East Adams Rural Healthcare’s Ritzville (Wash.) Hospital said it is “fully cooperating” with authorities amid 14 state, federal and local government investigations after the discovery of financial fraud brought on by its former leadership, according to a Feb. 19 news release shared with Becker’s.
EARH Superintendent and CEO Todd Nida said in the release that the alleged misconduct includes falsified documents on a federal grant for $342,000, $930,000 in concealed accounts payable and $761,000 in combined fraudulent Medicare and Medicaid billing.
The hospital’s current leadership also accused former administrators of approving $1.9 million in unauthorized contracts and misrepresenting the facility’s finances to its board and the community for almost two years, hiding losses that totaled $10.5 million from 2022 through 2024.
“In June 2025, when the former CFO [Matt Gosman] resigned, when the full extent of the financial fraud was discovered, the hospital was within two to three weeks of closure,” Mr. Nida said in the release.
EARH was able to keep its doors open due to a variety of reasons, including $2 million in distressed hospital funding and DZA, an accounting firm, accelerating the preparation of the hospital’s 2022 through 2024 audits, which allowed for Medicare Cost Reports filing that gave an additional $2 million in funding for 2025 and 2026 to the facility.
The hospital also brought on new management. Mr. Nida was appointed EARH CEO in August 2025, and replaced Cory Fedie. Viola Babcock was hired as CFO in June 2025.
“EARH leaders have publicly stated that I intentionally misled the Board of Commissioners,” Mr. Fedie said in a statement shared with Becker’s. “This is completely false.”
Other stabilization efforts included two rounds of layoffs, an application to become Washington’s first rural emergency hospital and a debt reorganization plan to help resolve $5.3 million in unsecured debt without seeking Chapter 9 protection.
EARH also reached an agreement with MultiCare the week of Feb. 9 on its $3.2 million claim and terms and reached an agreement with Health Carousel on its $700,000 claim and terms the week of Feb. 16. The hospital has resolved $3.9 million in claims as of Feb. 19 and is working with its remaining creditors to resolve the remaining $1.4 million, the release said.
While the hospital could file for Chapter 9 bankruptcy, no one can force it to close or be liquidated, the release said.
“I’m proud of the progress we have made,” Mr. Nida said. “We were at great risk of closing this past year. We still have a long way to go though. There is no certainty in the healthcare industry today. That is especially true in rural healthcare. It is incredibly unfortunate that individuals in the prior management deceived our Board, our suppliers and vendors, and our community. We are fully cooperating with the authorities regarding the financial discrepancies that were discovered last Summer.”
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