Coming off the heels of several concerns regarding travel reimbursements by the former CEO and another employee at Regional Medical Center in Manchester, a special investigation by the State has resulted in the identification of $256,675 in improper disbursements and $28,004 of unsupported disbursement.
According to a newly released report from Rob Sand, Iowa’s state auditor, there were multiple financial improprieties submitted on behalf of both the former CEO Lon Butikofer and the former Fund System and Development Director Mike Briggs.
Sand reported Butikofer and Briggs were reimbursed for mileage and meal costs for trips which Butikofer himself “identified as improper or events which representatives of professional organizations reported did not occur on the dates claimed,” documents state.
“In addition, the Center’s credit card was used for travel costs associated with these events. Travel costs were also improperly paid by the Center for trips which were personal in nature and were not related to Center operations,” the report reads.
A copy of the report has been filed with the Iowa Division of Criminal Investigation, the Delaware County Attorney’s Office and the Attorney General Office, documents state.
The investigation focused on financial transactions which took place between Jan. 1, 2009 and March 15, 2017.
Documents state Butikofer was hired as an assistant administrator at RMC in 1986 and was promoted to CEO in 1993. Briggs was hired in March 2009 and was further promoted in October 2014.
In February 2017, RMC’s IT department flagged materials in emails that raised concern over certain behaviors. As a result of the flagged emails, the chief financial officer began reviewing travel reimbursements to Butikofer which were unusual in nature — including one instance where Butikofer listed a travel expense for a meeting he did not attend.
A subsequent meeting between the CFO and Butikofer resulted in Butikofer admitting there had been some abuse of his expense reimbursement requests.
The report states that as a part of Briggs’ role with the company, he often traveled with Butikofer as a delegate to different events, bringing him under suspicion.
Documents state Butikofer submitted his resignation in February 2017 and Brigg’s last day of employment was in February 2017 as well.
The investigation identified $192,144 of improper payroll costs for unrecorded paid leave used by Briggs and Butikofer, $52,525 of other improper reimbursements for Butikofer and $120 for Briggs, as well as $11,885 of questionable credit card charges.
Butikofer told investigators that some of his expenses were from trips that “were not required” or that he “maybe should not have submitted.” He said he felt the CFO would not have approved of some of his trips, so he “maybe tweaked the name of that meeting a little bit.”
But Butikofer told investigators he could not identify a trip that “did not benefit the hospital because of his relationships with people” and stated he also listed visits to patients who had been transferred to other medical facilities, adding he thought the CFO would view these trips as a personal and not professional expense.
Butikofer said that given his background as a nurse and his love of working with patients, he characterized his role as much more than just performing administrative functions.
“Because Dr. Butikofer described his duties as the Center’s CEO as including advocacy, case reviews, and visiting patients in other facilities, we asked Dr. Butikofer if other Center officials and Board members viewed the CEO’s responsibilities in the same way, or if they would view the non-administrative functions as a personal pursuit. In response, Dr. Butikofer stated very few executives worked the hours he did and he compared his typical daily hours to those of other Center management staff,” documents state. “Also in response to the question, he stated, ‘that was who I was, that was my place, that was my family, that was my life. I don’t know and I really don’t care what they think because at the time I was doing what was best for me in that role in helping people. Right or wrong.’ Dr. Butikofer also stated ‘Maybe I didn’t draw my line at times that I had done enough or had met the job enough. So I don’t know how to answer that.’”
But when questioning other members of RMC executive management and members of the Board, investigators learned these individuals were not aware that Butikofer was visiting former patients or providing advocacy services as part of his duties as CEO.
“They all clearly stated they did not believe the role of the CEO was to provide these types of services and if they were provided by Dr. Butikofer, the related costs would not be allowable for (reimbursement).”
Further, they said they believed the time Butikofer was spending visiting patients or performing advocacy work during regular office hours should have been recorded as paid leave.
Documents state Briggs submitted four improper reimbursement requests totaling $757, but investigators determined that Butikofer frequently paid Briggs’ travel costs with the Center’s credit card or his own personal funds and then received reimbursement for those costs back from the Center.
“As a result, Mr. Briggs did not submit many expense reimbursement requests for the times he accompanied Dr. Butikofer,” documents state.
While examining the credit card charges, investors flagged $101,297 for various travel related expenses.
The report states there were several internal control weaknesses identified, and because supporting documentation was not available for all transactions, it was not possible to determine if additional money was improperly distributed.