A small Missouri hospital is now protesting charges by the state's auditor that it got $90 million worth of lab billings it shouldn't have.

Putnam County Memorial Hospital has just 15 acute-care inpatient beds, according to KBIA radio. It is in Unionville, population 1,800, just 150 miles from Kansas City.

The audit “uncovered a billing scheme, where the lab services company and its affiliates conduct lab work across the country, but Putnam County Memorial Hospital bills the insurance companies using the hospital account. In exchange, the hospital gets a cut of the insurance payouts,” Auditor Nicole Galloway’s office said in a statement.
“The hospital submits the bills for their services to the insurance companies, funneling millions of dollars through the hospital and reducing it to what is essentially a shell organization for labs across the country,” according to the auditor report.

Additionally, it continued, “the hospital foots the bill for the salaries of 33 employees from around the country who conduct this lab work. These 'employees' do not report to work at the hospital and most live out of state, some as far away as California, Georgia and Texas. The employees ship blood specimens to various labs for testing, while Putnam County Memorial Hospital submits the insurance claims for payment.”

The hospital “also paid out more than $10 million in lab management fees, with little explanation of the charges,” according to the document.

These findings were passed to the state attorney general.

“I can confirm our public corruption unit received the audit report and are reviewing it,” Loree Anne Paradise, deputy chief of staff to Missouri Attorney General Josh Hawley, revealed to The Kansas City Star.

The hospital’s board contracted with CEO David Byrns and Hospital Partners to manage Putnam, a move slammed by the audit.

“The board did not perform sufficient due diligence over the process of awarding management contracts,” adding that it also “did not provide sufficient oversight to be aware the CEO entered the hospital into a verbal agreement for a $500,000 loan.”

The audit also revealed that Byrns, who got his job at the hospital in September, was reimbursed $5,000 for such personal expenses as alcohol, cigarettes, car washes, golf outings and other questionable expenses.

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