Guam Memorial Hospital’s cash flow problems have circled back to an old and ominous low: The illegal withholding of gross payroll.
According to Senator Sabrina Salas Matanane, whose legislative health committee oversees GMH legislative matters, confirmed that last month, GMH paid out only net payroll.
“It is alarming to learn that, as of last Friday, GMH was only able to meet net payroll obligations,” Ms. Salas Matanane wrote to GMH administrator Lillian Perez-Posadas on May 1.
According to the senator, Ms. Perez-Posadas told the senator that GMH was unable to afford “$800,000 needed for employee retirement contributions” and that GMH needed “[a]dditional funds required to remit employee tax withholdings.”
Net payroll is what an employee would be paid every two weeks that he or she could deposit or cash. Gross payroll includes the paychecks plus payments GMH makes to other companies and government agencies on behalf of the employees. For example: The GMH and employee share of an employee’s health insurance premium, payroll taxes to Guam Department of Revenue and Taxation, contributions to employee retirement accounts, and payroll deductions for mortgages, car payments, and other loans.
It is illegal for any employer to make net payroll only.
Title 22, Chapter 3, Article 2, §3201 of the laws of Guam states:
“The earned wages of all employees shall be due and payable within seven (7) days after the end of each pay period, except that: (a) the earned wages of all employees discharged the employer either with or without cause shall be immediately due and payable upon discharge; (b) if an employee leaves his employment voluntarily, his earned wages shall be due and payable on the next regular pay day; (c) where work is suspended as a result of a labor dispute, the wage of all employees earned to the date of such suspension shall become due and payable at the next regular pay day.”
Three sections down, the law states:
“It shall be unlawful for any person to deduct and retain any part of portion of any compensation earned by any employee except where required by federal or territorial statute or by court process or when such deductions are authorized in writing by the employee, provided that deductions for fines may not be so authorized.”
The next section of the law makes the violation of §3201 and §3204 a crime:
“Any person who, having the ability to pay, intentionally refuses to pay wages due and payable when demanded or who violates any provision of §§ 3201 through 3204 of this Title shall be guilty of a misdemeanor.”
According to Ms. Salas Matanane, at the time GMH administrator Lillian Perez-Posadas privately relayed to her that GMH only could make net payroll, GMH also had a nearly $1 million overdue power bill, and only about $450,000 in the bank.
According to Ms. Perez-Posadas in April, GMH was four months behind in paying its power bill due to funding shortages.
Ms. Salas Matanane, in an interview with Kandit Sunday, said she needs GMH to be more forthcoming about its problems so that she, budget chairman Chris Duenas, GMH officials, and the governor’s office can compromise on solutions. Among the solutions the senator is considering include severe cuts, legislative appropriation, the governor’s use of her transfer authority, and investment into tools such as revenue cycle services and integrated claims and billing systems to raise revenue.
GMH’s faltering financial state and physical plant are expected to be focal subjects in Monday afternoon’s GMH budget hearing by Senator Chris Duenas.
