Fletcher Allen admits wrongdoing, pays $1 million fine

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(Host) The state’s largest hospital has agreed to pay a one million dollar penalty for misleading regulators over the cost of its expansion project. Fletcher Allen Health Care in Burlington has admitted criminal wrongdoing, but state and federal authorities have agreed not to pursue criminal and civil charges.

VPR’s Steve Zind reports:

(Zind) The settlement ends the threat of criminal prosecution of Fletcher Allen over the $362 million Renaissance Project. In the settlement announced Monday, Fletcher Allen acknowledged that its officials provided false information in an effort to hide from regulators the cost and scope of the project. But while the case against the hospital is over, authorities say the investigation continues into possible criminal conduct by former hospital executives.

The one million dollar penalty will be split between the state and federal government. Attorney General William Sorrell called the settlement fair and balanced. Sorrell says the hospital had cooperated fully with the investigation, waiving its attorney-client privilege and acknowledging that laws had been broken.

(Sorrell) “It’s because Fletcher Allen has taken its medicine, a tough medicine to swallow, that we have made the decision we have made. That is, not to criminally prosecute the institution for Fletcher Allen’s acknowledged violations of state and criminal laws; also not to file related civil claims.”

(Zind) Sorrell calls the fine significant. He says it sends a strong message to other health care providers that financial misconduct will not be tolerated. Authorities say they did not want to damage the institution with a higher penalty, and that ultimately taxpayers and health care consumers would pay for the fine. Acting U.S. Attorney David Kirby:

(Kirby) “We wanted to recognize that Fletcher Allen is an incredibly valuable resource to the community and too much of a penalty could really hurt its ability to deliver adequate health care.”

(Zind) Fletcher Allen board chairwoman Louise McCarren says the agreement will remove the threat of a criminal investigation and allow the hospital to borrow money:

(McCarren) “We plan to go to the bond market next year, in 2004, to raise capital. Not settling this would have been a major impediment in our access to the capital market.”

(Zind) The settlement does not include penalties which could be levied against Fletcher Allen by the Vermont Department of Banking, Insurance, Securities and Health Care Administration. Authorities say possible charges could be filed in the future against former employees of Fletcher Allen. A number of high ranking administrators resigned when the allegations were first made public.

Governor Jim Douglas indicated he will ask the Legislature to spend most of the state’s half of the million dollar payment on the Vermont State Hospital.

For Vermont Public Radio, I’m Steve Zind in Burlington.

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