Reports of only $500K paid to LBJ from 2% wage tax not true says Gov's office


Reports to the Fono that the Department of Treasury paid only $500,000 to the LBJ hospital from revenues collected from the 2% wage tax in 2012 and 2013, is not sitting well with the Lolo Administration. Both ASG Treasurer Dr. Falema’o “Phil” Pili and the Governor’s Executive Assistant Iulogologo Joseph Pereira in response to questions from Samoa News have said ASG has paid $1.6 million to the hospital — so far.
The information that only $500K was paid to the hospital from the wage tax was revealed to the Fono during a hearing called by the Senate Health Committee.
The hearing was held on Wednesday of this week, with the hospital board and CEO Joseph Davis Fleming answering questions from the senators on issues pertaining to the closing down of the Primary Care Clinic, the hiring process at the hospital, and other financial matters — such as the LBJ off-island patient referral program, which has been on hold for awhile now due to lack of funding.
During the senate hearing, Senator Magalei Logovi’i asked the Hospital CEO Fleming on the status of the off island referral program.
In response Fleming stated there have been discussions with the board to re-establish a true off-island patient referral program. However, they’ve agreed that the way it was attempted in the past is not financially sustainable, even with the help of the 2% wage tax.
(The 2% wage tax was passed by the Fono to help fund the government’s no-interest $3 million loan given to the LBJ Medical Center, as a cash infusion to the financially strapped authority, in 2011. The money came from the Workmen’s Compensation Account. The 2% wage tax law states in part that after the ASG loan is paid off, the 2% wage tax is earmarked to continue to provide funding for the hospital’s operations — such as the off-island referral program, but not its personnel costs.)
The LBJ CEO said, “As far as the funds, we do not have enough yet to fully take care of a person’s treatment, we are still behind in terms of the payments that are supposed to be made to the hospital from the Treasurer’s office. Currently they’re $2.4million in arrears but we are working closely with them, and I want to make it clear they are current with the payments they are making for this fiscal year, it’s the previous fiscal year that we’re trying to play catch up, that will serve as the seed money that we will need to use to come up with a better way to help finance or subsidize patients that truly need to go off island.”
Sen. Magalei asked about the time frame, and Hospital Chairman Mase Akapo, pointed out the hospital budget approved for FY 2014 did not have funding allocation for an off island referral program.
He noted that of the revenues from the 2% wage tax, 50% was to be allocated to the off-island referral program, but as the CEO stated only $500K has been paid to the hospital.
“Currently the Treasury owes the hospital $2.4 million,” the chairman stated.
Mase further explained that the $3million loan has been paid off with the 2% wage collections, and only $500K has been given over to the hospital. “At this time, the Treasury is making payments because the hospital has not received the whole amount due for the hospital.”
Magalei noted that if the Department of Treasury has paid off the $3million loan, the rest of the revenue collected from the 2% wage tax, which has supposedly reached around $3- 4 million, should go to the hospital.
“You mean to tell us in front of this committee that only half a million you have received so far for 2013,” Magalei asked?
“That is exactly true, sir,” Mase replied. “We have only received $500,000 of that money, of that $3million that was supposed to come to the hospital for 2013. We have asked the Treasury, where is our money that’s needed for the hospital’s operation?”
The hospital board chair also noted that the hospital depends on this money to use for matching funds for the federal grants of Medicaid and Medicare, yet that has been unsuccessful, “because we don’t have the funding.”
In response to Samoa News queries, the Treasurer explained that the 2% wage tax collected for 2012 was $3.78million; and for 2013 (Jan-Sept) $2.7million was collected with a total of $6.52million collected for both years. Through a spreadsheet, the Treasurer showed that from the $6.52Mil — $3million was used to pay off the workmen’s comp loan, leaving a balance of $2.73million.
From the $2.73Mil, the government deducted $1.03 million for the yearly insurance premium the hospital owes, according to the Treasurer. This left $1.7Mil.
Of this $1.7Mil, payments were made in 2013 to the hospital of  $200,000; and $589,266 respectively, leaving a balance of $1.69million, which was paid out in full in Sept. 2013.
(Samoa News should point out the bill signed into law did not specify that ASG could take out any monies owed by the hospital to ASG from the 2% wage tax revenue collected. Instead, the bill states the money is to be given to the LBJ Medical Center, which is to then use it to fund operations.)
Iu, in response to Samoa News queries, said the Hospital CEO has been informed many times that the primary purpose of the 2% wage tax is to repay the $3million loan which went to the hospital.
He also noted, Fleming was told about the hospital’s insurance premiums owed to the general fund and that liability needed to be liquidated.
“Mr. Fleming should pay more attention to his spending habits and behavior, instead of …doing little to directly improve the quality of health care services to the people of American Samoa,” Iu said.
He continued, “Earlier in the week a 75-year-old woman visited the governor and lt governor, seeking their assistance, for a referral off-island for treatment due to her heart condition.
“No assistance was given to her with regards to the setting up of an appointment with one of the medical institutions in Hawai’i and she was expected to do this on her own. It is rather sad that this elderly lady is further placed under unnecessary stress given her heart problems, because we lacked the basic human compassion to provide basic services to our people given that fact that the off-island referral program has been suspended for years.”
Iu concluded, “This is no way to treat our people who have already suffered because of illness and the inherent added stress of having to seek medical treatment off-island because of our healthcare service limitations.”


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