Zero tolerance for hospital fraud

The Otago District Health Board will be asked to approve a new and more comprehensive fraud policy when it meets today.

The policy, which is proposed for both the Otago and Southland boards, states the boards will have zero tolerance to fraud. Following internal investigation, matters of suspected fraud will be referred to the police.

Where matters of fraud or serious wrongdoing are suspected and where no criminal prosecution is likely or delayed, the board may exercise its rights of civil or contractual litigation. In its fraud definition, the policy includes more specific examples than in the existing Otago policy.

Among them is granting a contract, or engineering the granting of a contract to a particular third party with a view to direct or indirect personal gain, and knowingly approving for payment of false or deliberately misleading invoices or purchase orders.

Staff responsibility for reporting suspected fraud or breakdowns in the internal control system is also spelled out in the proposed policy.

A notification system sets out to whom staff should report suspected fraud and who would investigate. This covers suspected fraud by fellow employees, line managers, the regional chief financial officer, the chief executive, contractors and board and committee members.

Although the proposed policy also applies to board members, volunteers and contractors, the notification system does not specify who they should report to and who would investigate should they suspect anyone of fraud.

A fraud hot line (0800 377-277) has been set up with the audit and compliance section of the Ministry of Health to provide an independent reporting mechanism if required.

The proposed policy states that the board will make its best endeavours not to disclose identifying information of informants, but confidentiality may not be able to be maintained where disclosure is in the public interest or essential in terms of natural justice, the effective investigation of an allegation, legal proceedings or criminal complaint.

The boards' fraud control framework covers human resource policies and processes, internal and external audit requirements, who has authority for expenditure, and contract practices.

The Otago board's audit, finance and risk management committee will monitor compliance with the policy.

Dunedin businessman Michael Swann (46) and Queenstown surveyor Kerry Harford (47) are due to appear in the High Court on November 17 for trial on three charges alleging frauds totalling $16.9 million against the Otago District Health Board.

Swann was the board's information officer before being sacked in October 2006.

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