FEMA says Charity consultants erred

BATON ROUGE -- The private firms commissioned by the state to review hurricane-related damage to Charity Hospital made a series of errors that helped produce overinflated estimates of how much Louisiana should be reimbursed, FEMA says in documents filed this week with a federal arbitration panel.

The filing by the Federal Emergency Management Agency also alleges that the three consulting firms hired by the state to perform damage estimates were not truly independent, as they have ongoing financial relationships with the state and therefore have an incentive to produced biased cost estimates.

As it has said in the past, FEMA's report says that the state failed to properly safeguard the building after Katrina and that much of the hospital's pitiful post-storm condition was caused by years of neglect, not wind or water damage.

After reviewing the three reports, "FEMA concluded that each report was fatally flawed because of the consultants' failure to correctly assess disaster-related damage," the agency wrote. "This fatal defect was the underpinning for the experts' inaccurate conclusions."

Ray Lamonica, general counsel for the Louisiana State University System, declined to discuss FEMA's submission. "Our position was expressed in the original request for arbitration and remains unchanged," Lamonica wrote in an e-mail. "We expect to have a pre-hearing conference within 10 days in which we will discuss with the arbitration panel the next steps."

The 92-page filing by FEMA is the latest volley in the years-long dispute over the extent of hurricane damage to the iconic art deco hospital that has been shuttered since September 2005.

State authorities, citing the three studies it commissioned since the storm, insist that the 70-year-old building on Tulane Avenue was more than 50 percent damaged by Katrina and that FEMA therefore owes the "full replacement value" of $492 million.

FEMA has pegged the damage at $124 million, but has offered to settle the matter for $150 million.

A three-judge arbitration panel at the Civilian Board of Contract Appeals is expected to make a binding decision early next year.

The federal agency was particularly critical of an assessment done by Blitch/Knevel and Associates, a New Orleans architectural firm. An internal FEMA review of the company's work "identified major issues and concerns that suggested an overall pattern of error and inclusion of ineligible work," FEMA wrote.

According to FEMA, the company failed to follow established rules for doing damage assessments before it abruptly stopped cooperating with the agency in April 2008.

To boost its case that the hospital was in poor shape before Katrina, FEMA cites a 2002 study by Adams Management Services Corp., which also conducted a post-storm assessment.

The earlier study determined that the hospital needed $135 million in repairs and was unsuitable for use as a health-care facility.

The outcome of the arbitration process is critical to the state's ongoing efforts to build a new public hospital in lower Mid-City, as the state's financial plan relies on a large contribution from the federal government.

Should FEMA prevail in the arbitration, it means more borrowing would be needed to build the $1.2 billion, 424-bed hospital where Louisiana's next generation of doctors, nurses and other medical professionals would train.

. . . . . . .

Jan Moller can be reached at jmoller@timespicayune.com or 225.342.5207.