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NYS Comptroller Audit Raises Questions About Millions in Bonuses Paid Out by Westchester County Health Care Corporation

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NYS Comptroller Audit Raises Questions About Millions in Bonuses Paid Out by Westchester County Health Care Corporation

October 03, 2016 - 19:07

Michael D. Israel, President and Chief Executive Officer Westchester Medical Center

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ALBANY, NY — The Office of the State Comptroller of New York issued an audit of the Westchester County Health Care Corporation (“WCHCC”) which has raised questions about millions of dollars in bonuses paid out to senior executives with little or no indication that the bonuses had been earned.

The Westchester County Health Care Corporation is a State Public Authority. According to the audit, the primary mission of Westchester Medical Center is to serve as the regional healthcare referral center providing high-quality advanced health services to the residents of the Hudson Valley and the surrounding area.

The WCHCC is run by a 19-member Board of Directors with 15 voting directors and four non-voting representatives. Eight of the 15 voting directors are appointed by the Governor.

The audit covered the period January 1, 2012 to January 15, 2016.

The OSC audit found that from 2013 through 2015, WCHCC paid 18 executives almost $4.6 million in supplemental payments. The supplemental payments ranged from about $20,000 to almost $1.7 million per recipient for the three years ended December 31, 2014. This in addition to base salaries for the 18 executives totaling about $21.6 million.

The largest supplemental payments (totaling about $2.7 million) were made to the CEO and the Chief Financial Officer (CFO) and accounted for almost 59 percent of the total paid. The other payments (totaling about $1.9 million) were paid to members of “senior management,” which WCHCC  such as Senior Vice President and above.

Additional payments require the existence of an evaluation program with specific performance criteria set forth and disclosed prior to the performance of services, with a determination at the end of the period that the employee met the specified criteria and is eligible for the specified additional compensation. Both the CEO and the CFO had employment contracts with bonus clauses, including what they must do to earn the bonuses. Their performance is evaluated at the end of the year. However, the remaining executives did not have employment contracts with WCHCC, and thus, there were no specific criteria or benchmarks established upon which bonuses could be based.

WCHCC officials claimed that the supplemental payments to managements were not “bonuses” but instead consider them as “withholds,” or amounts withheld from base salary payments.

According to WCHCC officials, a “withhold” typically represents about 10 to 20 percent of a senior manager’s base pay that is paid in a lump sum amount in the following year. The OSC determined, however, that the lump sum payments of the amounts withheld actually ranged from 3 percent to 26 percent of employees’ base salaries.

A review of the payroll records for senior managers found no evidence of any amounts withheld for the reasons cited by WCHCC officials.

The OSC found millions in other payments that require further investigation.

Read the entire OSC report here.