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7th Circuit rejects hospital's claims for $20M more in federal aid

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Columbus Regional Hospital, which was flooded following heavy rains in southern Indiana in 2008, is not entitled to an additional $20 million in disaster relief funds from the Federal Emergency Management Agency in addition to the $70 million it already received, the 7th Circuit concluded Wednesday.

In Columbus Regional Hospital v. Federal Emergency Management Agency, 12-2007, the federal appellate court tackled two issues: whether the District Court was the proper venue for the lawsuit and the merits of the suit.

The lawsuit was filed in the Southern District of Indiana, but under the Tucker Act, suits seeking more than $10,000 in monetary damages are to move before the Court of Federal Claims. The judges concluded that the District Court was the right venue because it’s the only court that can serve as a forum for all of the hospital’s legal theories, which include claims under the Stafford Act and the Federal Tort Claims Act.

The 7th Circuit rejected FEMA’s claim that everything it does is a “discretionary function” so there can never be an obligation to pay more than the agency decides is due. Switching focus to the lawsuit, the hospital contended that FEMA must cover the replacement cost of equipment and supplies destroyed by the flood, and that includes new equipment. The court found FEMA’s approach – to value property lost as cost (basis) less depreciation – to make sense in that it gives all victims the value of what they lost, and no more.

“Disaster benefits are a subsidy, and no one is entitled to a greater subsidy than the statute mandates,” Chief Judge Easterbrook wrote. “If a fast-food restaurant gets the depreciated value of a fryer or milkshake mixer, a hospital gets the depreciated value of a magnetic resonance imager.”

The second issue involves the proceeds the hospital received from insurance. FEMA concluded property damage represented roughly two-thirds of the hospital’s losses within the policy’s scope, so it attributed around $16 million of the $25 million in insurance proceeds to the property damage and deducted that amount from the federal funds. The hospital claims that no deductions should be made because it used the $25 million to cover expenses such as salaries and the cost of moving patients.

“ … as far as we can see nothing in the Stafford Act or any regulation prevents the agency from imputing all insurance proceeds to covered claims. FEMA did the Hospital a favor when it allocated a third of the proceeds to losses outside the scope of the Stafford Act, and thus deducted only $16 million rather than $25 million from the Hospital’s claim,” Easterbrook wrote.

“The Hospital tells us that it now has pursued its administrative remedies and filed a second suit under the FTCA. We expect it to be met with a defense of claim preclusion (res judicata) as well as the observation that the suit is substantively feeble, but we leave that to the court where the FTCA litigation is pending.”
 

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  1. Such things are no more elections than those in the late, unlamented Soviet Union.

  2. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  3. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  4. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  5. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

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