Samaritan Village Inc., a contractor of substance abuse treatment for the Office of Alcoholism and Substance Abuse Services (OASAS), was paid nearly $1 million in inappropriate and questionable expenses over a one-year period, according to an audit released today by State Comptroller Thomas P. DiNapoli. The questionable expenses included more than $400,000 given to clients to spend on day trips and transportation.
“Nearly $1 million in inappropriate and questionable costs were charged to taxpayers because the Office of Alcoholism and Substance Abuse Services didn’t effectively monitor this contractor’s expenses,” DiNapoli said. “OASAS needs to improve its oversight of how contractors are using public money so taxpayers aren’t getting the short end of the stick.”
Samaritan Village provides residential, outpatient and methadone treatment services in the New York City area. Under a five-year $73.3 million contract, OASAS reimburses Samaritan Village for the net costs it incurs to provide the services, up to the contract amount. If Samaritan receives any program-related, non-contract revenues from food stamps, client services and Medicaid for individuals served, it is required to reduce, or offset, expenses by those amounts.
For the audit period July 1, 2009 through June 30, 2010, Samaritan Village reported $11.3 million to be paid by OASAS.
DiNapoli’s auditors found Samaritan Village charged the state $973,881 for unallowable, inappropriate, questionable or undocumented expenses. Specifically, Samaritan Village:
- Gave 203 employees a $1,082.84 bonus check, totaling about $220,000. OASAS officials indicated that given the prevalence of substandard salaries in the substance abuse treatment field, the one-time performance awards to employees could serve both as a motivator for good performance and as a staff retention strategy. However, these bonuses were not based on individual merit, but given as a result of unspent budgeted funds. Another $34,140 in personal service expenses were inappropriately claimed for an executive retirement account.
- Gave $406,096 to clients to spend on day trips and transportation. Since most Samaritan Village clients already receive a personal needs allowance, the expenses may be duplicative and unnecessary.
- Charged $63,519 for legal services not related to the OASAS program, $57,000 for construction costs related to damage caused by one of Samaritan’s contractors, $55,000 for contractual services with no identifiable benefit, and $35,158 for unapproved high-end office equipment purchases.
- Reported $34,295 as a bad debt expense, which is not allowable.
Auditors also found other areas that needed improvements. For instance, auditors found that Samaritan is not ensuring the price it pays for services is reasonable. Samaritan Village claimed $337,458 for consultant services that were neither bid nor approved in advance by OASAS, as required by regulations.
DiNapoli’s auditors also found $316,842 in other-than-personal-services expenses that Samaritan Village charged to OASAS programs, but should have allocated among OASAS and other programs. A review of records for 50 administrative employees found that the salaries for 16 may not have been properly allocated among OASAS and non-OASAS programs. Some of these employees’ salaries were allocated only to OASAS programs when they should have been allocated to both OASAS and non-OASAS programs. Other employees worked only for OASAS programs, but were partially charged to non-OASAS programs.
As noted, Samaritan Village is required to report all program revenue from sources that would offset OASAS payments. However, auditors determined that OASAS does not verify reported revenue and, as a result, overpaid Samaritan Village $94,008.
DiNapoli recommended OASAS:
- Establish effective monitoring controls to ensure Samaritan Village’s reimbursement claims comply with program requirements and only include appropriate expenses;
- Immediately recover $661,793 as repayment for unreported revenues, inappropriate, unallowable and undocumented claims for personal service costs, and other non-personal service expenses, while examining the other costs identified by auditors;
- Determine the correct allocations for the personal service and non-personal service costs mentioned in this audit and recover funds, as appropriate;
- Determine if Samaritan’s collective use of multiple funding streams to pay for client incidentals is duplicative; and
- Ensure Samaritan pursues available Medicaid revenues for services provided to eligible clients and accurately offsets such revenues against program costs.
In response to DiNapoli’s audit, OASAS officials detailed several improvements made to their fiscal oversight efforts, including adopting a risk-based system to better target audit resources, as well as introducing more focused fiscal reviews by field office representatives. OASAS’s full response is included in the audit.
For a copy of the report visit: http://www.osc.state.ny.us/audits/allaudits/093014/11s38.pdf