July 31, 2008 — A scathing joint federal and local audit this week revealed gross financial mismanagement at Schneider Regional Medical Center, but concerns that top executives were allegedly using hospital funds for personal expenses were documented by a high-ranking government official more than two years ago.
"Because of the serious nature and far-reaching implications of what appears to be mismanagement at Schneider Regional Medical Center, I feel compelled to document my concerns and offer recommendations as your liaison officer to the organization," Juel R.T. Molloy wrote in a May 2006 letter to then-Gov. Charles W. Turnbull.
Despite these efforts and more, it appears nothing happened — until Tuesday, when the audit was released.
As Turnbull's chief of staff, Molloy acted as the governor's liaison to the hospital and was responsible for overseeing its operations. It wasn't long after she started serving in this position that she became aware of reports from hospital staff and community members on how money from the Hospital Revolving Fund (a pool of money used to pay the salaries of specific hospital personnel and operating expenses) was being used, and that patients were being overcharged for services at the hospital.
Former Schneider Chief Executive Officer Rodney E. Miller Sr. claimed a cash flow shortage — made worse by debts owed to the hospital by the Health and Justice departments — prevented officials from replenishing the Hospital Revolving Fund with money to pay employees. In order to make payroll, the hospital worked out an arrangement to have the Department of Finance foot the bill on the condition the medical center would reimburse the department for any money it paid out for employee salaries (See "Schneider CEO: Government Owes the Hospitals, Too.")
The hospital's debt to the government quickly jumped up to $10 million, Molloy said in her letter to Turnbull. No reimbursements were made and no information backing up expenses made against the Hospital Revolving Fund was provided by Schneider Regional's board members, she said.
Molloy's letter also detailed concerns that the fund was being used to pay for staff at the Charlotte Kimelman Cancer Institute (CKCI) a year before the facility opened. During a press conference Thursday at the CKCI auditorium, hospital officials confirmed that staff was brought on two years before the opening.
"As part of the startup process, we need to have staff in place — particularly those in the leadership positions — to get things running," said Amos Carty Jr., Schneider Regional chief executive officer, during the press conference. Those brought on beforehand, such as former CKCI administrator Renee Adams, had a Notice of Personnel Action — a document that outlines, among other things, how much a government employee is getting paid — filed with the Division of Personnel, he said.
"I became concerned that I was also being denied the information I needed to do my job — basic information," Molloy said Wednesday. "I complained to everyone I could about it: the Legislature, the attorney general and the governor's legal counsel."
In her letter to Turnbull, Molloy wrote, "You will recall that approximately two years ago (2004), I brought to the attention of major policy makers the serious financial problems facing the … hospital. I subsequently requested specific documents from Mr. Rodney E. Miller to assist in conducting a financial analysis and in making recommendations to avoid this same type of financial crisis I predicted. Most of the important information was not submitted."
Opinions issued by then-acting Attorney General Alva Swan and attorney Queen Terry said attempts made by hospital board members to withhold the requested information — primarily on how the medical center's funds were being spent — were "not supported by law," Molloy said.
Still, no information came, she added.
"I felt an intervention was needed," Molloy said Wednesday. "We couldn't wait for the system to collapse before we acted. So I decided that I was going to detail all my concerns and attempts in a letter to the governor."
In her letter, Molloy also requested that Turnbull have a meeting with Miller and other hospital executives to discuss the situation. Meetings were held, but "nothing changed" at the hospital, she said Wednesday.
Asked about Molloy's concerns, Turnbull said Wednesday that he didn't have a copy of her letter in front of him and could not "provide an intelligent response" to what was contained in the document. When a reporter asked to fax or email a copy of the letter to him, Turnbull said he did not have an email address or fax machine.
"I don’t have all those things I had when I was governor — I didn't have them before I was governor either," he joked.
Looking for "closure" on the issue, Molloy said she took her findings to Sen. Louis P. Hill and asked that he request a V.I. Inspector General's Office audit on the medical center's operations.
"It has come to my attention that the center is experiencing severe financial challenges that are causing it to accumulate serious financial deficits in the Health Revolving Fund and other revenue streams," Hill wrote to V.I. Inspector General Steven van Beverhoudt in his July 18, 2006 audit request.
At the time Molloy began discussions about an audit, Hill — then the chairman of the Senate's Finance Committee — was preparing for a budget hearing with Schneider Regional Medical Center officials.
"I was getting the same calls she was about complaints at the hospital," Hill said Wednesday. "I know that she had contacted as many people as she could about her concerns, but could not seem to find anyone that would address the issue. She asked me to request an audit, and I pursued it."
The audit was a combined federal and local effort by the offices of the inspectors general of the Department of the Interior and the V.I. government. Schneider Regional Medical Center officials are scheduled to hold a press conference Thursday morning to address the audit findings.
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