Article - August 10, 2008 - The News Journal

Money missing from DPC patient accounts
Withdrawals in '07 hit $521,473, auditor says

By Lee Williams

Staff at the Delaware Psychiatric Center may have misappropriated money from patient trust funds while spending hundreds of thousands of dollars with little scrutiny and shoddy documentation, according to the findings of a special investigation released last week by Delaware Auditor of Accounts R. Thomas Wagner Jr.

Each patient at the hospital has a trust fund account, which receives deposits from a variety of sources, including Social Security, veterans benefits, retirement funds, inheritance money and donations from family and friends. Alerted to potential misappropriations by staff, a team of state auditors examined 2,531 transactions from the trust fund accounts of 13 patients committed to the state hospital for treatment.

Half the transactions reviewed by auditors lacked receipts that could prove the money was legitimately spent. Recordkeeping at the state hospital was so bad, Wagner says he can't tell if money was stolen.

Although three DPC employees quit while auditors were investigating, neither theattorney general nor DPC administrators would comment or provide documentation to The News Journal that would account for missing patient funds.

"I don't think we could reach any conclusion," Wagner said. "This is the frustration I feel as auditor of accounts, a government official and a taxpayer when you have problems like this -- nobody is held accountable."

The total dollar amount withdrawn from the 13 accounts during fiscal year 2007 was $521,473.37 -- about $40,000 on average per patient, the audit showed. In interviews with The News Journal, current and former DPC officials explained that the funds are used to pay for snacks, trips, personal items and medical devices, with the largest withdrawals for items such as wheelchairs that typically amount to $2,000 to $3,000. For their protection, patients are generally limited to $10 to $20 cash withdrawals, these officials said.

In many of the transactions examined by the state, auditors found either sloppy or no recordkeeping, lack of accounting oversight, and in some cases, no justification for withdrawing the patient funds. The auditors discovered 1,360 transactions had no receipts to support the payout of patient funds, which is contrary to DPC policy.

The report also shows there were 54 transactions -- totaling $4,851 -- "in which either the patient, social worker or both did not authorize the transaction."

Wagner's team turned over the findings to DPC leaders months ago, but neither Vince Meconi, Secretary of the Department of Health and Social Services, nor DPC Director Husam E. "Sam" Abdallah would explain how the patient accounts were tapped. However, when confronted with Wagner's initial findings earlier this year, DPC leaders told Wagner's office that the hospital had begun instituting protections for the patient accounts, the audit said.

Wagner confirmed that several of the 13 trust fund accounts his auditors examined contained money from federal agencies. Wagner delivered a copy of his report to Attorney General Beau Biden weeks ago, but Biden declined to comment on the report when contacted by The News Journal.

"Obviously there are some serious management issues at the psychiatric hospital," Wagner said. "There are two big issues: a lack of managerial oversight and an overall lack of accountability."

During his nearly 20 years as state auditor, Wagner said, he has seen only one other instance where records were worse than those encountered at DPC -- in 2006, auditors cited poor bookkeeping and business practices at Christina School District leading to a multimillion-dollar deficit.

Because of the poor state of financial records at DPC, it may never be possible to uncover the full extent of the loss, Wagner said.

One DPC staff member who was an Avon representative sold cosmetics to the patients, the report said -- despite the state's clear-cut conflict-of-interest rules. And there is no evidence any patient ever received Avon products, even though their accounts were billed for purchases. The Avon representative quit working for DPC during the auditors' investigation.

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