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Hospital Lawyer Embezzlement Reveals Flaws in Health Care Cost Auditing

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Hospital Lawyer Embezzlement Reveals Flaws in Health Care Cost Auditing

On Thursday, June 3, Roosevelt Hairston, Jr, a former lawyer for the Children’s Hospital of Philadelphia, was arrested and charged for embezzling $1.7 million over the course of the 12 years he served as general counsel for the hospital.

The charges represent one of the most serious embezzlement schemes in Philadelphia in recent history.

However, they also reveal the failure of the hospital’s financial auditing system to identify and stop significant financial waste, or in this case – serious fraud.

Charges against Hairston include mail fraud, money laundering and even filing a fake tax return.

According to the U.S. Attorney’s office, Hairston created false companies, forged invoices, and even created fake email accounts in order to continue the scheme and cover his tracks. His fraud continued, completely unabated, for about 12 years before hospital auditors finally caught up with him.




Details Behind the Fraud

According to the federal statement, Hairston utilized his money laundering and embezzlement scheme by establishing himself in a “position of trust” within the hospital.

Hairston was so successful in his scheme, that he was able to use the stolen funds to make just over $10,000 in mortgage payments and to purchase a private yacht, as well as a list of other purchases.

The scary part of the situation is that Hariston also served on the board for a number of nonprofit organizations in the area, such as the Public Interest Law Center of Philadelphia, and ironically he also served on several regulatory boards. For example, he was appointed to the Philadelphia Workforce Investment Board by Mayor John Street.

Why Did It Take 12 Years?

Aside from the embarrassment caused by such a highly placed and well-trusted person embezzling so much from the Children’s Hospital, the situation really begs the question – were hospital financial auditors sleeping on the job?

Why did it take 12 years for investigators to identify and uncover the stolen funds? Is financial waste such a prevalent part of the hospital’s financial systems that it takes 12 years to identify $1.7 million dollars in erroneous charges?

Apparently, Hairston got away with the scam for so long, because he had identified the tremendous flaws in the system, discovered areas where vendors and suppliers could charge the hospital without any questions asked, and then used those vulnerable financial areas to siphon almost two million dollars from the hospital.

Today, June 3, the hospital issued a public statement in response to the charges filed against Hairston:

Children’s Hospital of Philadelphia (CHOP) has been made aware of the charges filed today by the United States Attorney’s Office against Roosevelt Hairston, Jr., a former Executive Vice President and General Counsel of the hospital.

On February 18, 2011, Mr. Hairston was removed from his position following an internal investigation that found evidence of financial irregularities on his part.  The matter was referred to the United States Attorney for the Eastern District of Pennsylvania and CHOP has cooperated fully in the federal investigation that culminated in the charges filed today.”

Steven Altschuler, CHOP’s CEO, also made a statement to assure the public that there is nothing to worry about regarding the hospital’s finances.

“Today’s action by the U.S. Attorney confirms what we suspected and reported earlier this year. We will continue to cooperate with the U.S. Attorney on this case and are continually reviewing our internal control structure to ensure the proper safeguarding of the institution’s assets.”

That is all well and good, however considering that the stolen money should have been spent on upgraded medical equipment, improvements to the hospital itself, and investments to improve medical care for patients – federal investigators should seriously consider taking a closer look at the hospital’s own billing practices to determine whether this extensive fraud is indicative of a deeper and more wide ranging fraud within the medical billing system at the hospital itself.

Very often, such long-running operations involve more than one person – it requires an accomplice within the organization or group responsible for auditing the financials. A valid auditing system would have identified this level of fraud much earlier.

Originally published on TopSecretWriters.com

  • Mountains2386

    maybe you should also look into the Directors on up,  if he could do it more than likely they are too. Disgraceful

  • Bcook

    This is outrageous, when employees are unable to even order everyday items like post-its, pens, and are given bad reviews to assure they have little or no raise to keep money in the hospitals pockets.  and now we know whose pockets they are going…how did this happen 

  • Bcook

    This is outrageous, when employees are unable to even order everyday items like post-its, pens, and are given bad reviews to assure they have little or no raise to keep money in the hospitals pockets.  and now we know whose pockets they are going…how did this happen 

  • Bcook

    This is outrageous, when employees are unable to even order everyday items like post-its, pens, and are given bad reviews to assure they have little or no raise to keep money in the hospitals pockets.  and now we know whose pockets they are going…how did this happen 

  • Bcook

    This is outrageous, when employees are unable to even order everyday items like post-its, pens, and are given bad reviews to assure they have little or no raise to keep money in the hospitals pockets.  and now we know whose pockets they are going…how did this happen 

  • Bcook

    This is outrageous, when employees are unable to even order everyday items like post-its, pens, and are given bad reviews to assure they have little or no raise to keep money in the hospitals pockets.  and now we know whose pockets they are going…how did this happen 

  • Anonymous

    Thanks for the suggestion…It is sad that there wasn’t sufficient oversight, so you may have a point.

  • Anonymous

    Thanks for your comment – I agree it is pretty distasteful considering the economy today and its impact on the regular hospital workers.

  • Lfish

    Hariston was sentenced on Thursday… yet there is no reports in the local news. Do you know his sentence? I live  near and go to CHOP… a lot of folks want to know that justice has been served before they start opening up thier wallets.

  • Interesting – taking a look at this. Thanks for alerting us.

“The thing about the truth is, not a lot of people can handle it.” -Conor McGregor

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