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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: Erie County Medical Center Paid Over $670,000 in Improper and Questionable Incentives and Bonuses

Center Improperly Reported Nearly $1 Million as Regular Salary

January 13, 2017

Erie County Medical Center Corp. (ECMCC) paid out approximately $673,000 in improper and questionable bonuses to physicians over a three-year period, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.

“Erie County Medical Center did not properly administer its incentive and bonus programs, resulting in hundreds of thousands of dollars in payments that should not have been paid or for which they could not provide proper justification,” DiNapoli said. “ECMCC has been taking steps to address many of the concerns identified in our audit.” 

Between Jan. 1, 2013 and Dec. 31, 2015, ECMCC reported 4,720 employees on its payroll, including 209 management confidential (MC) employees. During the audit period, ECMCC offered two incentive programs to certain MC physicians — the Performance Incentive Program and the Productivity Incentive Program — and paid 16 of its physicians a total of $1,655,359 in these incentives. ECMCC also offered a bonus program for all MC employees and paid 80 employees a total of $503,022 in bonuses.

DiNapoli’s auditors found ECMCC did not properly administer and monitor those programs, resulting in $76,254 in incentive payments to doctors that should be recovered because they were either not justified under the terms of the relevant incentive plan, distributed in error or miscalculated.

ECMCC did not maintain documentation to support the validity of another $86,261 paid to four physicians. According to ECMCC officials, written support for the bonuses was lacking because the doctors’ compliance with their contractual performance requirements had been conveyed verbally many times.

Nine other physicians were paid a total of $510,062 in incentives based upon their performance as a group, despite the terms of their employment agreements that specified that such payments would be based on individual performance. Formal assessments and documentation of physicians’ individual job performances were not prepared, and consequently, DiNapoli’s auditors could not confirm if these incentive payments were proper.

Additionally, ECMCC paid a total of $401,096 in additional productivity incentives to three physicians as part of the settlement of an employment dispute. ECMCC officials stated that this matter was subject to litigation, and the payments were the result of “an arm’s-length negotiation” to accurately estimate the discrepancy and settle this matter to avoid litigation. However, auditors found problems with these payments, mostly due to a lack of documentation to justify the amounts.

For each year of the audit period, auditors found ECMCC’s public financial reporting improperly classified the compensation paid for the noted 16 physicians. Of the $1,655,359 in performance and productivity incentives, ECMCC reported $900,887 as regular salary. Accounting for these payments as “salary” instead of as incentives misrepresented the nature of these public employees’ compensation. For accountability and transparency purposes, this information should be reported accurately.

Additionally, of the $503,022 in bonus payments ECMCC made to 80 MC employees, DiNapoli’s auditors examined 27 payments to 10 employees totaling $214,800. Based on their review, auditors questioned the propriety of 26 of these payments totaling $209,800 because several employees received bonuses even though they did not establish formal personalized goals and objectives, as otherwise required by ECMCC; and others received bonuses although they did not meet all of their established personalized goals and objectives.

DiNapoli recommended ECMCC:

  • Recover the $76,254 in unwarranted performance and productivity incentives;
  • Further assess the $86,261 of unsupported incentive payments made to the four physicians cited in the report, and determine if additional disallowances and recoveries are warranted;
  • Ensure that incentive payments are properly classified for annual PARIS reporting purposes; and
  • For all incentive and bonus programs and payments: improve monitoring, maintain appropriate supporting records, and ensure that payments are in full compliance with contractual stipulations and commensurate with actual achievements.

Since the audit period, ECMCC no longer operates a bonus program for its non-physician MC employees. ECMCC officials generally agreed with many of the audit conclusions and reported actions they had taken to recover many of the improper payments identified. Officials have also announced their intention to restructure parts of the ongoing physician bonus program. Their full response is included in the report.

Read the report, or go to:

For access to state and local government spending and more than 50,000 state contracts, visit The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.