Taxpayers’ money spent in secret, UMC audit says

Marshall Allen and Tony Cook

Thursday, Nov. 22, 2007 | 6:54 a.m.

Then-University Medical Center CEO Lacy Thomas repeatedly failed to report pay raises, public works contracts and settlements with patients and employees during his three-year tenure, making it impossible for overseers to monitor finances as the public hospital hemorrhaged money, a county audit found.

The audit was performed after Clark County commissioners fired Thomas in January, citing poor performance. His dismissal came as police investigated contracts Thomas awarded to his Chicago friends - who allegedly left the hospital with little to show for the millions of dollars they were paid.

Metro Police detectives recommended in early September that District Attorney David Roger prosecute Thomas, but no charges have been filed.

County officials gave no indication that the audit results are related to the criminal case. But the audit shows Thomas had a chronic and willful inability to follow county rules.

"Even when the information was available and compiled for submission to the county manager, the CEO elected not to present the reports or comply with the resolutions," the audit said.

Thomas' attorney did not return a phone call for comment Wednesday.

Between Jan. 1, 2004, and Dec. 31, 2006, Thomas gave more than 200 unauthorized raises, mostly to managers, totaling an estimated $2.38 million, the audit said.

UMC's chief human resources officer said the pay increases were to retain staff and keep rates competitive, but the audit said they needed the county manager's approval.

Thomas also is accused in the audit of telling his chief human resources officer that monthly reports to the county manager related to vacant positions and employee transfers were not necessary. However, former County Manager Thom Reilly told auditors he did not give Thomas permission to discontinue the reports.

In the same period two public works contracts were awarded without a competitive process under the pretext that they were emergencies, but the audit found no evidence that the projects were urgent.

Hospital records show a $49,437.50 contract went to Paradise Plumbing in November 2004 and a $31,824 contract went to Big Town Mechanical a month later. The audit recommended that UMC follow the law that mandates soliciting quotes and reporting any public works project over $25,000.

The Paradise contract was approved by Thomas Hutchison, a facilities maintenance supervisor and later acting director of UMC's facilities maintenance section.

The Sun reported Wednesday that four UMC employees, including Hutchison, face theft charges. Hutchison, who resigned in April, and another former manager face additional charges related to accusations of stealing hospital supplies and enlisting hospital employees to work on their personal projects while on county time.

The audit also found that Thomas awarded $217,500 in settlements to six employees and one patient. County policy required that Thomas report those settlements, each less than $50,000, to the county chief financial officer. Auditors could not determine why Thomas did not comply with policy.

UMC lost $34 million in fiscal 2006 and $56 million in fiscal 2007. Thomas was fired in January on the day that the 2006 losses, much higher than the figure he had previously warned county officials to expect, were revealed.

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