Hospital was undercharged $800,000 for water; Poway wants it to pay up

A water-billing dispute between the city of Poway and Pomerado Hospital that could soon boil over into state court began when the city realized that for seven years it had charged the hospital for only 10% of its water use.

City officials caught the mistake last year and want the hospital to pay the more than $800,000 difference, but the Palomar Health District — which operates the hospital — is balking at the big bill.

Last week, the Poway City Council decided in closed session to file a claim against the health district seeking reimbursement. The council rejected an offer made by the hospital to settle the dispute for about $150,000. A claim is generally a precursor to a lawsuit.

Poway City Manager Dan Singer said the erroneous billing began when a new consolidated meter was installed at the hospital in 2008 and then incorrectly read until last summer. He acknowledged the mistake was the city’s, but also questioned why the hospital never said a word about being underbilled.

“Should they have been aware? I don’t know,” Singer said. “I would think so. If you think about them having a line item in their budget for $150,000 [worth] of water, and all of a sudden it drops down to $15,000 or $20,000 a year, I would think somebody would realize something is wrong.”

A spokesman for Palomar Health said the district won’t comment on the situation because of the pending litigation. Singer said the hospital has been paying the correct amount since the error was discovered in the summer of 2015.

He said the statute of limitations will affect how much money the city can seek in reimbursement. Damages will likely be limited to three or four years, depending on how various laws are interpreted by a judge, he said.

The mistake had to do with one digit, officials said.

“Back in 2008, they went to a new consolidated meter that took multiple lines and ran them through one meter,” Singer said. “It was designed for larger facilities with multiple lines in use.”

The face of the electronic meter has six digits.

“When the crew put in the application after it was installed and brought it to our customer service folks to put into the computer, it was recorded as having only five digits,” he said. “We should have caught it.”

The result: The hospital was being undercharged by 90%. For instance, Singer said, if they used 1,000 units of water during a billing period they were only being charged for 100 units.

Annual bills during the time period should have been roughly $150,000, he said.

“It was a pretty major error on our part,” Singer said. “We have since audited all our consolidated meters, and they’ve all been done correctly, so luckily this was isolated.”

City Atty. Morgan Foley said a claim seeking reimbursement for at least some of the funds will soon be filed.

“We’ve tried to negotiate a resolution, and we’ve been unsuccessful,” Foley said.

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jharry.jones@sduniontribune.com

Jones writes for the San Diego Union-Tribune