Audit of Federal Funds Received by Rural Health Services, Inc., d/b/a Margaret J. Weston Medical Center, Clearwater, South Carolina

EXECUTIVE SUMMARY:

This final audit report discusses Federal grant funds awarded to Rural Health Services, Inc., d/b/a the Margaret J. Weston Medical Center, under Section 330 of the Public Health Service Act. Our audit was initiated following allegations from a former member of the Center's Board of Directors related to misappropriation and mismanagement of grant funds as well as fraudulent billings to the Medicare and Medicaid programs.

Our audit disclosed no misappropriation of Federal grant funds or fraudulent billings to the Medicare and Medicaid programs. However we found significant deficiencies in almost every aspect of the Center's fiscal and administrative operations during the period June 1, 1994 through May 31, 1998.

In response to the deteriorating conditions and the Center's apparent unwillingness to implement the necessary corrective actions, the Health Resources and Services Administration made continuation grant support to the Center conditional upon formation of a new Board of Directors. The new Board took office in May 1998 and employed a new Executive Director to manage Center operations in 1998. We are recommending that the Board of Directors and Executive Director continue their efforts to rebuild the Center's fiscal and administrative operations.