Hospital settles embezzlement losses with insurance company
PITTSBURGH – A federal bankruptcy judge Tuesday approved an agreement between Brownsville General Hospital Inc. and an insurance company to cover part of the losses resulting from embezzlement by a former employee of the closed hospital. Attorney Scott Schuster of the Bernstein Law Firm, the bankruptcy plan administrator, said that while his firm felt that losses of $115,000 to $130,000 could be documented, it opted to settle the claim for $80,000, minus the hospital’s $5,000 deductible. The hospital’s former benefits administrator, Ellen Pocratsky of Uniontown, recently pleaded guilty in federal court to embezzling approximately $200,000 from the hospital between 2002 and 2005. Sentencing in that case is scheduled for October. Schuster said the embezzlement was discovered in September 2005 and the pertinent records were turned over to the FBI for investigation, since the case in part involved funds that were to be used to pay for medical benefits of former employees under the Consolidated Omnibus Budget Reconciliation Act (COBRA) program and fell under federal jurisdiction. Schuster said Pocratsky took payments from the former employees for COBRA benefits while keeping them on the regular employee insurance. She then withdrew the funds from the COBRA account she had set up.
Pocratsky also admitted to submitted double vendor invoices for payment, using erasable ink on one of the checks, then changing the payee so she could cash the checks. Schuster said the hospital was only open for a few months after the embezzlement was discovered and many records from that time period are missing.
Copies of the records provided to the FBI have not been located, Schuster said, and the hospital’s final chief executive officer, Harry Cancelmi, did not submit all of the final paperwork to National Union Fire Insurance of Pittsburgh, a subsidiary of AIG.
“We think we had a decent case to prove to the court that the debtor met the terms of the policy,” Schuster said.
Still, Schuster said, the settlement was preferable because it involved lower legal costs. Schuster said that under the agreement, the bankrupt hospital is giving up the right to pursue any further restitution from Pocratsky.
“We assigned all of our rights to pursue Mrs. Pocratsky to AIG,” Schuster said.
Schuster said he didn’t know if AIG would take action in the case, or if it would be covered by the criminal proceedings.