OIG: Largest Nonprofit Misallocated Millions in Hurricane Sandy Funding

Visiting Nurse Service of New York (VNSNY), the largest not-for-profit, home- and community-based health care organization in the country, may have used hundreds of thousands of dollars worth of federal disaster relief funds inappropriately, and planned to spend millions more inappropriately, according to a report from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG).

Specifically, VNSNY allegedly claimed almost $400,000 in Hurricane Sandy disaster relief funding inappropriately over a 6-month period, in addition to budgeting Hurricane Sandy disaster relief funds for nearly $2.5 million that were not appropriate, the report says. VNSNY denied any wrongdoing to Home Health Care News.

When Hurricane Sandy made landfall on Oct. 29, 2012, it damaged parts of the northeastern and mid-Atlantic U.S., the report notes. President Obama subsequently signed the Disaster Relief Act into law on Jan. 29, 2013. The legislation, in part, provided about $800 million in funding for disaster response and recovery and additional expenses directly related to Hurricane Sandy.

At the time, VNSNY operated Early Head Start and Head Start programs in New York City at two sites in the Rockaway section of the borough of Queens, the report says.

The Administration for Children and Families (ACF) awarded about $4.8 million in Disaster Relief Act funds to VNSNY for the period of Sept. 1, 2013, through Aug. 31, 2017. The funds were meant for program costs directly related to Hurricane Sandy, including nearly $800,000 for renovations and repairs at one of VNSNY’s two locations. VNSNY subsequently suspended its plans to renovate and repair the location, however, and chose to consolidate its Early Head Start and Head Start programs into its other location, the report states.

VNSNY relinquished its Disaster Relief Act grant effective July 1, 2015, and ceased operating its Head Start and Early Head Start programs as of Aug. 31, 2015, OIG asserts in the report.

Of VNSNY’s $760,066 in Disaster Relief Act expenses that OIG reviewed, $375,405 complied with applicable federal requirements, the report says. However, some Disaster Relief Act costs that VNSNY claimed were not in compliance with applicable federal requirements.

Specifically, VNSNY inappropriately claimed costs totaling $384,661 that were not related to Hurricane Sandy directly. Instead, VNSNY utilized Disaster Relief Act funds for Head Start program normal operating costs, like supplies costs, rent and rent-related costs, and renovation costs, the report says.

Additionally, VNSNY allegedly budgeted Disaster Relief Act costs totaling $2,472,695 that were inappropriate, including fireproofing, construction costs that were inappropriate after VNSNY suspended its plan to repair and renovate one of its locations, and Head Start program costs that were not directly related to Hurricane Sandy.

These misallocation issues took place because ACF inappropriately authorized VNSNY to budget and claim Disaster Relief Act grant funds for costs that were not directly related to Hurricane Sandy, and because ACF did not require VNSNY to alter its budget to comply with Federal requirements, OIG said in the report.

After reading a draft of OIG’s report, VNSNY claimed, among other things, that OIG takes “an overly narrow interpretation” of what costs were “directly related” to Hurricane Sandy, without any regulatory or legislative guidance on how that phrase was to be applied.

VNSNY also provided the following response to HHCN about OIG’s allegations:

“The Administration for Children and Families (ACF) and the Office of Head Start (OHS) categorically disagree with the OIG’s findings, and agree with our position. So we have two government agencies disagreeing with one another. In their own words, ‘ACF does not concur with the recommendation and believes that the identified expenses were properly charged to VNSNY’s Hurricane Sandy awards. OHS awarded Hurricane Sandy DRA funds to grantees to support full restoration of facilities, program operations, and targeted support services to Head Start and Early Head Start children, families, and program staff impacted by Hurricane Sandy. OHS believes that all funds awarded to VNSNY for Hurricane Sandy DRA purposes were necessary expenditures resulting from Hurricane Sandy and properly paid with DRA funds.'”

Written by Mary Kate Nelson