Dr O'Sullivan himself resigned from the hauora last June after he was given a warning that he too would be dismissed if he continued to treat patients who had unpaid bills to the hauora.
"So I don't put a lot of weight on the fact that the person we employed had that history, because that employer is particularly toxic," he said.
Mrs McNab was employed at the hauora as manager of a health development project for five marae which received $661,000 over four years from the Maori Health Innovation Fund.
Mr Halkyard said other staff became suspicious about the $3000 invoice last August because it was submitted in the name of an unknown company. Investigations revealed apparent "fabrication" of work and concealment of the true name of the employee.
"We discovered those two things after checking payroll records and a previous version of the invoice via the email system," he said.
However Mrs McNab said she prepared the invoice in good faith to pay an employee "for work that was done over and above her job description".
"I was not given an opportunity to discuss it face to face. It went straight to investigation and dismissal," she said.
The invoice was never actually sent and the employee was not paid.
Mrs McNab and Dr O'Sullivan have again applied to the Maori Health Innovation Fund for their "tele-medicine" proposal. Their service already visits 14 schools around Kaitaia and they propose to reach 12 more remote schools by training teachers and others to consult with a Kaitaia-based nurse via the new school ultra-fast broadband network.
Their proposal has been shortlisted and they are due to meet a selection panel in Auckland on March 12.
