No prosecution on Saline hospital deal | Arkansas Blog

Friday, April 3, 2009

No prosecution on Saline hospital deal

Posted By on Fri, Apr 3, 2009 at 4:12 PM

Saline County Prosecutor Ken Casady has concluded there's nothing to prosecute in the recent discovery, subject of a fair amount of press coverage, that the Saline Memorial Hospital got a sweetheart deal on sewer rates.

His letter to the Benton city attorney is on the jump. Everybody knew about it. The rate followed a practice once authorized by law (charging based on water that reaches the sewer, not water consumption). Nobody willfully violated any laws. Case closed.


City Attorney Brent Houston
Benton City Hall
Benton, AR 72015
Dear Mr. Houston,
      At a recent agenda meeting of the Benton City Council, Benton Utilities General Manager Terry McKinney acknowledged that Saline Memorial Hospital’s (Hospital) sewer rate was based on water that reached the sewer, rather than overall water consumption.

You provided me with some documentation and requested that I do the following:

1)      determine if there was a prosecutable violation of State Law, specifically any prosecutable violation of A.C.A. § 14-42-108 or 5-52-101; and

2)      determine if there was any criminal violation of a city ordinance by a city employee or elected official.

 In short, my answer to both questions is no.  

1)      Is there any prosecutable violation of State Law?

The current rate at which the Hospital is billed for sewer services by the City of Benton (City) is, and has been, known to the City and its employees since 2003.  There is documentation that at least two City employees appeared to have worked with the Hospital when the Hospital installed the meters. These new meters allowed the Hospital to be billed only for water that reached the sewer and not for water that evaporated through sprinkler systems or cooling towers.  Current City Ordinance bases sewer rates on water consumption.

Because the city was on notice of, and continued to participate in, this arrangement, if an investigation had found that the rate, or reduction, was the result of any elected official’s or city employee’s willful violation of State Law, a prosecution under A.C.A 14-42-108 or A.C.A 5-52-101 is barred by the applicable statues of limitations.  Therefore, even if I felt that there was criminal intent involved in this matter (which I do not) it would not be legally possible to prosecute this matter.

2)      Was there any criminal violation of a city ordinance by a city employee or elected official?

In addition to the statue of limitations bar, I find no evidence of any criminal intent or criminal activity that led to the current rate of billing or the reduction that the Hospital receives.  All of the records that I have reviewed and interviews that I have conducted of current and former City and Hospital employees and current and former elected officials, indicate that the Hospital, in accordance with Benton City Ordinance 12 of 1986, presented to the City “a showing by a user, [showing that] the water consumed by the user does not reach the sanitary sewer system of the city.”  Under this Ordinance, a reduction was allowed for large users upon the showing that consumed water that evaporated, such as in sprinklers and cooling towers, did not reach the city sewer, and therefore would not be billed as sewer services. 

      The language that appears in Ordinance 12 of 1986, which allows such a reduction for the Hospital, and other high volume users, does not appear in later ordinances that purport to replace it.  Longstanding City policy, predating Ordinance 12 of 1986, allowed users to pay to install a second meter for water use that did not impact sewer usage. There are apparently still numerous instances of users having and acquiring separate meters from the City for water that evaporates and does not impact their sewer usage.   However, since Ordinance 7 of 1995 was passed, which calculated sewer rates on winter months water usage, there does not seem to be any benefit from a second meter for residential users.

       Employees of the Hospital worked openly with municipal employees to install meters that would prevent the Hospital from being billed on its sewer bill for water that does not reach the sewer.   Allowing citizens to install such meters and not be billed sewer charges for water that evaporates appears to have been the City’s normal practice at one time before the Hospital installed these meters.   

      At this time, I have found no evidence of criminal intent or criminal actions on the part of any current or former City employee or elected official and no wrongdoing on the part of the Hospital.  The concept of citizens and corporate citizens not being billed for sewer service for water that does not reach the sewer is, I believe, a concept rooted in fairness, but it also did not and does not comply with the letter of the law of the applicable current ordinances.  However, the need to reconcile the City’s policies with the City’s ordinances is not a criminal matter.  Any part of this inquiry that constituted a criminal investigation by my office is now closed and I am returning to you the documents the City provided me.  Thank you for your assistance with this investigation.
Ken Casady
Saline County Prosecuting Attorney

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