Hudson River HealthCare, Inc., Claimed Unallowable Federal Grant Expenditures

Under the American Recovery and Reinvestment Act of 2009 (Recovery Act), the Health Resources and Services Administration (HRSA) awarded Hudson River HealthCare, Inc. (Hudson River) approximately $2.9 million in Recovery Act funds, of which Hudson River expended approximately $2.7 million. Approximately $2 million of this amount was awarded under a Capital Improvement Program (CIP) grant to renovate its existing health centers and enhance its information technology and electronic health records infrastructure. Approximately $900,000 was awarded under an Increased Demand for Services (IDS) grant to sustain its current workforce and hire additional staff.

We found that Hudson River, operating throughout southeastern New York State, claimed Recovery Act grant expenditures totaling $281,000 that were unallowable. Specifically, Hudson River claimed unallowable CIP expenditures totaling $261,000 and unallowable IDS expenditures totaling $20,000. The unallowable claims occurred because Hudson River did not properly comply with its policies and procedures for determining the allowability of costs claimed to Federal grants.

We recommended that HRSA (1) require Hudson River to refund the $281,000 to the Federal Government and (2) ensure that Hudson River follows its policies and procedures for determining the allowability of costs claimed to Federal grants.