BATON ROUGE -- The Department of Health and Hospitals' Office of Mental Health has failed to properly monitor the repayment of more than $45,100 in overpayments to employees who work in the New Orleans area and overpaid by almost $220,000 doctors who work at mental health clinics in Terrebonne, St. John the Baptist, St. Mary and Lafourche parishes, according to an audit of the agency made public Monday.

The audit covers the period from July 1, 2007, to June 30, 2009, Legislative Auditor Steve Theriot said. He said this is the third audit in a row showing the Office of Mental Health has not "maintained adequate internal controls over payroll."

The department concurred with the audit findings and said it is taking corrective action. The audit covers what the department calls Mental Health Area A -- which includes clinics from Mandeville to Houma and Morgan City as well as Southeast Louisiana Hospital in Mandeville and the New Orleans Adolescent Hospital, which is being closed.

The audit faulted the mental health office for not ensuring "proper supervisory approval of overtime earned by employees."

Auditors did not name the doctors involved but said one earned $79,282 by including three hours of commuting four days a week toward salary totals; a second was paid $46,809 for commuting two hours a day four days a week; and a third was paid $37,534 for commuting one hour per day five days a week.

The audit said that the doctors were working under "verbal agreements with previous management" for the overtime.

Auditors said the agency could not provide an accurate summary of outstanding balances of overpayments. The report said auditors could document the recovery of $23,000 of more than $45,000 that had been identified as overpaid in previous audits.

The report said that of 19 New Orleans Adolescent Hospital employees reviewed, four did not have approval to earn overtime and two others had "discrepancies between the approved overtime" and the overtime recorded on time sheets.

The report said that a review of nine professional and social services contracts also showed that one doctor at a LaPlace clinic received "an estimated $49,000 in excess of the approved contract terms" in the two-year period.

For the second consecutive audit, the mental health office did not move quickly to cancel computer access of dead, retired or transferred employees to finance and purchasing computer systems. It also said for the second straight audit, the mental health office "failed to maintain adequate controls" over consumable inventories that were valued at $1.2 million as of June 30, 2008. Auditors said the items include equipment and supplies but not drugs.

The report said that "periodic physical counts" of inventory were not performed at the New Orleans Adolescent Hospital warehouse, and of 52 items tested at other locations in the region, the balances for 11 of them did not agree with what was in storage.

In a formal response to the audit, DHH officials said commuting time will no longer be paid to doctors and that they will now have to work a 40-hour week at clinics or use annual leave toward their 40 hours. They said NOAH and Southeast hospital employees will now have to get approval before working overtime.

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Ed Anderson can be reached at eanderson@timespicayune.com or 225.342.5810.