The former head of a Louisiana nursing home oversight office allegedly charged $18,979 in personal expenses on an agency-issued credit card, buying items such as phones and electronic devices, kitchen appliances, internet service at his home, and streaming TV subscriptions. The Louisiana Legislative Auditor’s Office issued a report dated February 15, 2023, that detailed the credit card spending of the former executive director of the Louisiana Board of Examiners of Nursing Facility Administrators (LABENFA). LABENFA is responsible for developing, imposing, and enforcing standards for nursing facility administrators, issuing licenses, and investigating complaints.
The audit covered credit card use from June 2019 through July 2022. According to the report, the former director charged a total of $98,080 to his office-issued card during that two-year period, and $18,979 appeared to be either personal in nature or did not have a clear business purpose. The purchases included multiple cell phones, tablets, accessories, generators, home Internet service charges, and multiple streaming subscriptions. Credit card receipts show the former director used his personal Amazon account to purchase several of the items, which appear to have been shipped directly to him and stored at his personal residence. The former director denied using his agency credit card for personal purposes, but did agree that his purchase of a smartwatch “didn’t look good” and reimbursed LABENFA $261 for the smartwatch on June 2, 2022. He also resigned from his position on August 25, 2022.
The Legislative Auditor recommended that the LABENFA board seek reimbursement for all personal charges incurred and adopt detailed policies and purchasing procedures for the use of credit cards. Policies should provide guidance for the business use of credit cards and the supporting documentation expected to be maintained. The Auditor said neither credit card charge authorization receipts nor credit card statements alone are adequate documentation, as they do not provide sufficient detail to support the propriety of charges. According to the Auditor, policies should require:
(1) A listing of all active credit cards and who has physical possession of the credit cards at all times;
(2) Documentation of the business purpose for all expenditures;
(3) Itemized receipts for meals, as well as a listing of people attending the meals and the purpose of the meeting/gathering;
(4) Timely submission and retention of original receipts. Receipts should be submitted before the monthly statement arrives and in time to adequately review the propriety of the expenditure;
(5) Review of monthly statements for reasonableness and compliance with policy before payment is made. Any exceptions or noncompliance issues should be immediately investigated and resolved,
(6) Disciplinary action for noncompliance with the policy; and
(7) Establish a policy that the agency head or board president comply with state law and notify the Legislative Auditor and District Attorney, in writing, when they have actual knowledge or reasonable cause to believe there has been a misappropriation of public funds or assets.
Compliance Perspective
Issue
Misuse of allocated public funds can be seen as fraud, waste, and abuse of government funds. The Centers for Medicare & Medicaid Services (CMS) requires skilled nursing facilities to have a compliance and ethics program that is effective in preventing and detecting criminal, civil, and administrative violations under the Social Security Act, and in promoting quality of care. Routine audits should be conducted at each facility on monetary transactions and the results of the audits should be reported to the compliance and ethics committee and to the governing body. The audits should have a corrective action plan to address any identified discrepancy, and all discrepancies should be investigated and rectified immediately.
Discussion Points
- Review the facility’s policies and procedures on company credit cards, accounting practices, and the use of facility and resident funds. Update as necessary.
- Train appropriate staff on your policies for financial accounting and the protection and approved use of any company credit cards, as well as facility and resident funds. Document that these trainings occurred and file in each employee’s education file.
- Periodically audit to ensure that all monetary transactions have been double-checked and approved by a second party, including charges to company credit cards, and that all transactions have been approved in advance. Ensure that an independent audit is conducted at least annually. Also audit staff understanding to ensure that they are aware of the steps that should be taken if they suspect theft, and their reporting options, including the use of the anonymous hotline.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
