OIG: Organ Donor Network Inappropriately Used Funds

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.

The $65,912 of unallowable costs tallied by OIG included costs incurred for donations and gifts, the retirement party, entertainment, lobbying, and meals. Federal inspectors estimated that Medicare’s share of the unallowable costs related to kidney procurement was $33,431.

CTDN agreed with many of the OIG findings, but also defended some of the expenses as reasonably associated with fundraising, publicity, and raising public awareness, including events such as the Donor Family Gathering, which allows transplant recipients and their families to thank and share their stories with organ donors and their families.

"In order to participate in community events that provide a forum for community outreach and education CTDN is often asked to contribute to the cost of the event as funding for these types of activities is extremely limited," Siljeslrom wrote. "Volunteers are recruited as additional resources for the events. CTDN occasionally identifies a small way to thank those who volunteer to support this part of our mission. Hence the gifts to non employees."

CTND said it had documented the $99,188 identified by OIG as unsupported "and believes that all the costs are legitimate." However, CTND concurred that the documentation was inadequate.