VHA: Deciding a $130,000 question

Rindi White/ Frontiersman

Did coverage violate bylaws?

MAT-SU — Around 500 Valley Hospital Association members will turn in ballots over the next month to determine whether members of the association's operating board should be required to repay $130,000 in health-insurance claims they made over the past three years.

The issue stems from a 1997 decision made by the seven members of the VHA operating board, who decided to approve insurance coverage for themselves as a method of compensation for their time spent as volunteers responsible for the management of business and affairs of the hospital.

The decision, according to Valley Hospital's public relations director Elizabeth Ripley, was ratified by the larger association board, but was never ratified by the association members. Compensation is considered a violation of bylaws unless approved by the members.

VHA members will have an opportunity to vote on the matter when they gather for a special meeting at 7 p.m., Feb. 5, at Valley Hospital Medical Center's classroom B in Wasilla.

If the members deny the retroactive coverage, operating board members will be forced to repay the hospital for their insurance claims. The amounts, in some cases, may total tens of thousands of dollars.

The hospital's operating board is made up of six members elected by the 15-member association board and one doctor who serves as the chief of medical staff. Since the doctor already has insurance coverage in conjunction with hospital employment, six board members were eligible for coverage.

At the time, the board was made up of Allen Kingman, Edna DeVries, John Davies, Kathleen Kelly, Bob Byron and Kristan Cole. Kingman and DeVries are no longer on the board, but would have to repay the hospital for their insurance claims if the association so decides.

Patsy Crofford, the hospital's employee development and resource director, on Wednesday said $129,198.09 was the total thus far of the insurance claims made by the six members between the time the coverage started — Feb. 1, 1997 — and the time it was discontinued — Dec. 31, 2000. There are some outstanding claims which have not yet been processed, Crofford said, but she was unable to estimate what the total of those claims would be.

Crofford explained the hospital changed insurance providers and the board's coverage would not have been possible under the new provider.

John Davies, a five-year member of the operating board, said the new provider will end up saving the hospital around $50,000 per month.

A letter informing VHA members states the hospital's records do not reflect approval by the general membership of the board's insurance coverage and hospital staff say it was an oversight.

But Davies had a different interpretation of the matter.

Davies said he was on the board in 1997 when the previous Valley Hospital CEO, Cliff Orme, presented the idea of insurance coverage to the board members. Since the hospital was self-insured, according to the hospital legal counsel's opinion in 1997, the coverage would not be considered compensation and, therefore, offering such coverage to VHA operating board members would not be considered a violation of hospital bylaws.

"Because it was not compensation, the members did not have to vote," Davies said. "Because we were self-insured, it seemed like a good thing to do."

At the time, Davies said there were two reasons for compensating the board. First, he said, the compensation would encourage board members to continue service to the hospital. Second, the coverage would ensure the operating board had a chance to experience the hospital staff and services firsthand.

"The bottom line is, the operating board and the association board, in my opinion, made a good decision to provide insurance," Davies said. "Our motives were in the hospital's best interest." The board, he said, was told the insurance coverage was an all-or-nothing deal.

"The really disappointing part of that is that we were told in order for the directors to participate in the program, we all had to join or no one could," he said.

Davies said he gave up his less-comprehensive insurance for the hospital's. During the time he was insured through the hospital, he underwent two surgeries and his son, who had a skiing accident and broke his jaw, also had extensive treatment. Davies estimated his family racked up nearly $30,000 in insurance claims during the three years he was covered,.

If the members decide not to ratify the coverage, Davies and other board members will be forced to pay that money back to the hospital — if they OK the coverage, the members will still be responsible for paying back taxes owed due to the decision that the benefits should be considered compensation.

Ripley said it's unfortunate the board must feel the decision's effect. "As you can see, we've put membership in an awkward position . . . and board members as well . . . there is a financial aspect," she said. "We're trying to rectify the situation as quickly as we can."