In the Matter of BOWLING GREEN-WARREN COUNTY

December 29, 2025

CBCA 8327-FEMA

In the Matter of BOWLING GREEN-WARREN COUNTY

COMMUNITY HOSPITAL CORPORATION

Wendy Huff Ellard of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC,

Jackson, MS; and Jordan Corbitt of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC,

Houston, TX, counsel for Applicant.

Rebecca J. Otey, John Ebersole, and Alecia Frye, Office of Chief Counsel, Federal

Emergency Management Agency, Department of Homeland Security, Washington, DC,

counsel for Federal Emergency Management Agency.

Before the Arbitration Panel consisting of Board Judges GOODMAN, KULLBERG, and

NEWSOM.

KULLBERG, Board Judge, writing for the Panel.

The applicant, Bowling Green-Warren County Community Hospital Corporation

(MCH), seeks public assistance (PA) for costs incurred after the disaster declaration related

to the coronavirus disease (COVID-19). Its first request, in the amount of $1,172,438.53

(grants manager project (GMP) 696719), was for costs incurred during the period from

January 9 to July 1, 2022, and its second request, $5,003,657.77 (GMP 737917), was for

costs incurred during the period from July 2, 2022, to May 11, 2023. For both GMPs, MCH

seeks PA for forced account labor straight time (FAL-ST) for the cost of registered nurses

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(RNs) and other medical staff1 and the cost of its food service contract. The Federal

Emergency Management Agency (FEMA) denied MCH’s request for PA for FAL-ST for

both GMPs and food service costs for GMP 737917. FEMA determined that MCH had not

established eligibility for those costs under its regulations and policy. For the reasons stated

below, the panel concludes that MCH is not eligible for the requested PA.

Background

MCH is a 337-bed private nonprofit (PNP) hospital that provides both inpatient and

outpatient medical care. Request for Arbitration (RFA), Exhibit 4 at 1. After the outbreak

of the COVID-19 pandemic, the Governor of Kentucky declared a state of emergency. RFA,

Exhibit 8. On March 10, 2020, the President declared a national emergency regarding

COVID-19. RFA, Exhibits 9, 10.

On February 11, 2022, MCH announced in a nursing memorandum, which was

distributed in an email, its new nurse agency program (agency program). FEMA’s Response,

Exhibit 8 at 1. The stated purpose of the agency program was to “address nursing shortages,”

and it provided that “RNs who are hired or transfer into this program will receive premium

pay when committing to one of the program options.” Id. The agency program offered three

options. Id. The first option paid RNs $45 per hour without benefits and no work

commitment. Id. The second option paid RNs, without benefits, $70 per hour for day shifts

and $80 for night shifts for a work commitment of thirteen weeks. Id. at 1-2. The third

option paid RNs $55 per hour with benefits and a one-year work commitment. Id. at 2. All

three options required that nurses be able to “[f]loat[] to [m]ultiple units.” Id. at 1-2. The

announcement also provided that “20% of the MCH Agency positions will be filled internally

and 80% will be filled by external candidates.” Id. at 2. The memorandum made no mention

of treating patients with COVID-19.

GMP 696719

On December 13, 2022, MCH submitted to FEMA its first request for PA, GMP

696719. FEMA’s Response, Exhibit 10. FEMA’s January 11, 2024, determination

memorandum (DM) addressed MCH’s request for $13,846,589.57 in PA, and FEMA denied

a portion of that request ($1,172,438.53) regarding FAL-ST costs for RNs hired under the

agency program and food services obtained by contract. FEMA’s Response, Exhibit 11 at 1.

1

The panel understands that MCH is seeking PA for the cost of FAL-ST for

medical personnel who were predominately RNs. For the purpose of brevity, this decision

uses the term RNs to include other medical personnel who may not be RNs.

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In general, FEMA noted in the DM that eligibility for PA related to COVID-19 was limited

to the following:

•

The services are specifically related to eligible emergency actions to

save lives or protect public health and safety or improved property;

•

The costs are for a limited period of time based on the exigency of the

circumstances; and

•

The Applicant tracks and documents the additional costs.

Id. at 3 (citation omitted). FEMA stated in the DM that MCH was ineligible for FAL-ST for

RNs because only overtime labor costs were allowed for budgeted employees who performed

emergency work and that MCH was not eligible for PA for the increased costs of maintaining

usual operations. Id. at 4. Finally, in the DM, FEMA denied MCH’s request for additional

costs of food service that were obtained by contract because MCH had not shown that such

costs were related to emergency services. Id.

In a letter dated March 11, 2024, MCH submitted to FEMA its appeal of the DM

regarding GMP 696719. RFA, Exhibit 4. MCH contended that “[p]atients with a known

COVID-19 diagnosis were cared for by a cohort of nurses, caregivers, and support staff to

prevent the risk of cross-contamination within the care teams.” Id. at 2. Additionally, MCH

contended that such internal and external positions for RNs and other medical personnel were

not budgeted. Id. With regard to the costs of food services, MCH argued that such costs

were eligible “wraparound” costs. Id. at 4.

By letter dated November 18, 2024, FEMA forwarded to MCH its appeal analysis

regarding its DM for GMP 696719. FEMA’s Response, Exhibit 12 at 1. In that appeal

analysis, FEMA determined that MCH had not shown that its increased costs for RNs, which

totaled $1,145,579.24, were related to specific COVID-19 emergency services. Id. at 3.2

Additionally, FEMA determined that MCH was not eligible to receive FAL-ST for RNs

because they were permanent budgeted employees. Id. at 5-6. In the case of MCH’s request

for PA for food service costs, in the amount of $26,859.30, FEMA remanded that portion of

MCH’s request to its regional branch for further eligibility review. Id. at 6.

2

For exhibits that include more than one document with separately numbered

pages, such as FEMA’s Exhibit 12, the .pdf page number is cited.

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GMP 737917

On November 7, 2023, MCH submitted its second request for PA for GMP 737917.

FEMA’s Response, Exhibit 10. FEMA’s DM, which was dated July 1, 2024, granted, in part,

MCH’s request for PA, which totaled $18,803,157.78, for costs incurred from July 2, 2022,

to May 11, 2023. FEMA’s Response, Exhibit 9 at 1. FEMA denied MCH’s request for

FAL-ST, which totaled $4,959,013.63, for RNs. Id. at 4. FEMA noted in the DM that MCH

had implemented the agency program after the disaster declaration date for COVID-19 and

that MCH’s payment of FAL-ST for RNs, who were budgeted employees, was not an eligible

cost. Id. Finally, FEMA denied MCH’s request for PA for contract labor for food service in

the amount of $44,644.14 because MCH had not shown that such costs were related to

COVID-19 emergency measures. Id. at 5.

On August 29, 2024, MCH submitted its appeal of FEMA’s DM, which partially

denied its request for PA regarding GMP 737917. RFA, Exhibit 6. In a January 14, 2025,

letter, FEMA denied MCH’s appeal. FEMA’s Response, Exhibit 13 at 1. FEMA determined

that MCH had not shown that its labor costs in the amount of $4,959,013.63 met the criteria

set forth in FEMA policy for work responding to COVID-19 and that MCH’s request for food

service costs in the amount of $44,644.14 was not an eligible wraparound service. Id.

Request for Arbitration

On January 17, 2025, MCH requested arbitration at the Board regarding GMPs 696719

and 737917. FEMA filed its response to MCH’s request for arbitration, and the parties

requested a hearing on the written record. After receipt of the parties’ record submissions,

the panel directed oral arguments in this matter that sought, in pertinent part, from the parties

“[f]urther explanation as to how the panel can quantify the applicant’s costs for additional

work performed by RNs and other medical staff for care specifically related to COVID-19.”

Order at 2 (July 18, 2025). The panel heard oral arguments on August 6, 2025.

Subsequent to the oral arguments, the parties supplemented the record. In its

post-hearing brief, which was dated August 20, 2025, MCH responded to the panel’s inquiry

as to the distinction between costs incurred for medical professionals treating patients with

an actual or suspected diagnosis of COVID-19 as opposed to treating patients without

COVID-19. MCH argued that the time nurses spend with patients “can be quantified using

Nursing Activities Scores (NAS).” Applicant’s Post-Hearing Brief at 2. Additionally, MCH

represented that “[m]ultiple studies performed in 2020 and 2021 using NAS have confirmed

that COVID-19 patients, on average, required over four hours of additional treatment per shift

when compared to non-COVID-19 patients.” Id. at 2 (footnote omitted). In comparing

budgeted and actual costs incurred, MCH argued that the difference between its actual costs

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and budgeted costs was minimal before the COVID-19 outbreak but that its “actual labor costs

outpaced budgeted labor costs by 8.43% . . . in [fiscal year (FY)] 2022 and 6.56% . . . in

FY2023.” Id. at 4.

MCH also provided a declaration from its chief nursing officer (CNO), who stated that,

in response to COVID-19, MCH “implemented a Nurse Agency Program (Program) and

entered into short-term contracts with Registered Nurses and other licensed staff to provide

direct patient care to COVID-19 patients and to ensure our medical facilities maintained

adequate capacity to address potential surges in COVID-19.” Applicant’s Supplemental

Exhibit 30 ¶ 2. A February 11, 2022, memorandum “introduc[ed] the program [and] expressly

described terms of 13 weeks or one year, reflecting its emergency-only character.” Id. ¶ 3.

Under that program, “[a]gency staff and internal transfers . . . were assigned to multiple

patient care areas to include critical COVID-19 care areas, including ICU, emergency

departments, and dedicated COVID units.” Id. ¶ 5. “The increased base hourly wage rate

Program staff earned reflected the extraordinary burdens of COVID care, including mandatory

floating to multiple units.” Id. ¶ 7.

In its October 20, 2025, post-hearing brief, FEMA stated that, while it does not dispute

the accuracy of nursing workload studies cited by MCH, the NAS studies are not responsive

to the panel’s inquiry as “to the ineligibility bases regarding force account labor.” FEMA’s

Post-Hearing Brief at 2. FEMA noted that “the articles in which the Applicant relies on

evaluate NAS in reference to nursing workloads in . . . unrelated countries—Italy, Belgium,

Brazil, and the Netherlands—not work or expenses stemming from [MCH]; or even the

United States.” Id. at 3. The “Applicant’s Supplement and [CNO] declaration . . . do not

demonstrate that the work claimed is directly tied to temporary or unbudgeted employees

performing [emergency protective measures (EPMs)].” Id. at 5. FEMA argued that MCH

established a program that “was not created as a COVID-19 EPM, as it was created to

mitigate staffing shortages, generally, regardless of COVID-19.” Id. at 6. Finally, FEMA

noted that, as of the date of its submission, an MCH website showed its use of the agency

program after the declared COVID-19 disaster. Id. at 6-7 (citing FEMA’s Response,

Exhibit 7 (Feb. 13, 2025)).

Discussion

This matter presents two issues regarding MCH’s eligibility for PA. The first is

whether MCH is eligible for the increased cost of FAL-ST for RNs employed through the

agency program, and the second is whether MCH is eligible for the cost of providing food

service by contract. The panel addresses, in turn, those two issues.

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The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act),

42 U.S.C. §§ 5121–5207 (2018), sets forth this panel’s authority to conduct arbitrations. Id.

§ 5189a(d). FEMA is statutorily authorized to provide PA “essential to meeting immediate

threats to life and property resulting from a major disaster.” Id. § 5170b(a). Eligibility for PA

funding requires a showing that such work was “required as the result of the emergency or

major disaster event.” 44 CFR 206.223(a)(1) (2022). FEMA’s Public Assistance Program

and Policy Guide (PAPPG) (Apr. 2018) states that the Stafford Act “does not authorize

FEMA to provide PA funding for all losses or costs resulting from the incident.” PAPPG

at 41. “Increased costs of operating a facility or providing a service are generally not eligible,

even when directly related to the incident.” Id. at 42. In order for an applicant’s costs to be

eligible for PA, those costs must be “[d]irectly tied to the performance of eligible work” and

“[a]dequately documented.” Id. at 21. An applicant documenting such costs “should provide

the ‘who, what, when, where, why, and how much’ for each item claimed.” Id. at 133.

The PAPPG “refers to the Applicant’s personnel as a ‘force account.’” PAPPG at 23.

Eligibility for “overtime, premium pay, and compensatory time costs [are] based on the

Applicant’s pre-disaster written labor policy.” Id. FEMA has different criteria for

reimbursing FAL-ST labor costs depending on whether the employee is budgeted or

unbudgeted and whether the employee is performing emergency or permanent work. Id. at

23-24. The PAPPG provides the following:

For Permanent Work, both straight-time and overtime labor costs are eligible

for both budgeted and unbudgeted employees. For Emergency Work, only

overtime labor is eligible for budgeted employees. For unbudgeted employees

performing Emergency Work, both straight-time and overtime labor are

eligible.

Id. at 24. The PAPPG lists budgeted employees as including either of the following:

“[p]ermanent employee” or “[s]easonal employee working during normal season of

employment.” Id., Figure 11 (Emergency Work Labor Eligibility). Unbudgeted employees

include the following: “[e]ssential employee called back from administrative leave;”

“[p]ermanent employee funded from external source”; “[t]emporary employee hired to

perform eligible work”; or “[s]easonal employee working outside normal season of

employment.” Id.

In response to the pandemic, FEMA issued the Coronavirus (COVID-19) Pandemic:

Safe Opening and Operation Work Eligible for Public Assistance, FEMA Policy 104-21-0003,

version 2 (Sept. 8, 2021) (O&O Policy),which applied retroactively to the COVID-19 disaster

declaration. The O&O Policy provides the following:

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FEMA may provide assistance to all eligible PA Applicants, including [state,

local, tribal, and territorial governments (SLTTs)] and eligible PNPs, for the

following measures implemented to facilitate the safe opening and operation of

all eligible facilities in response to COVID-19 declared events:

i.

Purchase and distribution of face masks, including cloth face coverings,

and personal protective equipment (PPE).

ii.

Cleaning and disinfection. including the purchase and provision of

necessary supplies and equipment in excess of the Applicant’s regularly

budgeted costs.

iii.

COVID-19 diagnostic testing.

iv.

Screening and temperature scanning, including, but not limited to, the

purchase and distribution of hand-held temperature measuring devices

or temperature screening equipment.

v.

Acquisition and installation of temporary physical barriers, such as

plexiglass barriers and screens/dividers, and signage to support social

distancing, such as floor decals.

vi.

Purchase and storage of PPE and other supplies listed in this section

should be based on projected needs for the safe opening and operation

of the facility.

Id. at 5 (footnotes omitted).

FEMA also issued Policy 104-21-0004, Coronavirus (COVID-19) Pandemic: Medical

Care Eligible for Public Assistance (Interim) (version 2) (Mar. 15, 2021) (COVID-19 Medical

Policy) to provide guidance for the eligibility of medical expenses. Emergency and inpatient

care for COVID-19 patients includes, but is not limited to, the following:

i.

Emergency medical transport related to COVID-19;

ii.

Triage and medically necessary tests and diagnosis related to

COVID-19;

iii.

Necessary medical treatment of COVID-19 patients; and

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Prescription costs related to COVID-19 treatment.

COVID-19 Medical Policy at 4. The following labor costs are eligible:

i.

Overtime for budgeted medical staff providing treatment to COVID-19

patients;

ii.

Straight time and overtime for temporary medical staff providing

treatment to COVID-19 patients; and

iii.

Straight time, overtime, and other necessary costs for contract medical

staff providing treatment to COVID-19 patients. Work and associated

costs must be consistent with the scope of the contract and may include

costs for travel, lodging, and per diem for contract medical staff from

outside the local commuting area.

Id.

The panel finds that MCH’s agency program was an increased cost that MCH incurred

in response to a shortage of nurses and such cost increases are not eligible for PA. A panel

of this Board recognized that an applicant is ineligible for PA to cover the increased cost of

maintaining operations. See Tri-County Electric Cooperative, Inc., CBCA 7719-FEMA, 23-1

BCA ¶ 38,385, at 186,514 (Applicant was ineligible to receive PA for the increased cost of

providing electricity during a disaster.). An applicant does not establish eligibility for PA by

“simply paying the escalated cost . . . as directed by certain entities.” Id. Here, MCH is

similarly paying a premium rate for RNs as required by its agency program. MCH’s stated

purpose for implementing the agency program was in response to a shortage of nursing staff.

MCH is not eligible to receive PA for such an increased cost.

The panel finds that MCH is ineligible to receive FAL-ST for RNs hired through that

program because it was implemented after the declaration of a disaster regarding COVID-19.

The PAPPG provides that an applicant is eligible to receive PA for labor costs such as

premium pay based on an applicant’s pre-disaster written labor policy. MCH announced the

agency program on February 11, 2022, which was almost two years after the declaration of

a disaster regarding COVID-19. The record does not show that MCH had any earlier

pre-disaster labor policy that would apply in this matter.

Additionally, the panel finds that MCH’s agency program did not employ temporary

unbudgeted staff. As discussed above, an applicant is only eligible to receive PA for the cost

of FAL-ST for unbudgeted temporary employees, and the PAPPG defines unbudgeted

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employees as including either employees called back from leave, employees paid by an

external source, temporary employees hired to perform eligible work, or seasonal employees

working outside their season of employment. PAPPG at 24. None of those categories apply

to the staff MCH hired under the agency program. Although MCH argues that such

employees were temporary, the agency program offered different options for employment for

varying lengths of time at different rates of compensation in which employees could “float”

among units without any specific mention of emergency work.

Finally, MCH has not established its actual increased cost of care for patients who had

COVID-19. MCH acknowledges that it does not have records of actual hours spent providing

specific treatment related to COVID-19, but the PAPPG requires that an applicant document

its cost for eligible work with a showing of “who, what, when, where, why, and how much.”

Instead, MCH has only provided studies from other facilities to show that COVID-19 caused

medical staff to work longer shifts. The panel, however, cannot apply such findings to this

case and, in doing so, simply assume that either the entirety or some portion of the amount of

PA requested by MCH was actually related to the treatment of COVID-19 patients.

The panel does not find the CNO’s declaration to be helpful in establishing eligibility

for MCH’s increased costs. The CNO indicated in the declaration that nursing staff hired

under the agency program treated both patients with COVID-19 and patients admitted for

other reasons. Also, the CNO stated in the declaration that nursing staff were hired for

“potential surges” in COVID-19, which suggests that such hiring was not just in response to

an emergency but also in preparation for a possible future emergency. At most, MCH has

only established that its agency program was another way of recruiting RNs in response to a

shortage of nurses and planning for future emergencies.

The panel also finds that MCH is ineligible to receive its request for PA for the cost

of contracting for food service for the period from July 2, 2022, to May 11, 2023, which was

part of its request under GMP 737917.3 With regard to providing meals, the PAPPG provides

the following:

[p]rovision of meals, including beverages and meal supplies, for employees and

volunteers engaged in eligible Emergency Work . . . is eligible provided the

individuals are not receiving per diem and the following conditions apply:

3

On appeal, FEMA remanded MCH’s request for PA for food services in GMP

696719, and that part of its request is not at issue in this matter. FEMA’s Response at 29

n.146.

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•

[m]eals are required based on a labor policy or written agreement that

meets the requirements of Chapter 2:V.A.1;

•

[c]onditions constitute a level of severity that requires employees to

work abnormal, extended work hours without a reasonable amount of

time to provide for their own meals;

or

•

[f]ood or water is not reasonably available for employees to purchase.

PAPPG at 63. MCH has not alleged nor does the record show that MCH was required to

follow a written agreement or policy regarding food service, and MCH has not shown that its

employees were unable to provide their own food or that food and water were not available

for employees. Instead, MCH asserts that it contracted for food service “[f]or the continuity

of both COVID-19 and non-COVID-19 patient care during a critical staffing shortage.” RFA

at 38. In effect, MCH has only shown that it incurred increased costs in order to maintain

operations, and, as discussed above, MCH is not eligible for PA for that reason.

MCH also argues that contracting for food services was a wraparound cost. On

January 13, 2022, FEMA issued its memorandum, Wraparound Services for COVID-19 at

Primary Medical Care Facilities under Title 32 Mission Assignments (memorandum), that

allowed for states and territories to use National Guard services for wraparound services,

which included “food preparation and delivery.” FEMA’s Response, Exhibit 4 at 1 n.1. Such

wraparound services were only available for temporary and expanded medical facilities but

not primary care medical facilities. Id. at 1. MCH, consequently, is not eligible for

wraparound services because it is a primary care facility as opposed to being a temporary or

expanded facility. Also, the record lacks any evidence of a National Guard presence at MCH.

Decision

MCH is ineligible to receive its request for PA.

H. Chuck Kullberg

H. CHUCK KULLBERG

Board Judge

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Allan H. Goodman

ALLAN H. GOODMAN

Board Judge

Elizabeth W. Newsom

ELIZABETH W. NEWSOM

Board Judge