Potential fraud identified in travel nursing company’s billings, Newfoundland Auditor-General finds

An audit by Newfoundland and Labrador’s Auditor-General says it has uncovered “strong indications of potential billing fraud” by a travel nurse company retained by Newfoundland and Labrador to provide temporary health care staff.

The report was released Wednesday by Denise Hanrahan, who has been investigating contracts between private vendors and the health sector. The supplier is only identified as “Agency A” but details about it match those of Canadian Health Labs, a Toronto-based staffing company. Newfoundland and Labrador paid CHL a total of $73-million for two nursing contracts.

A Globe and Mail investigation published in 2024 raised questions about the costs and billing practices associated with CHL’s contracts in Newfoundland and New Brunswick.

The Newfoundland audit looked at 11 staffing companies that received more than $241-million from the province between 2022 and 2024. Auditors identified “tens of millions of dollars of potential wastage of public funds,” Ms. Hanrahan said in an interview.

“We saw a lot of failure here that I hope we can learn from and improve,” she said.

Details in the report are “wildly outrageous and very concerning,” Health Minister Krista Lynn Howell told reporters. She said she had asked the Newfoundland and Labrador Health Services to conduct a review immediately “to ensure that if there is any indication of fraudulent activity that that is escalated to the authorities where appropriate.”

Newfoundland and Labrador NDP Leader Jim Dinn said the audit’s findings were “appalling – full stop” and called for the Royal Newfoundland Constabulary to investigate.

The report found that NLHS paid on average $404,486 a year for a travel nurse, when regular registered nurses in the public sector were getting $118,750 annually in salary and benefits.

Number of nurses working in long-term care shrinks, report shows

CHL had under two years of experience in the business when it first clinched a $28-million contract in April, 2022, the report said. “We found little evidence that a thorough assessment of Agency A’s credibility or capability was conducted during planning.”

NLHS didn’t prepare adequately for the procurement of travel nurses, the report said, noting that staff shortages had been increasing gradually, so “there was adequate opportunity for advanced planning.”

NLHS chief executive Pat Parfrey disagreed. In an interview, he pointed to the sudden upheaval caused by the pandemic. “You’d need to have great foresight to predict what was going to happen,” he said, noting that vacancies went in a short time from 250 to 700.

The report says that in March, 2023, Newfoundland’s central health region rejected a CHL offer to supply travel nurses with electric vehicles.

CHL went ahead anyway and invoiced for more than half a million dollars in electric-car rental costs, the report said. The audit said the potential fraud involved nearly $100,000 paid for vehicle rentals for nurses who weren’t in the province. “It’s a very expensive thing to pay for, especially if you didn’t get any service,” Ms. Hanrahan said.

The report recommended health officials “complete an immediate comprehensive audit of all amounts paid to Agency A from April, 2022 to present, to recover public funds paid in error.”

“We will certainly audit for potential fraud and evolve our circumstances based on that potential fraud,” Dr. Parfrey said.

The contracts were signed in 2022 by two now-defunct regional health authorities that didn’t have the resources to handle the volume of invoicing generated by travel nursing, NLHS chief financial officer Scott Bishop said in an interview. Health care administration has now been amalgamated under one roof since NLHS was established in 2023.

The Globe and Mail’s reporting found that CHL invoiced for $2.5-million in meal allowances even though the nurses were told they had to pay for their own food.

NLHS Human Resources vice-president Debbie Molloy said in an interview that the meal per diems are a matter between the travel nurses and CHL. “We agreed to pay for meals while they were in the field, and really that is their contract with the nurses who were working for them.”

CHL didn’t respond to a request for comment.

The audit looked at a sampling of invoices from staffing companies and found that nearly $4-million was paid either for bills without supporting documentation or for ineligible expenses.

Among the questionable items cited in the report was $20,000 in “stipends” paid in 2023. After auditors inquired, NLHS said it was “the result of a keying error.” The company issued a refund in March of this year.

Following The Globe’s reporting, Newfoundland health officials unveiled new requirements for travel nursing contracts last summer. The rules included preset hourly rates, a cap on travel expense claims and the abolition of meal allowances.

CHL also had three contracts to supply temporary workers to New Brunswick’s Vitalité Health Network. The province’s Auditor-General, Paul Martin, also conducted a review of those agreements. Mr. Martin’s report, released last year, raised concerns about high fees, questionable billing and lack of oversight in retaining CHL’s services.

CHL and Vitalité are now locked in three lawsuits. The company alleges in statements of claims that the health network failed to pay it properly and acted improperly when it stopped scheduling for CHL nurses after Jan. 30.

In its court filings, Vitalité says that it was overcharged for travel and accommodation expenses and meal allowances. The court documents added that the company failed to disclose that vehicles were rented, above market rates, from companies connected to CHL.