Jan Moller of the Times-Picayune has a fresh report after having seen documents filed by FEMA in advance of a pre-hearing conference for the binding arbitration that is supposed settle the ongoing dispute between federal and state officials over how much FEMA will reimburse Louisiana for damage incurred at Charity Hospital in the aftermath of Katrina and the failure of the federal levee system.

FEMA maintains in the new filings, as they did previously in appeal documents, that state officials misrepresented and exaggerated the storm damage incurred at Charity Hospital in an attempt to present the building as beyond fifty percent threshold so that the federal government would be obligated to reimburse the state for the entire building, or $492 million. FEMA has offered $150 million to settle the issue, though that amount remains higher than what the agency believes the state deserves. FEMA says that state officials and the consultants they hired to assess the building improperly claimed as storm-related damage caused by years of deferred maintenance and a failure to secure the property in the months after Charity was closed.

Hundreds of military and medical personnel helped effectively decontaminate Charity Hospital after the flood waters receded in September of 2005 to the point that it was considered ready to reopen. Photographs obtained by SaveCharityHospital.com show the relatively clean condition of the first floor of the building when it was shuttered by state officials.

FEMA also alleges conflict of interest:

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.

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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.

Indeed, Blitch/Knevel and Associates is currently under contract with the state to design the proposed new medical center slated for Lower Mid-City.

The disputed reimbursement money is critical to LSU's vision for a new medical center but even the most favorable arbitration decision would not produce enough capital to complete construction. The remaining $400 million or more would be borrowed. State Treasurer John Kennedy and others have sounded alarms that LSU stands little chance of success given their proposed operating model and the current state of the nation's credit markets.

The new filing from FEMA reinforces our suspicions that many LSU and state officials cynically used the storm as an opportunity to tap the federal government for a sprawling brand new medical center that isn't necessarily in the best interest of New Orleans residents when compared to alternatives. The consequences of building LSU's proposed medical center - the closure of Charity Hospital, the abandonment of downtown New Orleans, the destruction of Lower Mid-City, and their negative impacts on public health, the economy, and an overall vision for rebuilding sustainable neighborhoods - were perhaps not in mind when administrators acted on their institutional loyalty instead of in deference to the public interest.