Forensic audit coming soon on travel nurse company expenses flagged in critical report

Newfoundland and Labrador Health Services expects to soon have a comprehensive review done on payments made to a travel nursing agency cited in a recent bombshell report by the auditor general.

"That contract will be provided by the end of this week, with the expectation that the forensic audit will be completed by the end of September," NLHS CEO Pat Parfrey told a legislative committee hearing on Tuesday afternoon.

In a scathing report released earlier this summer, Auditor General Denise Hanrahan highlighted a series of payments made to one nursing company in particular, dubbed Agency A.

Hanrahan called for "an immediate comprehensive audit of all amounts paid to Agency A from April 2022 to present, to recover public funds paid in error." The province no longer has contracts with the company.

That company "was frequently reimbursed for non-reimbursable expenses," the AG's report noted. "In total, 61 per cent of the Agency A invoices for expense reimbursement that we examined included ineligible items."

The auditor general found "strong indications of potential billing fraud by Agency A for electric vehicle rentals."

According to the AG, the company submitted invoices and was paid for $546,657 worth of EV rentals; however 60 per cent of that amount went on rentals to nurses "who did not appear to have the vehicle, or where usage by a nurse could not be verified."

Senior NLHS officials appeared before the legislature's public accounts committee — which acts as a watchdog on government spending — for more than three hours of questioning on Tuesday.

NLHS vice-president of corporate services and chief financial officer Scott Bishop said the external audit will look into whether there was any fraudulent activity, and whether there is further dialogue to be had with Agency A about possible recoveries.

Progressive Conservative MHA Joedy Wall cited the auditor general's comments about potential billing fraud, and asked Parfrey whether there has been "any communication with sending this to law enforcement, with respect to an investigation, because of the AG's report."

Parfrey replied: "This is contingent on the report from the forensic audit. And depending on what that demonstrates, then we will make a decision about going forward with the law enforcement. If there's an indication of fraud, or potential fraud, we will do so."

The auditor general's report made 15 recommendations. NLHS says 12 of them have been fully implemented so far. The remaining three — including the pending audit — are in the works.

At Tuesday's hearing, top NLHS officials repeatedly sought to distance the current provincial health authority from the "legacy" regional agencies that preceded it.

"We are the solution for the problem created by the contracts, and not the cause of the problems with the contracts," Parfrey said.

He said agency contracts came into effect in 2022 as a consequence of what he called the "Great Resignation" of nurses.

"They were in a state of emergency because of hospital threats to be closed down, particularly Gander, Grand Falls and Stephenville," Parfrey told the committee.

But current officials described a "systemic failure" in those legacy organizations to be able to administer those contracts.

Officials stressed that checks and balances are now much stronger than they were in the past.

And Parfrey said spending on agency nurses is now trending downward.

"I think the agency nurses helped us survive, and now we're getting out of that situation and we're anticipating we'll be out of that situation soon," he said.