Utah auditors checked out a health department after two employees were arrested. Here’s what they found.

(Steve Griffin | Tribune file photo)

State auditors identified several flawed practices within the Southwest Utah Public Health Department during a review conducted after a couple of former agency employees were charged with Medicaid fraud.

The health care workers, Todd Alan Stirling and Russell Amon Hinton, are accused of making 1,300 false claims to Medicaid, according to charging documents.

The audit determined the illicit activity was possible because of inadequate supervision by the health department’s director, a failure to follow policies and Hinton’s dual roles as human resources director and manager of the department’s accounts payable. The collusion between Hinton and Stirling, the former nursing director, also enabled them to divert the funds, according to the report.

In a prepared statement, a health department spokesman, David Heaton, said the department’s governing board has already voted to implement the audit recommendations.

“Many of the recommendations were carried out as soon as we were informed of specific concerns, and we are working to complete the rest as soon as possible,” the statement said. “The report also contains improvements the department has already made, along with explanations of how some of the issues occurred. We appreciate any opportunity to improve the department and the services we offer.”

In late 2015 and early 2016, a company called Feel Good Management LLC fraudulently took in more than $55,400 from the health department for purported follow-up calls to Medicaid patients, the auditors claimed. Both Stirling and Hinton helped operate the company, court records show.

The billed services were either noncompliant with Medicaid policy, never provided or not medically necessary, according to court documents.

The Office of the State Auditor report, released Thursday, stated that Hinton would prepare payments to his company and bring unsigned checks to the health department’s business manager. The business manager would ask about the payments to Feel Good Management and sign the checks after Hinton offered an explanation, according to the audit.

The health department's director was also supposed to authorize these payments, but the auditors found that the agency's procedure was to print his signature on the checks.

"[I]t appears the Director never reviewed any of the payments. The Director indicated he had not authorized expansion of the program under which the claims were submitted, and it is possible that the Director would have prevented the alleged fraud scheme had he reviewed any of the payments," the audit found.

The health department’s director, Dr. David Blodgett, and business manager, Jeff Shumway, haven’t changed since the alleged fraud took place, state auditors reported.

The health department is an interlocal organization serving Washington, Iron, Kane, Beaver and Garfield counties. A board of directors — which includes county commissioners and appointed members from each jurisdiction — governs the agency.

Among other things, the auditors determined:

  • the board did not provide adequate oversight;

  • the business manager didn’t make sure the agency followed purchasing guidelines; 

  • the agency was not fully compliant with quarterly financial reporting requirements; and

  • the agency let a former employee lease space for his private businesses, even when he failed to pay rent for more than two years.

Hinton and Stirling are scheduled for an August 2019 trial in 5th District Court on charges of carrying out a pattern of unlawful activity and a second-degree felony under the False Claims Act, according to the auditors' office.