In the early morning of Thursday, August 27, 2020, Hurricane Laura made landfall along the southern coast of Louisiana and Mississippi as a Category 4 storm, causing significant property damage to commercial properties, including health care facilities. As nonprofit hospitals and health systems assess and fix the damage resulting from natural disasters like Hurricane Laura, they should be mindful of state and federal aid that may be available. More specifically, they should consider whether they qualify for disaster relief from the Federal Emergency Management Agency (“FEMA”) under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 (“Stafford Act”).
Overview of the Stafford Act
The Stafford Act gives the president and FEMA the authority to direct federal monetary resources in response to a (1) “major disaster”; or (2) “emergency.”[i] The president must first issue a declaration finding that a major disaster or emergency exists at the request of the governor of the affected state (e.g., Louisiana, Mississippi and Arkansas in the case of Hurricane Laura). Where the event at issue is a natural disaster, the president usually issues a “major disaster” rather than an “emergency” declaration.
Following that major disaster declaration, FEMA may provide assistance to certain persons—specifically private nonprofit (“PNP”) facilities—where the assistance is “essential to meeting immediate threats to life and property” that result from the “major disaster” at issue.[ii] The Stafford Act deems “work and services to save lives and protect property” to be the type of “essential” work for which assistance is available. These “work and services” include, in part:
- Removing debris;
- Providing temporary facilities for “essential community services”;
- Demolishing “unsafe structures” that endanger the public; and
- Reducing “immediate threats” to life, property and public health and safety.
Despite the breadth of those “work and services,” the Stafford Act and the regulations promulgated thereunder contain several eligibility restrictions that narrow the application of available assistance. Notable restrictions limit or prohibit receiving assistance where:
- The PNP applicant receives or will receive other financial assistance or insurance proceeds from the damage, known as the prohibition on the duplication of benefits;[iii]
- The PNP applicant’s facility is in a flood disaster area and the applicant fails to obtain flood insurance in certain cases;[iv]
- The applicant is a for-profit facility, as only PNPs are eligible;[v] and
- For debris removal work, the PNP applicant fails to follow federal procurement standards.[vi]
Nonprofit hospitals and health systems should carefully review all other eligibility restrictions prior to seeking federal assistance from FEMA.
Tips for Applying for FEMA Major Disaster Relief
Identify the Appropriate Applicant for the Relief
The applicant must be the PNP incurring the expenses for repairing the damage at issue. That means the owner of the facility where the damage occurred will not always be the appropriate applicant. If, for example, the owner leases the facility to a tenant and allocates the repair and maintenance expenses for the damaged area to that tenant, then the tenant should be the applicant. Health systems with special purpose entities, affiliates and subsidiaries that own and operate their real estate should be especially mindful of this requirement and should carefully review their accounting records to identify the correct entity responsible for fixing the damages and incurring the expenses. Applicants must then clearly show FEMA this link by submitting with their applications invoices, deeds, leases and other property documents. FEMA may otherwise deny the application for failure to establish that causal link.
Consider the Use of the Facility
Nonprofit ownership of a facility is not sufficient to qualify for FEMA financial assistance. FEMA also looks at the use of the PNP facility and whether its occupants use it for nonprofit activities. To qualify, the applicant must show the facility is used more than 50% for nonprofit purposes. As FEMA lays out in its manual for the Public Assistance Program, an otherwise eligible hospital that owns a medical office building would not qualify for assistance for damage to that building if for-profit tenants lease 70% of the floor space therein.[vii]
The use of the PNP facility must also generally be used for “emergency” medical services. What constitutes “emergency” services is fairly broad, as it focuses on “diagnosis or treatment of mental or physical injury or disease.” FEMA thus considers the following facilities to be providing emergency services:
- Hospitals;
- Rehabilitation centers;
- Outpatient facilities;
- Hospice and nursing homes;
- Dialysis facilities; and
- Clinics
The closure of these facilities due to damage from a natural disaster would be the type of “immediate threat[] to life” for which this assistance may be available.
Document, Document, Document!
Document any and all expenses incurred for the work and services (e.g., invoices from contractors, ledgers) as such documents will need to be uploaded to the grants portal FEMA uses for accepting and reviewing assistance requests. The Stafford Act also permits the government to audit contracts entered into in connection with the work and services at issue. Even where such audit does not occur, such documentation will create a thorough record for appeal if FEMA denies an assistance request.[viii]
Applicants must also provide evidence linking the damage with the disaster forming the basis of the president’s declaration (e.g., Hurricane Laura). This could include before and after pictures of the premises, as well as notes and logs from contractors repairing the facility following the disaster at issue. This evidence should affirmatively show that the disaster caused the damage and such damage was not magnified by any neglect of the facility by the PNP applicant.
This records requirement is similar to the documentation needed to receive FEMA Public Assistance funding for COVID-19 relief. For information regarding COVID-19-related FEMA relief, please see Hall Render’s prior article here.
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If you have any questions or would like more information on relief available to health care facilities or need assistance applying for FEMA relief under the Stafford Act, please contact:
- Addison Bradford at (317) 977-1403 or abradford@wp.hallrender.com;
- Lauren Rodriguez at (317) 977-1453 or lrodriguez@wp.hallrender.com; or
- Your regular Hall Render attorney.
Special thanks to Macauley Rybar, law clerk, for his assistance in the preparation of this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
[i] 42 U.S.C. § 5170.
[ii] 42 U.S.C. § 5170b.
[iii] 42 U.S.C. § 5155.
[iv] 42 U.S.C. § 5154a.
[v] 42 U.S.C. § 5122 defines “private nonprofit facility” to mean a private nonprofit educational (without regard to the religious character of the facility), center-based childcare, utility, irrigation, emergency, medical, rehabilitational and temporary or permanent custodial care facilities (including those for the aged and disabled) and facilities on Indian reservations, as defined by the president.
[vi] 2 CFR § 200.318.
[vii] Federal Emergency Management Agency, Public Assistance Program and Policy Guide Version 4, 227 (2020).
[viii] 42 U.S.C. § 5189a.
