Louisiana charged with mismanaging $50 million post-Katrina health care grant

A federal audit charged the Louisiana state health agency again for mismanaging a $50 million post-Hurricane Katrina grant meant to restore health care access to the New Orleans area.

In a new draft of the audit, the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) suggests that the state pay back $13.6 million of the money paid out to doctors.  The money acts as an incentive for doctors and other medical professionals to practice within the city.

According to the updated draft, 33 out of 100 practitioners in a sample were in compliance with the Federal grant requirements while majority of the sample, 67, were not in compliance. Based on our sample results for the period March 1, 2007, through January 31, 2009, we estimated that the Bureau paid at least $13,629,287 of Federal grant funds to an estimated 3509 practitioners who were not in compliance with the Federal grant requirements.

The Deficit Reduction Act of 2005 authorized the Centers for Medicare and Medicaid Services (CMS) to award the Louisiana Department of Health and Hospitals a federal grant called Professional Workforce Supply Grant to restore access to health care in communities impacted by Hurricane Katrina. The $50 million Federal grant covers the period March 1, 2007, through September 30, 2012.  The Federal grant funds payments to licensed health care professionals to help keep doctors in the city and bring talented health care professionals into the city. As of September 30, 2009, all of the Federal grant funds had been distributed.

The Federal grant required the funds to be distributed in one-time payments to individual practitioners based on the incentive options they chose. The incentives included payments for:

  • Student loans
  • Malpractice insurance premium expenses
  • Contract execution (sign-on bonuses)
  • Income guarantees
  • Health information technology continuing education expenses
  • Relocation expenses

Practitioners had the option to choose more than one incentive option and receive payments within the limits set forth in the Federal grant requirements for each practitioner type.  As long as the recipient remained in their qualifying job for three years, they had the opportunity to use the grants for any of the above purposes.

The Bureau of Primary Care and Rural Health administers the Federal grant and remains responsible for grant guideline compliance. From managing the day-to-day operation of grant-supported activities and monitoring grant-supported activities, the Bureau must ensure compliance with applicable Federal requirements and achievement of performance goals.

The problems auditors cited among the 100 practitioners:

  • Practitioner Contracts Specified Service Periods of Less Than 3 Years
  • Practitioners Did Not File Quarterly Reports
  • Practitioners Not Working Full Time
  • Practitioners Did Not Spend Federal Grant Funds Appropriately
  • Practitioners Not Working at Eligible Sites
  • Practitioners Absent More Than 7 Weeks Without Contract Extension
  • Practitioner Did Not Provide Clinical Services
  • Practitioner Not Eligible To Receive Federal Grant Funds

If you have any questions or concerns, please contact the Law Firm of Beahm & Green at 504-288-2000.


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Hess Deynoodt Marketing is a full-service marketing and advertising agency located in New Orleans, Louisiana. Our formula is simple. We set objectives, establish a strategy,determine constraints and then set policies. We use our policies to develop and implement plans, product development, distribution, pricing and communication strategies. In the end it's all about developing new business for your company!
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