OIG: Organ Donor Network Inappropriately Used Funds

John Commins, October 13, 2010

This story was updated on October 13.

Federal inspectors identified $167,064 in "unallowable and unsupported costs" at the California Transplant Donor Network, including nearly $100,000 that was not adequate documented, and $19,000 that was spent on a CEO's retirement party.

The audit of 2007, released this month by the Department of Health & Human Services' Office of Inspector General, determined that at the June 2007 retirement party for long-serving CEO Phyllis Weber "CTDN catered for 300 guests, including CTDN’s employees and their spouses, the board of directors, the audit and finance committee, and transplant center officials. The estimated Medicare share of the unallowable costs related to kidney procurement was $9,620."

In addition, "CTDN reported $6,019 of overhead costs and administrative and general costs related to entertainment and alcohol, including $2,619 for transportation and lodging for dancers for a donor family gathering; $2,337 for alcoholic beverages purchased by CTDN personnel; $577 for a party held for individuals who were not CTDN employees; and $486 for ushers’ services at the donor family gathering. The estimated Medicare share of the unallowable costs related to kidney procurement was $3,053," OIG reported.

In a three-page response to OIG's audit, CTDN CEO Cindy Siljeslrom defended the $18,967 spent on the retirement party for Weber. "Based on the length of service and the role this executive played in founding this organization, CTDN believes the costs to be reasonable," Siljeslrom wrote. "However, given the unusual circumstances around the event, CTDN does not plan to sponsor such an event in the future."

OIG sorted the total $167,064 in misspent funds in 2007 into $65,912 of unallowable costs, and $101,152 unallowable costs.

CTDN was unable to provide adequate documentation for $99,168 of the reported $101,152 in unsupported costs, and OIS determined that no documentation existed to account for $1,984 of costs. OIG estimated that Medicare's share of the unsupported costs related to kidney procurement was $51,304.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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