Local and federal investigators found evidence of financial mismanagement at 126-bed Halstead (Kan.) Hospital, which closed in January after filing for Chapter 11 bankruptcy protection last year. The hospital apparently was taking deductions from employees' paychecks but not using the money for health insurance, 401(k) plans and tax withholdings, said Steve Bayless, senior investigator at the Harvey County (Kan.) Sheriff's Department. "We think they were using it to pay the light bill, the phone bill, everything to keep the doors open," Bayless said. The sheriff's department began investigating after employees complained. The U.S. Department of Labor has audited the hospital, and the Internal Revenue Service has been notified, Bayless said. Valley Hope Association, an alcohol and drug addiction treatment organization, is expected to take possession of the property after paying $560,000 in a bankruptcy auction. The money-losing hospital had been slated for closure in 2000 by then-owner LifePoint Hospitals but was sold to a local foundation, which later sold the facility to a local businessman. -- by Patrick Reilly
Hospital may have tapped paychecks to pay bills
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