold contamination.

As the final basis for its replacement funding request, the Applicant points to FEMA policy that allows funding if the Applicant demonstrates the existence of an exceptional circumstance to justify why reasonable measures were not taken to prevent further contamination.  The Applicant states that the Facility’s HVAC equipment was damaged by the disaster and therefore may have contributed to the spread of mold spores, yet the repeatedly argues that because it ran a ductless HVAC system from February 2016 through December 2016, it in fact took reasonable measures to prevent the spread of mold.  In addition, CNA paid the Applicant approximately $5 million by early March 2016 for various building damages, indicating that insurance proceeds were available to remediate the entire Facility and clean the HVAC ductwork.  Consequently, the Applicant has not demonstrated the existence of exceptional circumstances to explain why it did not take reasonable measures to prevent further contamination to the Facility.

Codes and Standards/Support Documentation/50 Percent Rule

FEMA may reimburse upgrade costs associated with the repair or replacement of disaster-damaged elements, so long as the upgrades are required by applicable codes, standards, or specifications.[11]  The burden to substantiate appeals with documented justification falls to the applicant, and hinges upon the applicant’s ability to clearly explain how records should be interpreted as relevant to support the appeal.[12]  FEMA may provide replacement funding for a facility when eligible repair costs (including codes/standards upgrades that apply to the repair of the damaged components) exceed 50 percent of the costs associated with providing a new facility with the same predisaster size or design capacity and function in accordance with current codes and standards.[13]

The Applicant has not substantiated its request that FEMA award costs associated with mandated codes and standards.  While the Applicant cited general code authorities, it does not explain or detail what specific code section(s) apply to any specific item of work.  For instance, the Applicant states that SCDHEC recommends 5/8 inch wallboard for hospitals instead of the 1/2 inch gypsum wallboard approved in FEMA’s CEF, but does not state a specific code, standard, or specification that requires the additional thickness.  GMK’s 2016 itemized repair estimate simply included a general note stating code upgrades were to comply with the current International Building Code, International Mechanical Code, International Plumbing Code, International Electrical Code, and SCDHEC Standard 61-16. 

Conclusion

The disaster’s rainfall overwhelmed the Facility’s roof drainage system, resulting in initial water damage, mold, and asbestos abatement due to contamination.  The Applicant completed certain emergency work, temporary repairs, and limited remediation/abatement.  However, the Applicant did not take prudent measures to protect the Facility from further water damage post-disaster, or implement reasonable measures to prevent the spread of mold contamination; it has also not demonstrated the existence of exceptional circumstances to justify why it did not take such measures.  In addition, the Applicant has not demonstrated that upgrades are required by codes and standards.  Therefore, FEMA affirms total eligible project costs (prior to insurance deductions) in the amount of $1,552,869.36.  Since this amount is less than 50 percent of the replacement value, the appeal for Facility replacement is denied.