Central Oregon hospital overpaid employees by $2 million. Now, it wants that money back

By Joni Auden Land (OPB)
Aug. 12, 2022 12:24 p.m. Updated: Aug. 12, 2022 12:52 p.m.

Employees say there’s lack of evidence for overpayments

The outside of the St. Charles Health System campus in Bend on July 26, 2022.

Joni Land / OPB

St. Charles Health System accidentally overpaid thousands of employees a total of $2 million across a few months and is now demanding employees pay that money back, according to a hospital spokesperson.

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Employees were notified Thursday of the total amounts they allegedly owed. Scott Palmer of the Oregon Nurses Association said the amounts range from less than $100 to as much as $3,000 for some employees.

St. Charles leadership said in a written statement that the average amount owed is $780, and that many employees have already signed forms agreeing they will repay the money.

At least 2,000 employees owe some money to St. Charles, emails obtained by OPB show.

The problems started last November when hackers launched a ransomware attack on Ultimate Kronos Group, a technology company that runs St. Charles’ payroll system. The attacks left many businesses across the U.S. who use the system reeling and unable to access payroll records.

From late November until January, the hospital paid employees based on hours they reported during that time, a spokesperson said.

Emails obtained by OPB show hospital leadership gave affected employees a series of options to pay back the money: in one lump payment, a series of installments or deductions from an employee’s accrued time off.

Palmer said the nurses association plans to issue a cease and desist letter to St. Charles on Friday afternoon, demanding it stop sending letters to employees seeking repayment. He said in one case, a nurse was notified with a sticky note the amount of money they allegedly owed.

“This is just yet another way in which nurses and frontline health care providers and staff are being burdened,” Palmer said.

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He said members of ONA have received little evidence that the hospital system overpaid employees.

“(St. Charles is) just asserting that this money is owed with no documented support, at least none that we can tell from our members,” he said. “(The ONA members are not) getting any sort of detailed rationale about why they should pay this money back.”

St. Charles representatives declined requests for an interview. In a provided statement, spokesperson Lisa Goodman wrote that employees were told ahead of time that overpayments would likely have to be collected.

“While we recognize this is an inconvenience for our employees, we’ve communicated from the beginning that this is a step we’d eventually need to take,” Goodman wrote.

She also wrote that St. Charles has spent the past several months paying back employees whom the hospital underpaid as a result of the hack, which forced the hospital to enter in payroll information for months afterward.

Palmer said St. Charles did not notify specific employees that they would owe money until Wednesday, months after the payroll issues at St. Charles had been addressed.

One employee sent an email to OPB from St. Charles in March briefly explaining how overpayments would be collected from workers.

It’s the latest setback in a year of unprecedented financial difficulty for St. Charles. As of July, the health system had lost a total of $40 million in 2022 and laid off more than 100 employees in May.

It also laid off two executives in July, which hospital officials said was done as a cost-cutting measure.

As with many other hospitals in Oregon, St. Charles has had difficulty handling a surge in patients while being severely short-staffed, especially among its registered nurses and certified nursing assistants. Executives have said it’s been difficult to fill vacant positions.

The hospital quietly declared crisis standards of care in July to address the shortage. It reversed the decision after the Oregon Health Authority said it didn’t meet the criteria to do so.

St. Charles Health System is the only hospital system in Central Oregon and is the region’s largest employer.

This story is developing and will be updated.

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