Most of the people on the list, including himself, Sackett said, did everything they could “to respond appropriately and correct any discrepancies that have been noted in the payments.”
“If you wanted to use the term ‘misuse of funds,’ it needs to be narrowly applied in a much more nuanced fashion to the few that have been identified in the investigation as actually doing activities with those funds that would be considered outside of business purposes,” Sackett said.
Credit: Contributed
Credit: Contributed
Sackett and his wife, Julie Sackett, were on the lower end of those who received excess benefits reported by the hospital to the IRS. Sackett received $7,525 and his wife received $2,169. Tax records say the Sacketts corrected the overpayment, meaning they paid the money back along with tax penalties.
Wally Sackett said one of those economic benefits was related to travel expenses to Shanghai, China, where Kettering Health has a longstanding relationship with Huashan Medical Center.
In 2019, Huashan Medical Center invited a delegation of executives to Shanghai and Sackett was part of that delegation, he said. He said it was normal for spouses to travel with them.
“The purpose of the visit was clinical. They wanted us to consult and advise on an expatriate medical program that they had in the Huashan Hospital,” Sackett said.
The visit was also cultural and led up to a conference, he said.
“They wanted us to learn and understand about some Chinese medicine and how their lifestyle and their patients are different,” Sackett said. “And they wanted to show us the developments, new programs, that they had hoped to expand in the markets.”
Kettering Health executives gave presentations at the conference, as well as met with different teams at Huashan Medical Center, both clinical teams and others related to business development, he said.
“This was all at the direction of the organization,” Sackett said.
Sackett did not have to pay the full amount of the trip back, he said, just a portion of the two-week trip at the beginning when he was adjusting to the time zone change and was not working.
When Kettering Health hired a firm in 2023 to look into allegations of financial impropriety, the firm determined he had to pay back some of the expenses related to that trip.
“As they looked at that trip, they said, ‘Well, the first two days of the trip, you weren’t actually at the hospital. You were recovering, and you were making plans for your presentations.’ And they disallowed those as legitimate expenses,” Sackett said.
“That is one of the excess benefit issues that showed up for me,” he went on to say, not going into detail about other excess benefits.
The trip was within Kettering Health’s compliance policy, including having his spouse travel with him, Sackett said.
“I did not have any reason to think that that was not appropriate,” Sackett said.
He agreed to pay the money back to Kettering Health, along with other excess benefits.
Sackett said this was an example of how the investigation involving a third-party firm conducting the 2023 audit “may have come in and scrutinized those costs and expenses in a way that our compliance committee and our audit committee wouldn’t have done.”
“And we, as executives, wouldn’t have known about those concerns until they were brought to our attention,” he said.
Kettering Health in a previous statement to the Dayton Daily News emphasized that “multiple individuals listed in the tax filings did not realize they received funds inappropriately until they were notified at the conclusion of Kettering Health’s internal investigation. In several instances, individuals were led to believe these were legitimate business activities, or acceptable gifts, and had no reason to believe they were not appropriate.”
“However, the internal investigation determined that some funds were misused, clearly falling outside of the stewardship principles of a not-for-profit organization. We are thankful that the vast majority of individuals chose to repay the funds back to Kettering Health,” the hospital network’s statement says.
The Sacketts were among 46 individuals identified as receiving improper benefits from the nonprofit hospital network. At the top of the list was Kettering Health CEO Fred Manchur and his wife, Mary Kaye Manchur.
The Manchurs received nearly $1.5 million in benefits, according to tax filings. Examples of such benefits include a $12,124 whale watching trip in Maui, thousands of dollars of decorations for the Manchurs’ private home, travel and lodging in Europe, and thousands of dollars in personal gifts, according to additional records obtained by the Dayton Daily News.
The Manchurs did not pay back or correct those amounts with Kettering Health, according to the tax records that say most of the other recipients of excess benefits did reimburse the funds.
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