Finding Text
Criteria: (45 CFR section 75.302) Activities Allowed or Unallowed and Allowable Costs/Cost Principles,
Eligibility, and Special Tests and Provisions.
Condition: The District received COVID-19 HRSA funds from the U.S.
Department of Health and Human Services but the District cannot meet the
compliance requirements for this program as they transferred the operations of
the hospital to Lion Star Nacogdoches Hospital, LLC (Lion Star).
Questioned costs: Unknown
Context: On July 14, 2021, the District transferred hospital operations to Lion
Star. After the transfer of operations and throughout the fiscal year, the District
received COVID-19 funds under this program. During the fiscal year, the District
transferred the entirety of these funds received to Lion Star.
Effect: The District does not have support of the patients in this program since
the hospital operations were transferred to Lion Star and should have returned the
funds to the U.S. Department of Health and Human Services.
Cause: During the fiscal year, the District transferred the operations of the
hospital to Lion Star but the District received COVID-19 funding under the
incorrect employer identification number.
Identification as a repeat finding: Not a repeat finding.
Recommendation: The District should ensure they only request
reimbursement for federal grants for programs with the correct employer
identification number.
Views of responsible officials and planned corrective actions: Management
agrees with the findings and recommendations.