Health wrangle stuck in the waiting room

Former Southern District Health Board chief executive Brian Rousseau.
Former Southern District Health Board chief executive Brian Rousseau.
Kevin Hague
Kevin Hague
South Link Health executive director Prof Murray Tilyard.
South Link Health executive director Prof Murray Tilyard.
Tony Ryall
Tony Ryall

Three and-a-half years after the Southern District Health Board called on the Ministry of Health to investigate its still unresolved multimillion-dollar dispute with South Link Health, trying to extract official information on it is more farce than fact-finding, Elspeth McLean opines.

If disputes about health funding were sexy, the story of the mystery files in the earthquake-ravaged building might be a subject for a mockumentary about bureaucracy.

We are told there were files relating to the Southern District Health Board and South Link Health dispute in a Christchurch building and they were eventually rescued, but now nobody at the Ministry of Health seems to be sure what those files actually are.

While the ministry believes there may have been ''two file boxes of source documents'' provided by the DHB, the DHB says the documents referred to were not sent to the ministry ''at any stage''.

And the group in charge of the mystery files was the National Health Board's audit and compliance unit, a fraud watchdog with the job of ensuring billions of public health spending is above board.

It took the intervention of the Ombudsman's office before the ministry responded to repeated questions about what the files were.

The ministry has not yet responded to a request for its view on the theory there were no boxes of documents and that the question of access to records was used to cover up the ministry/National Health Board failure to investigate this dispute, as sought by the DHB , in a prompt manner, or at all.

Another question not yet answered is, if nobody at the ministry knows what the documents were and where they are now, is this the level of care the public might expect the ministry to take of documents supplied to an audit and compliance unit?

The mystery files supposedly related to the multimillion-dollar dispute between the Southern District Health Board and South Link Health, which was referred to the audit and compliance unit by the DHB in December 2010.

In his report to the newly-elected board that month, the then chief executive Brian Rousseau said he had ''a number of serious concerns'' regarding the dispute.

These included the ''lack of approval and nature and timing of the expenditure'' by South Link Health.

At the time Mr Rousseau made his recommendation the dispute be referred for further investigation and recommendations as to how the board should proceed, the DHB considered it had exhausted attempts to reach a negotiated settlement in the dispute, which dates back to the 1990s.

Stoush over millions

The stoush is over about $5.3million (now believed to be about $15million once interest is added) savings achieved by independent practitioners association South Link Health on service contracts. South Link Health says it spent the money on approved programmes and has no case to answer commercially or criminally.

The Southern District Health Board has also been reluctant to release official information on the dispute. Its behaviour has raised questions about the thoroughness of its search for documents and its ability to interpret the word ''report''.

Asked more than a year ago, under the Official Information Act, for reports received or written by the board about the dispute, it initially refused any information.

Following the intervention of the Office of the Ombudsman, some documents were released recently. But several documents were not included or referred to in that list, including two reports from former board planning and funding manager Chris Fraser.

The board said one of the reports had been overlooked and it apologised for that, but said the other had not been included as it was not regarded as a report.

According to the board, that ''non-report'' was a 2009 document entitled ''Statement of Claim'' and set out the DHB's understanding of the background to the dispute, the outstanding issues that required agreement and the board position on these issues.

After acknowledging the Fraser documents' existence, the board refused to release them, but ''in the spirit of openness and good faith'' said it would offer them to the Ombudsman's office for its consideration.

A complaint about the approach taken to gathering information for this OIA request has been lodged with the DHB.

The documents released show at the time Mr Rousseau made his recommendation, the board was not happy with the amount of detail on the spending provided by South Link Health. Before going to the board, Mr Rousseau had sought legal advice, along with analysis of the SLH information by Mr Fraser.

Neither of these documents has been released but it is understood the legal advice raised the possibility of fraud. It was not the first time fraud had been mentioned.

Reference to the possibility of fraud was made in a letter from SLH lawyers to the DHB in April 2010, which asked the DHB to retract suggestions SLH's actions had been fraudulent or a breach of fiduciary duty.

That letter was released in March this year by Mr Rousseau, who left the board in September 2011 and lives in Australia. He said no retraction was made. At the December 2010 meeting, the board also considered a 12-page report from South Link Health executive director Prof Murray Tilyard outlining 22 areas where the savings had been spent.

The report said the total amount of savings paid to SLH from the budget holding was $6,195,898 received over the six years to 2003, although the amounts received yearly listed at the beginning of the report totalled $10,000 less than this.

Prof Tilyard said SLH's total expenditure on the 22 areas mentioned was $9,700,000. For four of the areas he outlined, no specific amount spent was included. Of those items where amounts were given, the two highest figures were for administration ($2,278,945) and levies for the Independent Practitioners Association Council ($1,388,485).

Next highest was $880,324 spent on education to reduce disparities in pharmaceutical and laboratory spending. (The timing of this spending was not spelled out.) That investment in education had returned a saving of more than $12million.

He emphasised SLH's status as a charitable body whose members were committed to improving healthcare and outcomes for patients.

The dispute over the savings had ''hovered over the head'' of the organisation for a long time and it would like to see it resolved as soon as possible, he wrote.

A day before the December 16 board meeting, Mr Rousseau wrote to Prof Tilyard stating the board position remained that only $923,825 had been spent by South Link Health with the approval of the funder. ''The balance of the savings must therefore remain unspent, or have been spent without approval.''

Hard to get direct answer

The ministry has been reluctant to give a direct answer to the question of whether it actually carried out an investigation (as sought by the board), as distinct from proceeding straight to without prejudice or settlement discussions.

Deputy director general of health (corporate services) Barbara Phillips said no mention of fraud was made or suggested to the Ministry of Health at the time the DHB referred the matter. It only became aware of the fraud allegations in November last year. (She made no reference to the fact the suggestion of fraud featured in the SLH lawyer's letter forwarded to the ministry in June 2010).

The matter was dealt with by the ministry, along with the DHB, as a commercial dispute and the ministry's input was to support negotiations between the parties, she said. Green Party health spokesman Kevin Hague, a former West Coast DHB chief executive, said the ministry's initial response once the dispute was referred to it was relevant to the issue of public accountability.

''Did the ministry actually investigate, or was it motivated by a need to conceal that both civil and criminal remedies had not been pursued as a result of inappropriate ministerial intervention?''The public was being asked to trust that the Minister of Health and Ministry of Health had behaved appropriately with ''no way of confirming this'', Mr Hague said.

''It certainly strains credulity that after so many years of complete failure to make any progress at all on the dispute through negotiation and mediation, that the DHB and the ministry would conclude after proper investigation that more of the same was the only course of action to be pursued,'' he said.

Health Minister Tony Ryall said he was made aware of any allegation of fraud only at the end of last year, when the issue was mentioned in an Audit New Zealand report.

Before that time, he told the Otago Daily Times, the ministry and his office had not received any correspondence ''that constituted an allegation of fraud''.

To Parliamentary questions about whether he advised the DHB not to take the matter to court, he said it was a perfectly responsible position for a minister to say, in the case of a contractual or civil dispute which did not involve fraud, that one taxpayer-funded organisation should not take another to court if there were options for mediation and arbitration.

He did not respond to ODT questions about whether he was made aware in June 2010 of the April letter referring to the suggestion of fraud or breach of fiduciary duty. Under the ''no surprises'' policy, it would be expected Mr Ryall would have been informed of this by his senior officials.

The letter was among correspondence forwarded by Brian Rousseau to the then director general of health Stephen McKernan and copied to National Health Board chairman Chai Chuah, Otago DHB chairman Errol Millar and Southern's crown monitor Stuart McLauchlan.

In the body of the email, Mr Rousseau explained the board had reached an impasse and sought advice on what to do next. Doing nothing was not an option, but ''litigation with a 'key health partner' is also not an action that is to be taken lightly!'' Mr Rousseau wrote.

Mr Ryall also did not answer an ODT question about whether an apparent reluctance by senior public servants to discuss the issue with him was because he had already advised them he wanted a hands-off approach to the dispute.

This question to the minister was sparked by an email from ministry's chief legal adviser, Phil Knipe, to Brian Rousseau in July 2010, apparently following up the DHB's earlier request for advice.

In the email, Mr Knipe said he and Mr McKernan had discussed the possibility of Mr McKernan raising the matter with the minister but ''were of the view that this was unlikely to be a matter where we would get much traction''.

He went on to say Errol Millar, ''if anyone'', would be the person best placed to raise the issue.

In response to questions, Mr Knipe said at the time Mr McKernan was in the process of finishing his term so it was appropriate Mr Millar discuss the matter with the minister directly.

The ministry had no indication that the minister was unwilling to discuss the matter, he said.

Pressed to explain why the term ''if anyone'' was used, the ministry said it was just a point of emphasis that the best person to raise the matter with the minister was considered to be Mr Millar. (Later that year, Mr Millar was not reappointed to the chairmanship of the DHB, replaced by Timaru accountant Joe Butterfield.)

Times and details of any communications between the National Health Board and Mr Ryall on the matter following the DHB referral of the dispute for investigation have been withheld. Asked if the communications indicate if Mr Ryall was happy with progress on the matter, the ministry said the minister was satisfied it was an ongoing matter involving a complex commercial dispute.

The Ombudsman's investigation into the complaints about both the ministry and the DHB is not yet complete.

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