A few days ago, a reader was kind enough to send me a copy of the “First Amended Complaint” filed by the El Paso Children’s Hospital accusing the University Medical Center (UMC) of fraudulent behavior in its dealings with children’s. Yes, I am aware that Ali Enrique Razavi aka MaxPowers published a copy on his blog last weekend. The news media has alluded to the filing but they have not given you all of the details that is important to you.
I have started to review the 40-page document and like all legal documents, it involves a lot of legalese that I must be careful to interpret properly. I will share with you what I find out in a later post. However, today I wanted to bring your attention to something that I have written about before, but has been largely ignored.
The issue is a very important taxpayer question that needs to be addressed.
Why is it that the taxpayers of the community agree to tax themselves to build The El Paso Children’s Hospital a building, yet UMC charges children’s rent for using the building?
This is an important question because it addresses a very fundamental problem about how the County of El Paso uses your tax dollars. Keep in mind that through the 2007 bond you pay taxes each year to pay for the building. Demanding that children’s hospital pay rent on the building creates a revenue stream for UMC that in my opinion is improper and in many ways, it is a fraud perpetuated upon the taxpayers of the community.
Keep in mind that when the hospital district goes before the County Commissioners for approval of its annual budget it must report what monies it anticipates to receive from all sources and how it plans to spend the money during the next fiscal year. The majority of the money comes from you, the taxpayer. However, there are other revenue sources like patient fees, other grants and federal funds. Whether the “rent” monies due from children’s are included therein is assumed but I have not verified this.
Why is this important?
When the El Paso Children’s Hospital feasibility was being touted about in the community one of the loudest arguments was that UMC was in the “black.” Additionally, when the issue of the clinics being built all over town was being discussed; they were touted as a benefit to the hospital district’s bottom line, and by extension a tax relief for you.
In the court filing, the El Paso Children’s Hospital alleges that UMC obligated children’s to pay “$10 million dollar plus per year lease.” The filing also alleges that in a “June 2014 Notice” children’s asked UMC to amend the rent payments to reflect changes in healthcare funding, as per the agreement the two entities had in place. According to the court filing, “UMC completely ignored the Plaintiff’s requests, preferring instead to carry a large account receivable on its books that masked its own core operating losses.” [Emphasis added]
In other words, the accounting presented by UMC to Commissioners Court includes accounts receivables that are questionable at best. Removing the accounts receivables would fundamentally alter UMC’s budget possibly taking it from being in the black to actually being in the red.
As a business owner, one of the questions all creditors ask me is “how likely is your accounts receivables to be paid?” As a matter of fact, the bank demands an accounts receivables listing showing what each customer owes and how long it has been since they last made a payment.
If I know of a customer that is arguing that they disagree with how I am billing them and not let the bank know about it that would be fraud. In other words, I have a fiduciary duty to be forthright with the bank.
The bank, in the case of children’s, is you, the taxpayers. The county commissioners are your “bank” employees. The county commissioners have the duty to make sure that UMC is being honest with you. UMC is required to clearly and honestly produce an accounting statement that explains UMC’s financial condition when it presents its budget to Commissioners Court each year.
As of today, no one has argued that children’s was not required to pay rent. As of today, everyone agrees that The El Paso Children’s Hospital was to pay “rent” to UMC.
The amount of the “rent” is in dispute.
The children’s hospital argues that the rent amount is wrong. UMC and county commissioners argue that children’s owes rent.
Yet the most fundamental question each of you should be asking yourselves is whether the children’s hospital should be paying rent for a building you are paying for through your taxes.
If you agree that they should be paying rent, do you want the rent monies to go towards reducing the 2007 debt or shoring up UMC’s bottom line? Keep in mind that if the rent payments do not go towards the 2007 bonds that in effect you are paying twice to UMC. First, through the 2007, bond payments included in the taxes and second through the taxes, you pay directly to UMC.
Most important to you is the answer to the question of whether UMC has been transparent and forthright when it presents its budget to the county commissioners each year. In other words, do you trust the accounting that UMC has given you?