Whistleblower Alleges Waste, Mismanagement, Misuse of Funds at JFL

The former senior vice president of finance at Gov. Juan F. Luis Hospital on St. Croix has filed a whistleblower suit alleging millions of dollars in lost Medicaid funding and the illegal and unethical use of federal funds to cover payroll and other shortfalls, among other claims.

The lawsuit, filed by Christopher Lewis on Monday in V.I. Superior Court, names Juan F. Luis Hospital and Medical Center and the V.I. Government Hospital and Health Facilities Corporation, which oversees the territory’s health facilities, as defendants.

Lewis’s 23-page suit details his increasing alarm at the hospital’s financial straits amid its transition to JFL North, the $130 million temporary facility that was built to serve patients while JFL rebuilds after it was severely damaged in the 2017 hurricanes.

Among his frustrations were trying to convince hospital and board officials that they needed to change course to recoup more Medicaid funding, and to not use Federal Emergency Management Agency and American Rescue Plan Act funds for items outside of their intended scope, according to the suit.

For example, when the COVID-19 pandemic officially ended in April 2023, so did a stay that had prevented patients from being removed from Medicaid rosters during the health emergency, according to the suit. Despite this, the hospital’s human services department “failed to do the massive removal of non-qualified Medicaid persons,” it says.

As a result, in April 2024 the hospital began to receive electronic statements, called 835’s, explaining the refunds it had submitted starting in October 2023 were not paid by Medicaid because 17,000 individuals were not eligible, the suit states. The delay in the process resulted in an approximately $3 million loss to the hospital, Lewis claims.

The same month, JFL received an $8 million “loan” from a commercial lender called VFI, with $6 million slated for operating costs and $2 million for capital improvements to increase revenues and make up for the shortfall caused by the Medicaid disenrollment, according to the suit.

Lewis also advised that the hospital should be reporting to Medicaid through the “charity care” division rather than through a claim of “bad debt,” which would double its refund amount from 8 percent to 17 percent. That was the proper division in any case, “as there was no actual anticipation that there would be payment, which is known as presumptive charity care,” the suit states.

Moreover, Lewis advocated that JFL change its billing system to better align with Medicare “to allow the hospital to capture additional reimbursements.” After a competitive bidding process, JFL subsequently selected consulting firm M1 to audit its Medicaid billings and determine how to obtain higher refunds, but the contract never went forward, the suit states.

Meantime, the V.I. Government Hospital and Health Facilities Corporation had created the Temporary Hospital Redevelopment Team, or THRT, to oversee the rebuilding of the territory’s hospitals and attendant temporary structures after the 2017 hurricanes.

Mismanagement by that entity led to another snafu, according to the suit, when the team failed to properly document procurements to obtain FEMA payments to open JFL North, and JFL Hospital was stuck with a $1.2 million bill that was not reimbursed.

According to the suit, in spring 2023, Gov. Albert Bryan Jr. ordered then-hospital CEO Doug Koch to pay vendors to prevent any further delays in the opening of JFL North, which was behind schedule, though “the hospital’s operating funds did not have any reserves for such a substantial payment.”

Instead, JFL paid the vendors using funds from its ARPA account, even though that money was only allowed to be expended for nurse retention or to update hospital software, the suit states. Koch assured him the funds would be refunded in two to three months, Lewis claims, but ultimately, only $700,000 was restored — after he threatened in April 2024 to resign and expose the wrongdoing — with $500,000 still outstanding.

Lewis also threatened to quit that month because JFL “was financially not able to make the next payroll, there was no accountability for financial mistakes, failure to properly document procurements, and no progress had been made in solving the hospital’s dire financial condition.”

He urged the territorial hospital board to assign Zamora Belardo — a person “very knowledgeable and experienced in project management and property documentation to obtain FEMA reimbursements and payments” — to the THRT. However, beyond being notified of one meeting, her efforts to access the necessary paperwork and filings were rebuffed by Darryl Smalls, the team’s director, the suit claims.

Lewis complained to Koch, who said he would speak to Smalls, but instead, he resigned as CEO one month later without resolving the issue, according to the suit.

At the same time, Lewis was trying to convince the hospital to switch its Medicaid billing to be under the Tax Equity Federal Regulation Act, or TEFRA, instead of the Inpatient Prospective Payment, or IPPS system, which “would result in JFL Hospital getting millions more from Medicaid,” the suit states. “A similar problem had occurred in Guam, and when they corrected it, they received a multimillion-dollar settlement,” it says.

He also wrote an email to certain members of the territorial and JFL hospital boards, notifying them “that it was imperative that the issues in his email be addressed promptly as JFL Hospital faced potential threats to its FEMA funding and unresolved contractual issues,” the suit states.

“He notified them that they needed to address the inefficiencies plaguing certain departments at JFL Hospital, that were hindering the ability to manage escalating costs, amidst the complexities surrounding the JFL Hospital Government reimbursement situation,” it states.

The issues included an outstanding reimbursement to the ARPA fund of $210,582, outstanding reimbursements from FEMA dating earlier than 2022, and requests for proposals for the transfer of patients to the new JFL North that were never sent out to bid, according to the suit. “As a result, JFL Hospital had to use its own staff, which increased payroll expenditures and delayed patient care services and revenue.”

Meanwhile, the hospital was under threat that its coding and billing companies would withdraw their services over outstanding payments, the suit claims.

Lewis says he continued to urgently warn officials about JFL’s dire financial straits but to no avail.

In an Oct. 9, 2024 email labeled “Payless Paydays,” he “pointed out that several months earlier he had informed the Board that if proactive measures were not taken, there would be a shortfall during the first month of the fiscal year” the suit claims. He also “pointed out, with a spreadsheet, that there was a potential for $4.7 million in revenue if the outstanding requests for funds had been followed up on, but nothing was done.”

Additionally, Lewis said in the email that payroll expenses, AMEX cards, and VFI loans came to $5.1 million in expenses and “begged for immediate action.”

On Nov. 18, Lewis resigned, stating his last day of work would be Jan. 10 and warning interim CEO Hazel Philbert that “the lack of action to correct the financial condition of the hospital was hurting the community and staff.”

On Nov. 23, he alerted management that $1.9 million needed to be in the payroll account no later than Monday at 4 p.m., it was short by $1,212,136.13, and he would not use ARPA or FEMA funding “as it was illegal to do so,” the suit states.

Two days later, Philbert instructed Lewis to use $1.2 million in past FEMA funds owed to others for payroll, it says. He said he transferred the money as directed but noted his objection.

On Nov. 27, Philbert processed the [Notice of Personnel Action] for Lewis’s resignation and “continued to pressure [him] to improperly allow them access to bank accounts and federal funds to use those funds improperly,” according to the suit. Lewis refused and informed the CEO that any such activity would be disclosed to the proper authorities, it says.

On Dec. 3, Lewis was notified that his resignation was accepted effective immediately, according to the suit, which alleges that a smear campaign against him followed, which led to rumors and speculation “that something nefarious had occurred.”

Lewis is alleging a violation of the V.I. Wrongful Discharge Act, violation of the Whistleblower’s Protection Act, Breach of Duty of Good Faith and Fair Dealing, Defamation, and one count under the Taxpayer’s Suit under 5 V.I. Code section 80. He is represented by Lee Rohn of Lee J. Rohn and Associates, LLC.

Lewis’s complaint follows two other whistleblower lawsuits against USVI entities in recent months.

On Dec. 1, Stephanie Berry filed suit in V.I. Superior Court against the V.I. Housing Finance Authority, alleging noncompliance with policies and procedures that are costing the agency millions of dollars in federal funding.

On Nov. 26, former CEO Peter Chapman filed suit in V.I. District Court against the UVI Research and Technology Park Corporation, alleging statutory violations and retaliation.