The state health agency has taken steps to limit employees dealing with checks it receives in the wake of one of the agency’s former fiscal chiefs being arrested in the theft of more than $1 million.
State Department of Health and Hospitals Undersecretary Jerry Phillips on Thursday told the Legislative Audit Advisory Committee of the changes as well as state legal efforts to recoup the funds.
The panel reviewed an investigation by the auditor’s office into Deborah Loper’s alleged conversion of 167 checks payable to DHH to personal use over a period of years. Arrested in June, Loper, of Baton Rouge, is accused of funneling the funds into a special account at Capital One that she then tapped.
Phillips said the state has sued both Loper and Capital One in efforts to recover losses.
The auditor said the theft occurred because of a lack of DHH controls, including employees not knowing what to do with checks; Loper’s knowledge of how funds were handled; and Capital One allowing checks to be deposited into a bank account not affiliated with DHH or the state treasurer.
The account was set up in 2006 on behalf of the National Association of State Human Services Financial Officers when the state hosted the group’s national meeting. Loper was responsible for managing the account.
Checks Loper deposited ranged from $30,000 to as little as $100. Some checks from hospitals and other health care entities return overpayments.
State Sen. Ed Murray, D-New Orleans, suggested that DHH file a complaint with state and federal banking regulators. “I don’t understand how a bank could accept a check like that,” Murray said.
State Rep. Hunter Greene, R-Baton Rouge, said he doesn’t understand “why Capital One did not catch it earlier.”
State Sen. Ben Nevers, D-Bogalusa, suggested that lack of DHH internal auditors during part of the time also contributed to the theft not being noticed earlier. The legislative auditor had noted the omission in prior DHH audits.
“If you have that much money coming into DHH, we should have had more than one person to turn these checks over to,” said state Rep. Clay Schexnayder, R-Sorrento.
“Ms. Loper was head of the fiscal division,” Phillips said, and a natural person for employees to turn to when they did not know what to do with checks.
Phillips said the whole incident caused DHH to look into how the agency could reduce employees having anything to do with checks.
In some areas, the system has been changed so “a DHH employee at any level cannot touch those checks,” Phillips said. “We do not take checks from some entities any more.”
Some checks automatically go into bank “lock boxes,” he said.
The agency has also implemented a chain of custody for checks that was not present in the past that includes logging checks in with different people depositing and verifying the deposit, he said.
DHH first became aware of the situation when a lawyer for Loper contacted the agency, Phillips said. The contact came in February after Loper inadvertently deposited a DHH check of more than $40,000 into her personal account, triggering bank questions.