The hospital sale may have been finalized a year ago, but it’s finally time for the city to pay up for a liability they discovered during the sale process. And concern over the coronavirus, which was recently declared a “pandemic” by the World Health Organization, also bubbled up when the Sitka Assembly met on Tuesday (3-10-20). KCAW’s Katherine Rose reports. 

The city owes just over $4 million in government fines for liabilities associated with the former Sitka Community Hospital. The violations were discovered last year during the merger with the Southeast Alaska Regional Health Consortium. 

“The liability stems from Sitka Community Hospital overcompensating physicians in violation of Stark and anti-kickback laws,” said city administrator John Leach in a statement at the end of the Sitka Assembly’s regular meeting, Tuesday (3-10-20).

Most assembly discussion of the Sitka Community Hospital violations has happened behind closed doors in executive session. But as part of the sale agreement with SEARHC, the city absorbed the responsibility for the violations, and set aside $4.5 million in an escrow account as a condition of the sale, not knowing exactly how much it would owe in fines. City Attorney Brian Hanson said the city recently came to a settlement agreement with the Office of the Inspector General. That’s the branch of the federal government that oversees Medicare and Medicaid to combat fraud.

“The good news is that the liability essentially came back as low as it possibly could, which is still extremely high,” said Hanson.

The assembly went into executive session for just under an hour to discuss the settlement. When the group returned, it voted to direct the city administrator to pay out $4.125 million in fines to the Office of Inspector General on a 5-1 vote with assembly member Richard Wein opposed. 

The assembly also heard a presentation from SEARHC CEO Charles Clement, who gave a six-month update on the hospital merger. Clement said SEARHC is currently soliciting architects to design the new hospital building, and plans to hire an architect by April. He said there were a lot of uncertainties, but as of right now, the project is still on schedule. 

“It is no surprise to anybody that there is a great deal of uncertainty right now, both with the federal government with regards to the immediate outbreak of the coronavirus and the impact that’s having on the price of oil, cruise ship industry, tourism, airlines,” he said. “We are going to be able to move forward without regards to those considerations at this point.” 

The coronavirus came up again during persons to be heard when Mike Mayo voiced his concerns about the city’s response to what has now been declared a pandemic by the World Health Organization. Mayo called for the assembly to develop a comprehensive plan. 

“How many testing kits are in Sitka? Do we know?” asked Mayo.

Assembly member Richard Wein responded, informing Mayo that there were, as of 3-10-20, no test kits in Sitka and 150 total currently allotted for the state (there are now test kits available at SEARHC, story forthcoming).

“Wow. Are you guys prepared? No I won’t hurry up Gary [Paxton], you listen. You ain’t doing anything on this, I’m telling you what you should do. You better listen. Don’t hurry me up,” he said. “How many test kits are in Sitka? None!” 

Paxton said the assembly and city staff were taking the threat of the virus seriously, and administrator Leach said the city was working closely with the state and federal government and SEARHC. Both the city and hospital have developed a plan to respond should the virus reach Sitka, and said the city is working with the cruise ship industry to develop a response and screening plan for cruise ship passengers.

Read more coverage of the 3-10-20 Sitka Assembly meeting here

Watch the full meeting here