New River CEO addresses allegations

A rose by any other name would smell as sweet, but for New River Behavioral Health Care CEO Pam Andrews, fraud by another name would be more accurate and sting substantially less.

In a statement dated Wednesday outlining the chronology of events that led to the agency’s closing, Andrews takes exception to the use of the word “fraud” by the Division of Medical Assistance to describe New River’s difficulties.

“Fraud is an alarming word on its own and is compounded when it is accompanied by financial concerns. An accusation of fraud can result from something as simple as a document that hasn’t yet been uploaded to a patient’s file or from much more complex and even illegal actions. New River has done nothing illegal.”

I suspect the DMA letter informing New River of the suspension of Medicaid services uses the word out of necessity for legal and technical reasons, but as Andrews points out, it’s a word heavily imbued with negative connotations. At its simplest, fraud is a false representation of a matter of fact intended to deceive. It doesn’t have to necessarily be for gain, although it almost always is. It’s a powerful word that brands an individual or entity as profiteers, swindlers and cheats. Obviously, the jury is still out on whether there was any fraud at New River.

Whether there’s any particular significance or not, an interesting side note to New River’s demise is that payments were suspended pursuant to the provisions of , “An Act Relating To Requirements Of Medicaid And Health Choice Providers,” which just became law July 25 after Governor Perdue’s veto of it was overridden.

In her letter, Andrews says that on August 25 while closing out the financial year, New River’s CFO found a shortfall of approximately $1 million, less than two weeks after the same CFO had estimated a shortfall of just $200,000. The agency’s Executive Management Team then requested a leading CPA to assist in a review of accounts and after a cursory review, the shortfall had grown to an estimated $3 million. Based on that preliminary loss estimate, New River was prepared to implement a new business plan, Andrews says, but by then other factors were at play that prevented it.

The letter outlines steps New River has taken over the past several years in working with the external audit firm of Lowdermilk, Church and Co, in achieving accurate financial results. A critical part of that, Andrews says, was forensic accounting and a review of every number for possible malfeasance or misappropriation of funds. To date, she says, none have been found.

But, as Andrews points out herself, there remains questions on how the present circumstances could have occurred, given the internal oversight and regular financial audits.<

“It is both painful and frustrating that we now face an en to our organization … . The disappointment is compounded by the suspicions and confusion raised by allegations of fraud. The staff of New River knows that this is not an accurate reflection of our organization or its values.

David Cornwell
Executive Director
North Carolina Mental Hope

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