St. Joseph Hospital in Lexington, Ky., is trying to keep its books closed against a lawsuit filed by state Treasurer John Kennedy Hamilton.
Hamilton's office sued the 324-bed hospital Aug. 7, asking the Fayette County Circuit Court to open the hospital's financial records for an unclaimed property audit. The treasurer's office wants to see whether St. Joseph really doesn't have any abandoned money and property as it claims.
By law, Kentucky businesses have to report unclaimed money such as stocks, uncashed payroll checks, utility deposits, abandoned safe deposit boxes or any type of account that has not been active in seven years, assistant state Treasurer Paula Payne said. Businesses must turn over the unclaimed money to the state, and the state tries to find the rightful owners.
Since Hamilton took office January 1996, about $2.5 million has been returned to owners. Payne says 88 audits have been conducted since February, one of which is being conducted on a second not-for-profit hospital.
"They are cooperating to the fullest extent," Payne said of the hospital, but she refused to release its name.
In its complaint, the state treasurer's office said St. Joseph doesn't have a penny in abandoned property in any of its audit reports. Other businesses similar to St. Joseph in size and business objectives reported significant amounts of unclaimed property, Payne said.
In a letter to the treasurer's office sent in February, St. Joseph officials said it is exempt from state audits because it is a not-for-profit corporation. Dave Riggins, a St. Joseph spokesman, said the state statute does not say not-for-profit institutions need to be audited.
St. Joseph attempted to work with Hamilton's office, but the office made unreasonable requests for information, Riggins said.
For instance, the state wanted unlimited access to patient, employee and accounting records but refused to keep them confidential. What's more, Riggins said he knows of another not-for-profit hospital unwilling to allow the treasurer's office to investigate its financial records.
If Hamilton's staff is allowed to look at the hospital's books, it will probably start in 1989 and work back 15 years to 1974, the maximum the law allows, Payne said. Funds have to be inactive for seven years in order for the state to conduct a proper audit. The last report filed would be for fiscal 1996.
St. Joseph has until Aug. 28 to respond to the complaint, said Robert Barnes, attorney for the state treasurer.
The hospital was served with the complaint Aug. 8 and plans to respond by the deadline date, Riggins said.