Community Health has filed a suit to recover nearly $10 million from Fresno, Ariz.-based physician group Santé Health System, The Sun reported Oct. 5.
Community Health, which entered an agreement with Santé in October 2017 to provide millions in grant money, alleges an independent audit revealed the group did not distribute or account for various grants.
According to the report, Santé asked the health system in 2019 to increase the grant to cover management service fees. Community Health then solicited an independent audit for fiscal year 2020 and found the group allegedly misappropriated $9.89 million of grant funds.
The suit alleges the grant money was "distributed for unincurred expenses, disbursed in excess of permitted expenditures and dispersed or retained by Santé after the grant periods expired," the report said.
Santé has allegedly admitted it has possession of grant funds due but is refusing to return the funds, Community said in a statement, according to The Sun. The lawsuit also states that Santé is not operating medical clinics, enrolled in Medicare nor offering genuine financial assistance.
"In the last month of the grant period alone, Santé disbursed $6.8 million in grant funds to medical providers before expenses were incurred in order to avoid having to return those funds to Community when the grant period expired on Aug. 31, 2020," the statement reads, according to The Sun.
Santé, which has a portfolio of more than 1,500 providers who serve more than 120,000 people, has claimed in response that Community severed their agreement more than two years ago and "breached the exclusivity provision in the contract in a way that Community is obligated to pay $5 million in liquidated damages," the report said.