GAB Decision 394
February 28, 1983
Buckeye Health Plan, Inc.;
Ford, Cecilia; Teitz, Alexander Settle, Norval
Buckeye Health Plan, Inc. (Buckeye) appealed an informal review
decision of the Public Health Services (PHS) Grant Appeals Board
sustaining $6,186 of a $7,612 disallowance by the Office of Health
Maintenance Organizations (OHMO) of costs under grants by OHMO to
Buckeye for the period from March 1, 1975 to December 31, 1979.
In the review by the PHS Board, Buckeye conceded $1,426 of the
original $7,612 disallowance, contested the ground of $2,000 and asked
to be given consideration for $6,000 of additional expenses as an offset
against the disallowance.
During the present appeal Buckeye gave PHS new evidence relating to
the $2,000, on the strength of which PHS informed us that it would allow
that sum. Regarding the rest, $4,186, of the costs disallowed by the
OHMO decision, Buckeye did not present any contest of the grounds of
disallowance either to the PHS Board or here. Consequently, the only
question that we consider is that of the $6,000 of additional expenses.
Because the amount in dispute is not over $25,000, we decide whether the
PHS Board's decision about the $6,000 was clearly erroneous. 45 CFR
16.12(d).
Buckeye expended the $6,000 during the term of its grants, that is,
not later than December 31, 1979. The record does not show clearly why
the expenditure was never allowed as a grant expense. It was not
disallowed in the proceedings leading up to this appeal. In 1979
Buckeye requested, but did not receive, OHMO approval of $5,891 of
payments that it had made, and $2,000 of payments that it intended to
make, to a consultant company. See PHS appeal file, tab B, item 1,
letters dated March 20, April 6 and April 23, 1979. The $6,000 may have
been part of these payments. If so, it can be inferred that the lack of
OHMO approval dissuaded Buckeye from claiming the $6,000 as grant
expense. This would be consistent with Buckeye's view, stated in its
appeal statement on the present appeal, that the $6,000 had been
"disallowed," if we take "disallowed" in a nontechnical
sense. Letter
from Buckeye to Board dated December 15, 1982; see also letter from
Buckeye to Board dated January 24, 1983.
On the review by the BHS Board in the present proceedings the PHS
Board's decision on the $6,000 was as follows:
(2) The grantee states that it can document additional out-of-pocket
expenditures of $6,000 made at the encouragement of Region V to set up a
health center, and feels that consideration should be given for these
expenditures to offset the audit disallowances. However, the
expenditures were for preaward planning or application development
activities for another project and does (sic) not fall within the
authority of the PHS Grant Appeals Board.
We do not believe that this decision was clearly erroneous. The
regulation defining the PHS Board's authority (42 CFR Part 50) does not
require consideration, on review of a disallowance, of the allowability
of expenditures not included in the current disallowance. Nor does it
require review of an agency decision disapproving a proposed expenditure
unless the review is requested within 90 days after the approval was
requested.
We cannot ourselves credit any of the $6,000 against the present
disallowance. We would be waiving all or part of the present
disallowance, and we do not have authority to do that. See, e.g.,
Washington County Opportunities, Inc., Decision No. 232, November 30,
1981. This is so even though we recognize (but do not pass on)
Buckeye's argument that it was originally treated unjustly on the
$6,000. *
The $6,186 disallowance is sustained with the understanding that PHS
will decrease it by the $2,000 that it has decided to allow as noted
above. * Of course, nothing in our decision would prohibit the grantee
from submitting a claim for the extra $6,000 in expenditures, assuming
they were not unallowable preaward costs as suggested by the PHS Board.
OCTOBER 22, 1983