Isle health group
settles Felix case

Hawaii Pacific Health will pay
up to $1 million to the state but
acknowledges no wrongdoing

By Susan Essoyan

Hawaii Pacific Health has agreed to pay up to $1 million to the state to settle claims stemming from a pilot project that provided mental health services to children on the Big Island from 1996 to 1998 under the Felix consent decree.

The settlement, reached by the Attorney General's Office in November, was announced yesterday by members of the Joint Senate-House Felix Investigative Committee, who said it validated their efforts to root out fraud and abuse.

"We believe this shows there were problems and it validates the efforts taken, and it also justifies the further action that needs to be taken," said Sen. Colleen Hanabusa (D, Nanakuli-Makaha), co-chairwoman of the committee.

Under the agreement, Hawaii Pacific Health admits no wrongdoing and agrees to cooperate with the Attorney General's Office in its investigation of Felix-related providers over the next year. Hawaii Pacific Health, formerly known as Kapiolani Health, is the parent company of Kapiolani Medical Center for Women & Children.

"We have been pleased to work cooperatively with the state Attorney General's Office to reach this mutually agreed upon settlement, and are happy to close the chapter on this project, which our former health plan had difficulty in managing," Hawaii Pacific Health said in a statement yesterday.

It noted that executives of its former health plan, Kapiolani HealthHawaii, who were in charge of the project left the company after the project ended in 1998.

Hawaii Pacific Health has agreed to pay $250,000 to the state Attorney General's Office and another $250,000 in cash or in kind for neurological testing for children covered by the Felix decree. An additional $500,000 payment will be waived completely if the company abides by terms of the agreement to cooperate with the attorney general.

The attorney general is seeking records and interviews with employees in its probe of service providers. The settlement agreement stipulates that the state will not pursue criminal charges against Hawaii Pacific Health.

To comply with the Felix consent decree, a court order mandating improved services for special-needs students, the state Department of Health signed a contract in late 1996 with Kapiolani HealthHawaii. The company was paid $18 million over two years to oversee mental health services provided by various contractors to 1,500 children.

During the first year of the contract, concerns arose about the cost, delivery and quality of services being provided. The Office of the Auditor looked into the situation in 1997 and 1998 and found various failings by the state Department of Health and Kapiolani Health, including a lack of accountability for service delivery as well as fiscal controls, state Auditor Marion Higa said yesterday.

A follow-up audit in December 2001 raised questions about $1.2 million charged to the state by Kapiolani Health for services for which there was no documentation, and $81,200 in salaries that were not adequately documented, she said.

Rep. Scott Saiki (D, McCully-Moiliili) said yesterday he had been informed by the Attorney General's Office that it is conducting criminal investigations related to Felix services and plans to pursue civil cases as well. The $250,000 awarded to the Attorney General's Medicaid Investigations Division will be used to pursue those cases, Saiki said.

Susan Puapuaga, a therapeutic aide, was indicted last May for allegedly billing the state for $1,800 in services that were not delivered. She pleaded no contest in July.

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