Investigation Reveals Over $500,000 Missing from Wayne County School Districts’ Medical Claims Fund; Dentists Left Unpaid

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Financial Troubles Emerge for New York schools and Dental Practices

Rochester, N.Y. – A growing financial crisis is unfolding in Wayne County, New york, as school districts and dental offices report over half a million dollars in missing funds. The alleged mismanagement centers around Health Economics Partners, a third-party administrator (TPA) tasked with processing medical and dental claims. The situation is sparking concerns about the oversight of TPAs and the security of funds entrusted to them.

Claims Funds Disappear, Leaving Bills Unpaid

Sodus Central School District claims more than $400,000 is unaccounted for within its claims fund. North Rose Wolcott Central School District reports a loss exceeding $163,000.Simultaneously, at least four dental practices are struggling to recover significant payments, with Bay Ridge Dental in Webster reporting over $20,000 in unpaid claims and Demarree Dental in Sodus facing losses exceeding $30,000.

Amber hoertz, Business Manager at Bay Ridge Dental, expressed her frustration. “I just need to be paid,” she stated. Jessica Poltorak, holding the same position at Demarree Dental, echoed this sentiment, noting issues began in February of 2025. both businesses report receiving problematic “replacement” checks from Health Economics Partners, often bouncing or arriving with significant delays.

Investigation Reveals Troubled Finances

Efforts to reach Health Economics Partners have proven difficult, with investigators finding the company’s offices deserted. John Pusloski, President of Interaction Workers of America Local 1170, revealed that his institution terminated its 50-year relationship with the TPA in July, suspecting financial irregularities.”We do have reason to believe that they withdrew more money than they paid in our claims,” Pusloski said.

Legal documents reveal that Zacchary Weber, CEO of Health Economics Partners, admitted via email to placing $230,000 into an interest-bearing account with a promise to replenish the funds and settle outstanding bills. This occurred prior to the filing of lawsuits.

Regulatory Gaps Expose Vulnerabilities

A significant challenge in addressing this situation is the lack of direct state regulation over third-party administrators. As TPAs operate in conjunction with self-insured employers, they fall outside the purview of the New York state Insurance Department. When the dental offices sought assistance from the state, they received notification that existing insurance laws do not apply to their arrangement. “since benefits are not paid by an insurance company the arrangement is not insurance,” the Department of Financial Services explained.

Did You Know? According to a 2023 report by the Employee Benefit Research Institute, approximately 20% of U.S. employers with 500 or more employees are self-insured, relying on TPAs to manage their benefits programs.

Entity	Amount Missing/Owed (Approximate)
Sodus Central School	$400,000+
North Rose Wolcott Central	$163,000+
Bay Ridge Dental	$20,000+
Demarree Dental	$30,000+

The role of Third-Party Administrators

Third-party administrators play a crucial role in the employee benefits landscape, handling everything from claims processing to premium collection for self-insured companies. They are often viewed as cost-effective solutions for organizations seeking to outsource benefits governance. However, the current situation highlights the risks associated with limited oversight and the potential for financial mismanagement.

Pro Tip: Employers utilizing TPAs should conduct thorough due diligence, including background checks, financial audits, and regular monitoring of fund activity.

Understanding Third-Party Administration

The use of TPAs has grown in recent years as companies look for ways to control healthcare costs. These firms specialize in managing employee benefit plans, offering expertise in areas like claims processing, utilization review, and network negotiation. Understanding the details of your TPA agreement and actively monitoring their performance is vital to protecting your funds. The challenges faced by these New York schools and dental practices serve as a critical lesson regarding the importance of due diligence and the need for greater transparency within the TPA industry.

Frequently Asked Questions About Third-Party Administrators

What is a third-party administrator? A TPA handles the administrative tasks of employee benefit plans for self-insured employers.

Are TPAs regulated? Generally, TPAs are not directly regulated by state insurance departments.

What are the risks of using a TPA? Risks include financial mismanagement, lack of transparency, and potential delays in claims processing.

What can employers do to mitigate these risks? employers should conduct thorough due diligence, perform regular audits, and closely monitor TPA activity.

What recourse do entities have if a TPA mismanages funds? legal action, such as filing a lawsuit, may be necesary.

How common are issues with TPAs? While not widespread, occurrences of TPA mismanagement are increasing and warrant greater attention.

what is self-insurance? Self-insurance is when an employer assumes the financial risk of providing health benefits to its employees, instead of purchasing insurance from a customary carrier.

What are your thoughts on the current state of oversight for third-party administrators? Do you think stronger regulations are needed to protect the funds of schools and dental practices?

Share this article with your network to raise awareness about this critical issue. Leave your comments below!

what specific internal control failures contributed to teh misappropriation of funds, and how can these be corrected?

Financial Misconduct Uncovered

An investigation into the Wayne County School Districts’ Medical Claims Fund has revealed a significant financial discrepancy. Over half a million dollars is unaccounted for, raising serious concerns about fraud, mismanagement, and potential embezzlement. The funds, intended to cover medical and dental expenses for school employees and their families, have apparently been misused, leaving crucial healthcare providers, particularly dentists, unpaid for their services. This situation has created a ripple effect, impacting not only healthcare providers but also the well-being of school staff and the financial stability of the school districts.

The Scope of the Missing Funds

The investigation, spearheaded by an independent auditor, uncovered that over $500,000 is missing from the Medical Claims Fund. This amount represents a significant portion of the allocated budget, which has created serious financial strain. Key findings include:

Unexplained Disbursements: Transactions lacking proper documentation, approvals, or explanations.

Suspicious Payee Activity: Payments made to individuals or entities with no apparent connection to the fund’s purpose.

Inadequate Oversight: A lack of financial controls and internal audits, contributing to the problem’s escalation.

Delayed Payments: Long delays in claim processing and payment of dental and medical bills.

Lack of Transparency: Limited information about the fund’s spending, operations, and financial health was accessible.

These findings have created more questions than answers and are prompting a deeper look into the financial practices of the Wayne County School Districts.

Impact on Dentists and Healthcare Providers

The missing funds have had a direct and detrimental impact on dentists and other healthcare providers who serve school district employees. The unpaid bills have created extreme financial pressures, forcing some providers to:

Limit Services: Some clinics have had to reduce services offered to school district employees.

Delay Treatment: Delayed claims processing has led to delayed treatments.

Implement Payment Plans: Providers are now requesting payment plans for employees.

Cease New Patient Acceptance: Some have had to stop accepting new patients covered by the district’s benefits.

Reduced Staff hours: Clinics were forced to cut back on employee work hours.

These measures are deeply affecting the quality and accessibility of healthcare for the staff.

Potential Causes and Liabilities

While the investigation is still ongoing, the primary causes for the missing funds could include:

Embezzlement: The diversion of funds for personal gain.

Fraudulent Claims: Submission of false or inflated claims.

Inefficiency: Mismanagement and administrative errors.

Lack of Oversight: Weak financial controls, lack of audits.

Potential Liabilities:

School District Officials: those responsible for the financial management and oversight of the fund.

Third-Party Administrators: Any external companies or individuals responsible for processing claims.

Financial Institutions: Banks that handled the fund’s accounts.

Steps Taken and Future Actions

The Wayne County School Districts have taken several steps in response to this critical situation:

Independent Investigation: Thay have contracted an independent third-party auditor to conduct a thorough investigation.

Suspension of Involved Parties: Parties involved in the financial mismanagement have been placed on administrative leave or other appropriate measures.

Policy review: They are reviewing financial policies and procedures to strengthen internal controls and prevent future occurrences.

Contacting Authorities: All findings were shared with law enforcement agencies for further actions.

future Actions

Full financial recovery will be attempted but may be unlikely.

The goal is to determine the full extent of the losses to identify those accountable and recover the misappropriated funds.

Protecting Employees

The Wayne County School Districts are working to protect employees by the following measures:

Prioritizing employee Healthcare: To ensure staff access to medical care during this crisis, the district is working with providers.

transparency on Finances: Keeping the staff informed on all of the District’s latest financial findings.

Lessons Learned and Prevention Measures

This situation highlights the critical need for strong financial oversight and transparency within school districts. To prevent similar incidents in the future, it is indeed vital to implement the following measures:

Regular Audits: Implement regular, independent audits of all financial accounts.

Strong Internal Controls: Implement internal segregation of duties and required protocols.

training and Education: Train all employees on financial procedures and red flags.

Whistleblower Policy: Adopt a robust whistleblower policy to encourage reporting of suspicious activities.

Technology Enhancements: Utilize technology, such as automated fraud detection systems.

* Board Oversight: Increase the school board’s financial engagement.

By implementing these measures, the Wayne County School Districts can enhance financial management, protect employees, and uphold the principles of fiscal obligation.