Internal report blames regulators in FAHC debacle

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Regulators should have responded sooner to allegations that Vermont’s largest hospital misrepresented the true cost of a major expansion project. That’s one of the key conclusions in an internal report prepared for Governor Jim Douglas.

In the report, Banking and Insurance Commissioner John Crowley provides details of the financial scandal at Fletcher Allen Health Care in Burlington. The cost of the hospital’s project more than doubled because of expenses that were not approved by the state. The final cost is expected to be more than $356 million. The hospital had permission to spend $173 million.

Crowley says regulators took appropriate action last year as soon as they realized that Fletcher Allen executives had misled them. But he says that the state could have acted faster, if officials had followed up on questions raised by Fletcher Allen’s critics. Crowley says legislation is needed to strengthen criminal sanctions for hospitals that violate the law. And he says testimony submitted to his department should be made under oath.

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