Erie County Medical Center has failed to follow its own rules as well as other rules laid down when it was spun off into a public-benefit corporation, the county comptroller said Monday in describing the results of a four-month inquiry by his auditors.

County Comptroller Mark C. Poloncarz also said that the records of the hospital’s board are incomplete and that, in one case, officials masked a $50,000 expense for advertising and public relations.

“I don’t believe these findings are illegal,” Poloncarz said of the problems found by his auditors. “I think it’s fair to say they are unethical.”

ECMC responded by questioning Poloncarz’s motives for triggering the audit and implied he was trying to wrench information from the hospital to benefit its competitors.

The county comptroller had played in a foursome with Kaleida Health’s chief executive officer at a Kaleida golf tournament shortly before the auditors began their research last year, said hospital spokesman Thomas J. Quatroche Jr. But Poloncarz’s staff called the event irrelevant and said he had played at an ECMC Foundation tournament, too, in 2006.

“Why is the comptroller trying to make ECMC look bad at this particular time?” asked Quatroche, ECMC’s vice president of marketing and planning. “We trust questions will be asked of the comptroller about his motivation and timing.”

The state Commission on Health Care Facilities in the 21st Century last year ordered the elimination of the public entity that operates ECMC, and the combination of Kaleida and ECMC into a nonprofit corporation that includes the University at Buffalo. Poloncarz said that he was not trying to affect progress toward that goal but that taxpayers have an interest in the hospital.

The 2004 agreement that sold the county’s hospital to a new public-benefit corporation — postponing the county’s financial meltdown for a year — keeps taxpayers on the hook for hundreds of millions of dollars to ECMC through 2033, he said.

Over two years, taxpayers contributed about $26 million for ECMC’s major capital needs, but most of it remains unspent because the state is not authorizing major hospital projects until the state Berger Commission recommendations play out regarding hospital closures and consolidations.

Right now, the county and the state-appointed control board are borrowing an additional $15 million for ECMC improvements. The hospital, which is showing year-end surpluses, will collect interest on the money it cannot spend, Poloncarz said, while taxpayers will pay the principal and interest as they repay the debt.

Poloncarz said his auditors found that certain decisions by ECMC’s executive committee were never approved by its full board, as the bylaws require, or at least the full board’s actions were never recorded in meeting minutes.

That was evident in the tale of one $50,000 invoice, for advertising services, that the auditors found almost by accident.

It is common for ECMC and other hospitals to promote themselves with advertising, and ECMC has done so for years. But against the backdrop of the Berger Commission, ECMC also wanted to bring public opinion to its side to prevent it from being absorbed by Kaleida.

County auditors reviewing hospital operations from Jan. 1, 2005, to June 30, 2007, found a curious invoice to the hospital from the group Citizens to Save ECMC — a collection of ministers who wanted to help the hospital, Quatroche revealed Monday.

The group has an address in the Liberty Building, which also houses ECMC’s counsel, Anthony J. Colucci III.

An ECMC official had scrawled on the Citizens to Save ECMC invoice, “Canceled by SM. Paid by Colucci.”

Auditors assumed that “SM” was Chief Financial Officer Sue J. McCarthy. The day after that invoice was canceled, Colucci billed ECMC $50,000 for “certain public relations matters” and was soon paid, auditors found.

They later learned, from Colucci, that the $50,000 had been spent on a television ad, played in Buffalo and Albany, about the Berger Commission and its effects on ECMC. So ECMC had not spent just $6,500 trying to win public opinion, as records showed, but $56,500.

Poloncarz said he had no problem with the $50,000 expense. Had it been recorded properly, he said, the auditors would have accepted it.

“I have a problem with them trying to hide the payment,” Poloncarz said.

While it had been discussed by the hospital’s executive committee, Poloncarz noted, there is no record the committee approved it, and it was not approved by the full board. Hospital executives countered by saying that it was not an item requiring board approval since it was less than $500,000.

According to Poloncarz and his staff, when county auditors and ECMC officials met to review the audit’s findings before they would become public, ECMC’s president and chief executive officer, Michael A. Young, explained that the transaction was arranged to prevent the expense from being released to outsiders under New York’s Freedom of Information Law.

In a 16-page letter given to the County Legislature on Monday, ECMC gave another explanation as it challenged Poloncarz’s findings. ECMC said that it need not disclose “marketing strategy,” and had asked Poloncarz not to include the $50,000 transaction in his report, especially amid the unsettled discussions involving ECMC Corp. and Kaleida.

“There was no violation of law involved in his transaction, no waste of public monies and no inconsistency with internal procedures,” the hospital wrote to legislators. “Other than his intent to embarrass ECMC, the comptroller had no legitimate reason to highlight this transaction.”

ECMC also defended itself from Poloncarz’s complaints that its officials had not provided county government the continual financial data required by the 2004 agreement. ECMC officials said that such information was regularly provided to the county executive’s office and that in other instances, Poloncarz misunderstands the law.

The hospital said Poloncarz had not gone into the audit objectively, as auditing standards require. Quatroche said ECMC officials suspect that Poloncarz might be setting the stage for a lawsuit against the hospital to recover money the county was forced to pay under a Medicaid program that reimburses public hospitals for their losses caring for the working poor who do not qualify for Medicaid.

Poloncarz has argued that the government should not have to pay those millions when its support for ECMC was spelled out in a State Supreme Court consent decree.

“This audit is motivated by politics and the agenda of ECMC’s competitors and does not speak to the financial success of ECMC over the past three years,” Quatroche said. “It is troubling, to say the least.”

mspina@buffnews.com

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