Finding 2022-003 – Internal Control Deficiency and Noncompliance over Activities Allowed or Unallowed and Period of Performance
Identification of the federal program:
Federal Grantor: United States Department of the Treasury
Assistance Listing No.: 21.027 COVID – 19 Coronavirus State and Local Fiscal Recovery Funds.
Pass-Through Award Numbers:
Good Shepherd, pass-through Gregg County: SKM_C55822012711390
Trinity Mother Frances, Pass-through Smith County: Not available
Santa Rosa, Pass-through the City of San Marcos: Not available
Award Period of Performance:
Good Shepherd, pass-through Gregg County, September 1, 2021 – November 30, 2021
Trinity Mother Frances, Pass-through Smith County, October 1, 2021 – November 30, 2021
Santa Rosa, Pass-through the City of San Marcos, March 03, 2021 through December 31, 2026
Criteria or Specific Requirement (including statutory, regulatory or other citation):
Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Good Shepherd ($1,000,000 award):
The agreement states, “The purpose of this Gregg County Medical Personnel Retention Agreement is to incentivize local medical personnel to continue working full-time with their current local medical service provider, and to provide continued excellent patient care to those suffering from COVID-19.” Individuals are considered qualified to receive a retention bonus under the agreement if they meet certain requirements, including, but not limited to the following:
• must have been employed on September 1, 2021
• must have remained employed full time from September 1, 2021 through November 30, 2021 (the Retention Period)
• must work a minimum of 72 hours each bi-weekly pay period
• must not have more than two unscheduled absences during the Retention Period
• must sign a commitment letter
Trinity Mother Frances ($2,000,000 award):
The agreement states, “The purpose of this Smith County Medical Personnel Retention Agreement is to incentivize local medical personnel to continue working full-time with their current local medical service provider, and to provide continued excellent patient care to those suffering from COVID-19.” Individuals are considered qualified to receive a retention bonus under the agreement if they meet certain requirements, including, but not limited to the following:
• must have been employed on September 30, 2021
• must remain employed full time from October 1, 2021 through November 30, 2021 (the Retention Period)
• must work a minimum of 72 hours each bi-weekly pay period
Santa Rosa ($500,000 award):
Per the agreement, the funds are to be used to provide continued medical services by retention and hiring of hospital medical staff to provide patient care.
Condition:
CHRISTUS did not have controls in place that operated effectively to ensure that employees receiving retention bonuses were eligible under the requirements of the agreements for Good Shepherd and Trinity Mother Frances, resulting in ineligible employees being charged to the grant.
Controls were not in place to ensure the expenditures reported by Santa Rosa were eligible under the agreement. Certain types of expenditures used in the calculation to support the award were not allowed under the agreement.
Cause:
Notarized certification was made by executives at Good Shepherd and Trinity Mother Frances indicating compliance with the terms and conditions of the agreements; however, the individuals that certified that the requirements were met had never read the agreements. For Santa Rosa, the preparer of the calculation did not adhere to the technical requirements of the agreement.
Effect or potential effect:
Lack of controls lead to noncompliance with the terms and conditions of the agreements and submission of ineligible expenses.
Questioned Costs:
Good Shepherd: $1,000,000, Trinity Mother Frances: $21,480, San Marcos: $139,759
Context:
CHRISTUS reported $3,500,000 of total expenses. The awards for Good Shepherd and Trinity Mother Frances totaled $3,000,000. We selected 34 disbursements totaling $61,680, noting that 29 disbursements totaling $52,280 did not meet the eligibility requirements of the grant agreements.
Good Shepherd observations:
• Although the award for Good Shepherd was $1,000,000, expenditures submitted to support the award totaled $1,379,900, of which $173,600 and $49,686 were incurred in August 2021 and December 2021, respectively, which were outside the period of performance.
• No commitment letters were signed by any employees.
• We could not determine if unscheduled absences exceeded 2 per employee as this information was not documented and retained.
Of the 34 selections, 11 selections were from Good Shepherd totaling $30,800. For these selections, we noted the following:
• Eight employees did not sign the commitment letters and did not work the required minimum 72 hours per bi-weekly pay period and thus were also not considered full time and thus were not eligible to participate in the program. Expenditures submitted for reimbursement for these employees totaled $24,000.
• Three employees adhered to all of the requirements except signing the required commitment letters. Total expenditures submitted for reimbursement for these three employees totaled $6,800.
Trinity Mother Frances observations:
Of the 34 selections, 23 selections were from Trinity Mother Frances totaling $30,880. For these selections, 5 employees were in compliance with all requirements and 18 were not in compliance as noted below:
• One employee did not work any shifts during the retention period and received bonus payments throughout the entire retention period. Expenditures submitted for reimbursement for this employee totaled $1,600.
• One employee was terminated during the retention period and the bonus payments were not eligible to submit under the program. Expenditures submitted for reimbursement for this employee totaled $1,600.
• Four employees did not work the required minimum 72 hours per bi-weekly pay period and thus were also not considered full time and thus were not eligible to participate in the program. Expenditures submitted for reimbursement for these employees totaled $3,600.
• Ten of the employees received a bonus that was not a retention-related bonus and thus did not qualify under the program. Expenditures submitted for these employees totaled $14,080.
• Two employees received a retention bonus whereby the amount submitted was in excess of the retention bonus paid. Excess expenditures submitted for these employees totaled $600.
Santa Rosa observations:
• The method used to support that expenditures were used to hire and retain hospital medical staff was based upon a rolling 12-month average of labor charges compared to the month of August 2021. The incremental expenses for August compared to the 12-month average were submitted for reimbursement under the program. Although the award was for $500,000, Santa Rosa submitted $624,274 of expenses to support the award.
• Contract labor was included in the calculation, which does not meet the requirements of hiring and retaining medical staff. Total incremental contract labor charged to the grant totaled $139,759.
• As part of the calculation, all staff at the hospital were used in the calculation to calculate incremental salaries versus just medical staff providing patient care. The costs associated with just the medical staff could not be determined. Total salary related amounts charged to the award for all hospital staff, including non-patient care staff, were $336,216.
Identification as a repeat finding, if applicable:
The finding is not a repeat finding.
Recommendation:
Gregg County and Smith County Awards:
Should the award continue in the future, CHRISTUS should implement controls and ensure only employees that meet the eligibility requirements are submitted for reimbursement and that the calculations used to support the expenditures submitted for reimbursement adhere to the terms of the award. CHRISTUS should review the employees that received retention bonuses as submitted and certified under the program and ensure the employees were eligible to receive payment. CHRISTUS should reperform the calculation submitted to support the reimbursement and ensure only items in accordance with the agreement are included. CHRISTUS should work with the awarding agencies on how to remediate the noncompliance.
City of San Marcos Award:
Should the award continue in the future, CHRISTUS should implement controls and ensure calculations used to support reimbursement meet the requirements of the award.
View of Responsible Officials:
CHRISTUS agrees with the finding and will develop internal controls to ensure compliance with federal expenditures.