UNC Hospitals Director of Pharmacy Nailed

State Auditor concluded investigative audit of University of North Carolina Hospitals Director of Pharmacy, James C. McAllister, III.

June 30, 2007

ORANGE COUNTY NC NEWS -- The Office of the State Auditor has concluded an investigative audit of the University of North Carolina (UNC) Hospitals Director of Pharmacy, James C. McAllister, III. The investigation was initiated after receiving an allegation that the Director, who also provides services to the University of North Carolina at Chapel Hill School of Medicine, submitted the same travel expenses to both institutions for reimbursement. The complainant also alleged Director McAllister was reimbursed for his son's cellular telephone expenses.

The State Auditor's investigation showed on three separate trips to Miami, Cincinnati, and Las Vegas. Director McAllister had submitted duplicate reimbursement requests for two trips and submitted his son's travel expenses on the third.

The University's Travel Policy clearly states: "Under no circumstances may duplicate reimbursements be made. Any travel expenses to be reimbursed by a third-party organization will not be reimbursed by the University. Individuals accompanying the traveler (spouses, children, etc.) may not be reimbursed for their travel expenses."

On the trip to Las Vegas to the "Midyear Clinical Meeting of the American Society of Health-System Pharmacists," the Director's son, a pharmacy student during this time, also attended meeting. According to the Dean of the University's School of Pharmacy, the Director acknowledged he submitted his son's expenses for reimbursement, but assured the Dean this was an isolated occurrence. Following this admission to the Dean and an initial interview by the State Auditor, the Director reimbursed the University $1,202 for his son's travel expenses.

Later investigations, revealed that the other two trips to Miami and Cincinnati, had duplicate reimbursements paid. The State Auditor recommended that the Director, James C. McAllister III, should reimburse the University $693.39 for travel expenses from the trips.

Continued investigations found paid cellular telephone expense reimbursements for two phones. On examination of the cellular telephone statements indicated Director McAllister consistently claimed reimbursement for the telephone number with the highest monthly charges - his son's cellular phone. In addition, both UNC Hospitals and the University reimbursed the full amount for the selected telephone each month during the 21-month period without any evidence supporting the business purpose of the charges. The State Auditor report recommended that The Director should reimburse UNC Hospitals $1,123 and the University $1,248 for cellular telephone charges unrelated to hospital or university business.

The State Auditor's investigation also found Director McAllister had received duplicate reimbursements for the same expense. On June 11, 2004, the Director received a $387 reimbursement from the University for his Nextel bill from April 19, 2004 through May 10, 2004. Documentation for the reimbursement request showed the majority of the charges were for a $268 BlackBerry 7510 kit. On December 30, 2005, the University reimbursed the Director $387 for the same Nextel bill dated May 15, 2004.

The State Auditor also found 25 instances in which the Director submitted expense reimbursement requests to the University months and even years after incurring the expense. In one example, the Director James C. McAllister, III, was reimbursed $267 for replacement of an Alltel cellular telephone. On examination of the reimbursement, the original receipt was dated July 3, 2003. The check request, with his signature, was submitted for payment on September 12, 2005. Finally, the reimbursement check was written October 6, 2005.

The State Auditor's final recommendation to the University management is to:

• Ensure that employee requests for reimbursement of expenditures are made as soon as reasonably practical. The University should require employees to
• Submit original receipts, invoices, etc. as supporting documentation for the reimbursement of expenditures.
• UNC Hospitals and the University should consider developing a policy that either limits the reimbursement of expenses for employees in dual-employment status to the primary employer or provides for a comprehensive annual review and reconciliation of compensation and expense reimbursements for employees in this status.

The Office of the State Auditor is located in Raleigh and has nine branch offices across the state. North Carolina state auditors are dedicated professionals who are committed to producing thorough audits and examinations. The results of these audits and examinations are useful and practical recommendations to improve state and local governmental services in North Carolina.

To read the full State Auditor's Report of the special review of the allegations against the UNC Hospitals Director of Pharmacy, James C. McAllister, III, click here: "Special Review of the University of North Carolina Hospitals and University of North Carolina School of Pharmacy Chapel Hill, June 2007." The University of North Carolina at Chapel Hill School of Medicine is located in Chapel Hill, Orange County, NC.

Published by:
Rob Cross
mailto:editor@357news.com

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