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Former Fletcher Allen CFO pleads guilty

BURLINGTON — The former chief financial officer of Fletcher Allen Health Care pleaded guilty Thursday to charges that he made false statements to health care regulators as part of a multi-year scheme to hide the true costs of the Renaissance Project, a massive expansion at the state’s largest hospital.

David Cox, 52, pled guilty to charges in state court and admitted to his role in hiding millions of dollars in costs from officials at the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA).

Prosecutors claim that the Fletcher Allen scheme included the submission of a false financial model to BISHCA as part of the application submitted in 2000 by Fletcher Allen to build the Renaissance Project, as well as the Public Oversight Commission.

After obtaining BISHCA approval, based upon false information, Fletcher Allen continued to misrepresent the costs of the project by, among other things, claiming in filings with BISHCA that the costs of the project would be $173.4 million. Hospital officials continued to use this false data until late 2002. Cox left in July 2001.

The project, at completion, cost more than $350 million.

Cox also agreed to a federal civil forfeiture of $25,000, and 100 hours of community service. He will not face federal charges, prosecutors said in a statement.

Cox is the fourth Fletcher Allen officer to plead guilty to criminal charges.

Former Chief Executive Officer Bill Boettcher, 57, was sentenced to two years in prison repaying almost $750,000 to Fletcher Allen, which he was granted as part of a severance package when he left the hospital in 2002.

Dave Demers, a former senior vice president, pled guilty to conspiracy charges and has agreed to cooperate in the ongoing investigation. His sentence is pending.

Thad Krupka, the former chief operating officer, pled guilty last year to three state charges of making false claims, and agreed to cooperate. He paid a $170,000 forfeiture and his sentence is also pending.

Fletcher Allen reached a settlement agreement with state and federal prosecutors, too, regarding the Renaissance Project investigations. As part of that settlement, Fletcher Allen paid $1 million, half to the state and half to the federal government, in October 2003. The $500,000 payment to the state will be used for in-state, health-related projects.

Tsoi-Kobus and Associates, the architectural firm for the project, agreed to cooperate with prosecutors and paid $1.3 million to resolve its role. Macomber Barton Mallow, the construction management firm, also cooperated and paid $150,000. Vermuelens Cost Consultants, the construction cost estimating firm used by Fletcher Allen, cooperated and forfeited $50,000.

Finally, Downs, Rachlin, Martin, Fletcher Allen’s outside legal counsel, settled its potential legal disputes with Fletcher Allen for approximately $2 million.

Posted August 24, 2006

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