It’s the end of an era: The lucrative forays by a handful of politically connected lobbyists and businessmen into providing healthcare for the District’s poor and most vulnerable are coming to a close.
On Monday, city officials announced that they were close to selling Chartered Health Plan, a Medicaid managed care organization that serves 110,000 low-income District residents, to AmericaHealth Mercy, a Philadelphia-based insurance company. Chartered, which has been in receivership since October, is owned by Jeff Thompson, an accountant who is the alleged financier of an illegal shadow campaign federal prosecutors say helped Mayor Vince Gray win in 2010.
Meanwhile, Thompson’s close associate and former lobbyist, David Wilmot, is ending his career in the city’s publicly funded healthcare business. Independent monitors gave his company, Individual Development Inc., poor marks for years for providing substandard care to developmentally disabled residents. IDI has sold off its group homes and will have transferred them to new owners by January, according to Department of Disability Services Director Laura Nuss.
The departure of both Thompson and Wilmot from the health care business won’t come cheap. The District plans on spending between $1 million and $2 million to cover a gap in federal money as the new providers take over Wilmot’s 11 group homes, according to Nuss. In addition, the District gave a Maryland-based nonprofit, Volunteers of America-Chesapeake, $900,000 to help the company purchase eight group homes from Wilmot. Nuss says that grant will save the District money by shielding it from having to cover greater housing costs down the road and will not result in any payouts to Wilmot or IDI’s other politically connected board members, Fred Cooke Jr. and A. Scott Bolden.
“Believe me, we would not be interested in doing that,” Nuss says.
Meanwhile, Chartered’s shaky finances forced the city to place the company into receivership in October. That receivership includes the services of legal and financial experts who are advising the city on the best way to unload Chartered. So far, the receiver, a law firm, and an investment banker have invoiced nearly $165,000, according to Department of Insurance, Securities and Banking spokesman Michael Flagg. Flagg’s boss is quick to point out that Chartered is covering those costs.
“The District is not paying for any of this,” says DISB Commissioner Bill White. Except it kind of is, since Chartered gets almost all of its money from contracts with the District.
In a way, it’s fitting that Thompson and Wilmot’s exit from the healthcare business will result in extra costs to the taxpayer, as well as Medicaid money being spent on lawyers when it probably could have been put to better use helping the sick and the poor. After all, that’s what’s been going on all along.
A court appointed Wilmot receiver of what would become IDI back in 1996. After closing the depressing dungeon for the mentally handicapped known as Forest Haven, the city had awarded a contract to run group homes to Charles Dorsey, a former aide to former Councilmember H.R. Crawford who had zero experience in health care.
“I’d never really come into contact with a mentally retarded person,” Dorsey told the Washington Post in 1996.
When Dorsey’s operation went belly-up in the mid-’90s, Wilmot, along with Cooke and Bolden, took over. Wilmot, who did not return a call seeking comment, has said that during the first few years of IDI’s existence, he worked for free. But tax records show that after that initial burst of generosity, Wilmot made bank.
In 2002, for instance, he paid himself $161,400 for a five-hour work week. Cooke and Bolden made $55,000 for five-hour weeks that year, as well. Wilmot’s salary ranged from $154,000 to $346,743 and his hours from 40 to 75 a week during the next eight years, tax records show. Keep in mind that Wilmot was also one of the city’s top paid lobbyists while he says he was working those crazy hours. Wilmot has repeatedly credited his success as a lobbyist to his near-constant presence at the Wilson Building, which makes you wonder where he found time to spend 75 hours a week running IDI. A 2010 report by the city’s inspector general said Wilmot’s pay was excessive, while IDI’s staff voted to unionize that year to protest their low wages.
IDI’s high executive pay didn’t translate to high-level service for its clients. The city sued IDI in 2009 for alleged substandard care. The company settled after agreeing to make improvements. When an independent monitor found that IDI wasn’t living up to its end of the bargain, the city tried to impose $240,000 in fines. IDI settled again in early 2011, agreeing to pay $180,000. A few months later, a federal court–appointed monitor found that IDI still wasn’t providing adequate care.
During a visit in October 2011, a court monitor found that problems with IDI’s care “were of such concern” that the monitor requested a meeting with city officials and IDI’s management. The topic: IDI’s “absence of active treatment, the failure to follow through on individualized interventions prescribed by the individual support plans and the uneven, often substandard quality of care.”
In November, District officials told IDI they were seeking to put two group homes into receivership because of “ongoing performance issues,” says Nuss.
Wilmot told Ward 1 Councilmember Jim Graham during a hearing this April that the federal monitor was “biased” and determined to put him out of business. Cooke tells LL that while the nonprofit made some missteps, its overall record of caring for the District’s most severely disabled is positive: “I think on the whole we did a good job.”
Nuss declined to give her official opinion on Wilmot’s performance as a group home leader, but noted: “He has a public record as to how his company has done.”
Similarly, Thompson has compiled a pretty lengthy and unflattering public record of his tenure as the sole owner of Chartered since 2000. It includes an audit of the company’s 2005 books, which found $7.6 million in questionable expense. Those expenses including paying a Thompson-owned transportation company $5.35 per month for each of its clients, while a non-Thompson-owned transportation firm was charging $1.70.
That year Thompson also paid himself $364,716 in consulting fees and his accounting firm more than $800,000 in payments the auditor says the firm didn’t have supporting documents to justify. The city sued Chartered in 2008; until then, Chartered had paid Thompson dividends of up to $4 million a year. Chartered settled for $12 million and has been in the red ever since. (As it happens, Cooke represented Chartered during that civil suit. Bolden is now Thompson’s attorney on Chartered-related matters.)
More recently, a preliminary audit found that Chartered’s books couldn’t account for $3 million in revenues and $1 million in expenses. A more detailed audit explaining where that mystery money came from and where it went is expected to be complete by the end of this month. As for Chartered’s pending sale, city officials declined to provide specifics of how much the company might fetch and how much of that money, if any, will go back to Thompson.
If there’s a lesson in the millions of dollars in city funds spent on lawyers, settlements, huge salaries, and the District’s pricey exit plan, it’s probably that politically connected businessmen with no history in health care shouldn’t be landing health care contracts. But given the District’s track record of rewarding the politically connected with contracts, that may be a lesson that goes unlearned.
Photo illustration by Carey Jordan