Hospitals to soon get quake-recovery funds.

FEMA has approved about $100 million so far

After nearly 17 months of delays, massive paperwork and disagreements over California building codes, some earthquake-damaged San Fernando Valley hospitals finally seem to be on the verge of receiving long-awaited Federal Emergency Management Agency funds.

"Things appear to be on the right track now," said Terry Leggett, chief financial officer of Valley Presbyterian Hospital in Van Nuys. Leggett has been trying to get FEMA to reimburse the $2.6 million insurance deductible the hospital paid out for repairs after the Jan. 17, 1994 Northridge earthquake.

Leggett said he hopes to see the money within two to three months. The hospital's Chairman David Fleming seemed less confident.

"Government, once again, has over-promised and trader-produced," Fleming said. "The check is in the mail is their story."

Randolph Langenbach, senior analyst in response and recovery for FEMA, said there had been a misunderstanding about the amount of money Valley Presbyterian was seeking from FEMA, but the entire $2.6 million deductible will be reimbursed.

"There was apparently an error within our program," Langenbach said. That error was that FEMA staffers had erroneously concluded that Valley Presbyterian was seeking more than just a reimbursement for its deductible. "It's unfortunate, but it (the erroneous conclusion) happened," he said.

The 362-bed Valley Presbyterian Hospital was yellow-tagged after the earthquake because it had severe cracks in its walls, major water damage from broken pipes and asbestos problems.

Tab split three ways

Repairs are expected to cost $10 million to $12 million, Leggett said. FEMA has paid $150,000 of that, and insurance has covered $2.5 million, he said. The rest, about $7 million so far, has had to come from the hospital's own reserves.

"Thank God we had that reserve," Leggett said.

He added that he objected to FEMA's stringent requirements that hospitals "hire architects and engineers to go through the facility and do voluminous reports on damage," even when the hospital had documentation, such as before-and-after photographs of the damaged areas, paid invoices and canceled checks, to verify repairs.

"We're doing our part to keep this hospital open for the community," he said. "All we're asking them to do is their part. This was documentation that anyone can see with their own two eyes. It didn't take a rocket scientist to figure it out."

Morrie Goodman, FEMA's director of emergency information in Washington, D.C., said hospitals should understand FEMA's responsibility to work under strict congressional guidelines.

"We're talking about (reimbursing) millions of dollars," he said. "There are rules and regulations. You can't stand in front of a hospital with a cash drawer and say, 'How much do you need?' We have very strict ways of doing business."

Filing the paperwork

To be reimbursed, officials of hospitals and other earthquake-damaged facilities must fill out a disaster survey report with an 11-point checklist that includes an architectural and engineering review.

FEMA has received 650 damage-survey reports from 14 San Fernando Valley health care facilities, Goodman said. Of those, 425 reports have been approved for reimbursements totaling about $100 million. Goodman said the remaining 175 reports have not yet been approved for one of four reasons: the building is historic and under historic preservation laws, there is an anticipated environmental impact creating a delay, the repairs are not eligible under FEMA regulations or the forms are incomplete or inaccurate.

Another hold-up for some hospitals has been a dispute between hospitals and FEMA over California building codes.

The California Association of Hospitals and Health Systems, a trade association representing 450 hospitals statewide including Holy Cross Medical Center in Mission Hills, Granada Hills Community Hospital and Northridge Hospital Medical Center - has been working with FEMA and state agencies to resolve the dispute.

The state's hospital building code is enforced by the Office of Statewide Health Planning and Development, which reviews hospital plans and construction. After the earthquake, OSHPD issued "policy intent notices" to hospitals - directing hospital officials to the appropriate section of the complicated building code and providing interpretation and clarification of the code.

FEMA is arguing that OSHPD is adding additional, more-stringent requirements through its policy intent notices, over and above those required by the building code. Because policy intent notices have not been adopted by the state Building Standards Commission, they cannot be included in the funding proposals that hospitals submit, FEMA officials argue.

Officials at OSHPD and the California Association of Hospitals and Health Centers, in rebuttal to FEMA, insist that the policy intent notices are simply clarifications of existing code.

Estimates run high

"Our position is that the policy intent notices have to be considered as part of the code," said Roger Richter, senior vice president of CAHHS. "If they are not, it's going to result in, I've heard estimates of $1.5 billion to $2 billion less in funding for (hospital) earthquake damage (statewide). This really needs to get clarified soon, or very little is going to move for hospitals."

Richter said FEMA and state officials recently have made a commitment to "do whatever is necessary" to get this controversy resolved.

OSHPD attorney David Keast said his department plans to ask the Building Standards Commission for an emergency adoption to make policy intent notices part of the code, a process that he estimated would take several weeks.

Holy Cross Medical Center - which was evacuated after the earthquake due to loss of water and power needed to operate oxygen machines, elevators and phones is one hospital CAHHS is representing. Hospital spokesman Steve Rutledge declined comment on negotiations with FEMA, saying only that he would defer to CAHHS because "we don't want to rattle anyone's cage."

Administrative closure

The 257-bed hospital's main building was operating three days after the earthquake, but its administrative office building was red-tagged and remained closed for several weeks.

Northridge Hospital Medical Center is waiting for $40.5 million from FEMA, said Debby Iacunato, a spokeswoman for UniHealth, which owns the hospital.

Repairs and losses at the hospital total $62.4 million, of which $13.4 million has been covered by insurance. FEMA has only given the hospital a bit more than $1 million, Iacunato said.

"They're way behind," she said, attributing it to the numerous claims FEMA has received from the quake.

Officials at Granada Hills Community Hospital, which sustained approximately $5 million in water and structural damages, said, although they have not been reimbursed fully by FEMA, they have had a positive experience.

"That probably sounds strange in dealing with government," said Leon Stevens, a hospital spokesman. "Every time (FEMA officials) have said they're getting money to us, they've gotten it to us."

Stevens attributed the hospital's success with FEMA to a hired insurance consultant, Neil McAuliffe, who was meticulous about getting information to the agency.