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Clinic deemed illegal

Donation to splash pad might have been improper use of COVID funds

Staff writer

A downtown Hillsboro medical clinic operated by Herington Hospital is illegal, and a $100,000 donation from the hospital to a Hillsboro community splash pad may have improperly used COVID-19 funds.

Although Herington city commissioners held a special meeting Friday after they were made aware that opening the clinic was illegal, they are apparently not willing to hear any more about it from city residents at this time.

Herington resident Robert Danzman, who sent a letter to the city council Dec. 1 calling for an investigation, was on the agenda for Tuesday night’s meeting to talk more about it.

City manager Branden Dross notified him at 12:48 p.m. Tuesday that he had been removed from the agenda.

Dross told Danzman he could send his comments to the city clerk to be read during public forum, but that offer was nearly five hours after the 8 a.m. deadline to send written comments.

“He was trying to get on today but my city attorney mentioned we shouldn’t have any items on the hospital until we can regroup and get some legal information,” Dross said Tuesday.

Dross said he and city attorney Brad Jantz “need to get some facts that are in doubt.”

“We need to look at what’s best for the city, so we are not allowing any opinionated residents or community members about the hospital issue until myself and Brad can get some more legal questions answered and looked over,” he said.

The state attorney general’s office weighed in on opening the clinic at the request of state representative Don Hill.

That opinion, along with many issues relating to the financial operation of Herington Hospital, was discussed at Friday’s meeting.

“We conclude that, under the current statutory provision, the board cannot use its hospital moneys to fund a clinic located outside the territorial boundaries of the county where the existing hospital is located,” the attorney general’s opinion said.

Jantz admitted Monday that when Herington Hospital opened a clinic in Hillsboro, the action was illegal.

“I don’t think there’s anyone arguing that as it stands today those actions in putting the clinic in Hillsboro were outside the parameters of the law in Kansas,” Jantz said.

Jantz said Herington commissioners agreed that he and hospital lawyer Andy Ramirez would draft a charter ordinance to allow the Hillsboro clinic to operate.

Commissioners must approve and publish the ordinance. Then there’s a 60-day waiting period when citizens can draw up and circulate a protest petition, which could place the ordinance before voters.

Wichita lawyer Patrick Edwards, who represents a Herington pharmacy owner concerned with Herington Hospital’s leadership, sent an email to Jantz Monday. The email questioned whether a charter ordinance would be “an easy solution.”

“It was suggested by the hospital that this ordinance was an ‘easy fix’ to solve the issue of … operating outside of the city limits,” Edwards wrote.

Edwards sent Jantz a 2012 attorney general’s opinion and said that even if Herington commissioners enact such an ordinance, it would be “only the first step in a four-step process necessary.”

“I specifically read this opinion as also requiring a petition for an election to be filed in Hillsboro and a special election in Hillsboro,” Edwards wrote. “Even if the Herington city commission enacts the ordinance suggested by the Herington Hospital, the Herington Hospital cannot operate the Hillsboro Clinic if the local residents in Hillsboro ultimately vote against it.”

Danzman wants the hospital investigated.

“My goal is to get the commission to order the hospital board to investigate and get rid of the CEO and the CFO,” Danzman said.

Danzman raised concerns about both the clinic in Hillsboro and the hospital’s donation of $100,000 for the Hillsboro splash pad.

“Herington Community Hospital may have improperly used funds, money, from the federal government which was allocated as COVID-19 relief funds to finance the Hillsboro Health Care Clinic,” Danzman wrote. “The Herington Community Hospital administration may have also improperly used the said funds to make a well-publicized donation of $100,000 to the city of Hillsboro for the construction of a splash pad.

“Such financial transactions are most likely in violation of the rules regarding the use of CARES Act funding to hospitals. There is a published report that Herington Community Hospital CFO Bryan Coffey stated, ‘some of the money for these services is coming from COVID funds that have become available.’ ”

Danzman said federal law restricts how CARES Act funds can be spent, and said the city of Herington could be held liable for repayment by the federal government.

Marion County commissioner-elect David Mueller said Herington Hospital was on the verge of bankruptcy two years ago and lost $900,000 in 2019.

“They cannot use COVID funds for expansion or a splash pad,” Mueller said.

Herington Hospital CEO Isabel Schmedemann was formerly connected a hospital operated by EmpowerHMS, the company that owned HCH before it was put into receivership two years ago after not paying bills. Ultimately the hospital declared bankruptcy.

She was CEO of Fulton County Memorial Hospital in Fulton, Missouri. EmpowerHMS principals were investigated for insurance fraud and several were indicted on federal charges.

Herington Hospital CFO Bryan Coffey was CEO of Hamilton County Hospital at Syracuse before he was fired by the hospital’s board of directors in 2015 because of “financial irregularities.”

“In my mind this is a threat to health care in Marion County,” Mueller said.

Hillsboro mayor Lou Thurston said as long as Herington Hospital is operating in a legal manner, the city of Hillsboro has no problem with the clinic there.

“We are telling them that any kind of surgical procedures cannot be done in that location,” Thurston said. “The city of Hillsboro has a financial and emotional investment in our hospital, the Hillsboro Community Hospital. We are not looking to do anything detrimental to our hospital.”

Doing surgical procedures would violate city zoning codes.

“The city is not looking to hinder investment or competition as long as people are operating within the law and our building and zoning codes,” Thurston said.

Thurston also is concerned about the direction Herington Hospital might be taking, especially given the backgrounds of its CEO and CFO.

“I do have some concerns and I would attribute them to what we went through just a little over a year ago,” Thurston said.

Last modified Dec. 17, 2020

 

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