Guam Memorial Hospital was paying MedHealth public funds without verifying whether the company continued to operate with a Guam business license, according to the latest audit into GMH by the Office of Public Accountability. As previously reported, that audit uncovered evidence of a sweetheart deal resulting from illegal procurement acts and resulting in about $5 million in questioned costs.
Also in the audit is the discovery that, between September 1, 2022 and the end of the contract with GMH on November 3, 2022, no GMH official checked whether MedHealth renewed its Guam business license, which had expired August 31 that year.
In fact, when MedHealth competed for the GMH contract, the company initially submitted a CNMI business license “issued in January 2020 for health care management.” It was not until MedHealth started performing work that the company presented GMH with a valid Guam business license.
That business license expired on August 31, 2022, according to the audit. And MedHealth continued to work as a contracted government vendor until November 3 that year, when GMH pulled the plug on the contract following the public let out of the scandal by the media.
“It is unclear if the Contractor renewed its Guam business license prior to its expiry on August 31, 2022, as GMHA did not make any further request for a valid Guam business license following the initial contract award and subsequent renewal up to May 13, 2023,” the audit states. “As a result, we could not determine if the Contractor’s services from September 1, 2022 through November 3, 2022 were covered by a valid Guam business license. GMHA did not perform its due diligence in ensuring that the Contractor was legally permitted to conduct its business in Guam throughout the life of the contract due to the absence of a copy of a renewed Guam business license.”
Guam law has been clear about the requirement for a business license since the Second Guam Legislature in 1953: “Every person engaged in or carrying on a business in Guam for the sale or manufacture of any tangible property whatsoever shall be required annually to obtain a commercial license.”
That license is proof of conformity with relevant industry regulations, and is what is used to identify a business on Guam for the purpose of paying taxes.
According to a table of invoices and payments provided in the audit, GMH paid MedHealth $532,773.28 for that September through November period in which it is not know whether MedHealth had an active business license.
The audit also notes that while MedHealth had a CNMI business license for health care management, its Guam business license was only for consulting. The requirements and fees for a consulting license are far less tedious and expensive than one for health care management.
In her management response to the audit, GMH administrator Lillian Perez Posadas did not refute the audit’s findings about the business license issue.
