Oakwood Healthcare System, Dearborn, Michigan, Needed Additional Assistance in Managing its FEMA Public Assistance Grant Funding

Oakwood Healthcare System, Inc. (Hospital), in Dearborn, Michigan, received a gross award of $15.2 million from the Michigan State Police Emergency Management and Homeland Security Division (Michigan), and FEMA grantee, for damages resulting from severe storms and flooding in August 2014. The Hospital did not always account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. Although the Hospital competitively awarded contracts for most non-exigent work, it did not always take the required affirmative steps to ensure the use of small and minority firms, women’s business enterprises, and labor surplus area firms when possible; and did not include all required contract provisions in its contracts. However, we did not question the costs because insurance proceeds covered essentially all the repair costs except for the insurance deductible. We also found that the Hospital did not initially account for labor costs properly. However, after we identified the improperly supported costs, Hospital employees corrected the records to reflect actual costs the Hospital incurred.