The Journal Register (Medina, NY)

February 22, 2013

Hospital sues former employee

By Jim Krencik
Medina Journal-Register

Medina Journal-Register — MEDINA — Orleans Community Health has alleged that a former Medina Memorial Hospital employee misappropriated more than $400,000 in payroll funds for her personal gain, according to court documents filed earlier this month.

OCH is suing Linda Rakonczay, who worked as the hospital’s payroll coordinator for more than two decades, in the State Supreme Court in Albion. According to a summons filed on Feb. 1, the hospital is seeking a return of all of the funds that Rakonczay received, “that were additional to, and distinct from, her paycheck” as part of a scheme that began at least by 2006.

According to an affidavit of Orleans Community Health Controller Joseph C. DiStasio, at least $421,716 of hospital funds was misappropriated through the hospital’s payroll savings deduction program for employees. MMH allows employees to designate a portion of their paycheck to a savings account, a process that was overseen by Rakonczay. The hospital claims that Rakonczay did not participate in the program, but added herself as a “distributee” of the program.

DiStasio’s statement said the discrepancies were discovered after Rakonczay, a resident of Middleport, went on disability leave in November. She was terminated from her position on Jan. 28.

According to payroll records filed with the statement, discrepancies of between $1,000 and $2,210 were found in a period beginning in 2006. For a six year period beginning late that year and ending in November 2012, the discrepancies were almost always $3,000 taken every two weeks.

The Medina-based healthcare provider further charges that Rakonczay actively concealed her actions by “inflating the Hospital’s health insurance bills” to ensure MMH’s overall funds balanced.

Hodgson Russ Attorney Daniel Oliverio, who is representing the hospital, said Rakonczay was in charge of payroll and direct deposit accounts. She did not oversee the hospital’s charitable accounts or patient records.

”This was isolated to a tiny fraction of what the hospital does,” Oliverio said. “It was a fairly simple scheme ... money charged for health care premiums went to her bank account.”

Attorney Jon Louis Wilson of Lockport, who is representing Rakonczay, said Thursday that a response to the plaintiff’s attorney was filed and sent to the Orleans County Clerk’s Office Wednesday. Wilson said further comment would be made on Tuesday, when both parties will appear before acting State Supreme Court Justice James Punch.

Oliverio said Thursday that criminal allegation are also possible, as Rakonczay is under investigation by the FBI and the Buffalo U.S. Attorney’s Office. The U.S. Attorney’s Office would not confirm or deny that an investigation is occurring.

Contact reporter Jim Krencik at 798-1400, ext. 6327.