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ICAC finds sisters corrupt over alleged hospital fraud

Wednesday 31 August 2011

The Independent Commission Against Corruption (ICAC) has found that Sandra Lazarus engaged in corrupt conduct in relation to claims she made for payments of more than $680,000 from the Royal Hospital for Women (RHW) and the Royal North Shore Hospital (RNSH).

The payments were made to companies in which Ms Lazarus had undisclosed interests and for services that were never provided.

In its report on the Investigation into corrupt conduct involving alleged fraud on two Sydney Hospitals, released today, the Commission also finds that Sandra Lazarus' sister, Michelle Lazarus, engaged in corrupt conduct in relation to both hospitals by concurring with the submission of false invoices by Sandra Lazarus on behalf of Wish Consulting Pty Ltd, one of three companies in which Sandra Lazarus and her sister Michelle Lazarus had an undisclosed interest.

The Commission found that between 2007 and 2009, Sandra Lazarus had falsely represented herself to the hospitals as a PhD student of the University of Sydney, who wished to undertake clinical trials of the Medex diagnosis device as part of her research.

The Commission found that Sandra Lazarus submitted false invoices and other false documentation to procure payment from the hospitals for services that she knew, with the exception of tests on one or two patients, were not provided.

Sandra Lazarus prepared vendor maintenance forms that she knew falsely purported to be signed by professors at the hospitals and sent them to the South Eastern Sydney and Illawarra Area Health Service (SESIAHS) and to Health Support Services (HSS) in order to procure payment respectively from RHW and RNSH.

She also prepared requisitions and non-order vouchers that she knew falsely purported to be signed by other doctors and sent them to the SESIAHS and HSS in support of invoices on behalf of Wish Consulting and other companies in which she had an undisclosed interest, Medical and Clinical Informatics Consultants Pty Ltd (MCIC) and Complete Health and Medicine Pty Ltd (CHM).

Sandra Lazarus also represented to a data entry clerk and an accounts clerk at the SESIAHS that she was a hospital representative chasing up payments, without disclosing that she was the supplier to whom the payments were to be made.

The Commission's investigation highlighted a number of flaws in the organisational structures and processes that enabled Sandra Lazarus to improperly obtain the funds from the hospitals. She was able to convince clinical and administrative staff that she was a student researcher who needed access to hospital premises and equipment. With the degree of access she gained, she was able to obtain requisition and non-order voucher forms, as well as information, which helped her to create false versions of these documents.

The flaws in the organisational structures and processes identified in the investigation include: gaps in the procedures that authorise hospital access; inadequate methods of verifying financial delegations; and understaffing, confusion of responsibilities and the use of untrained, temporary staff in an organisational restructure.

The Commission has made seven recommendations to improve these systems, including that the NSW Department of Health (NSW Health) requires non-employees who are to be given access to hospital campuses, records, facilities, and patients, be subjected to screening checks and afforded a level of access that is determined by the role they are to perform and the degree of risk attached to this role.

The ICAC also recommends that NSW Health develops procedures for ensuring that electronic approvals are used for all procurement transactions except for emergencies.

The Commission is of the opinion that the advice of the Director of Public Prosecutions should be obtained with respect to the prosecution of Sandra Lazarus for several offences under the Crimes Act 1900 including obtaining money by false or misleading statements, and with respect to the prosecution of Michelle Lazarus for offences of giving false or misleading evidence, contrary to the Independent Commission Against Corruption Act 1988.

The Commission held a public inquiry, as part of the investigation, in two segments. The first commenced  on 14 February 2011 and continued for 13 days, with the inquiry resuming on 23 March 2011 for a further three days. Commissioner the Hon David Ipp AO QC presided at the public inquiry, at which 33 witnesses gave evidence.

Investigation Report   Fact Sheet - Operation Charity