Yesterday, District officials put a number—$4 million— to the so-called “financial irregularities” occurring at Chartered Health Plan, the Medicaid managed care organization that the city recently seized from alleged shadow campaign financier Jeff Thompson.
Chartered’s books can’t account for $3 million in revenue and $1 million in expenses. Specific details about where this money came and went are still unavailable to the public. But what is clear is that under Thompson’s control, Chartered Health Plan was a complete mess. The company lost $15 million last year.
“It’s upside down,” says Insurance Commissioner William White.
This is not the first time that Chartered’s financial dealings have come under intense scrutiny since Thompson took over the company more than a decade ago. In 2004, the Washington Times found that despite being given an extra $2 million in 2002 to operate a health clinic on Minnesota Avenue 24/7, Chartered never did. After the story prompted an outcry, Chartered returned the funds.
“I’m tired of the blank checks of this government,” former Councilmember Carol Schwartz said at a council hearing addressing the funds at the time.
But apparently the city government didn’t share that sentiment. A few years later, an outside auditor looked over Chartered’s books and found a number of problems. They include:
- Chartered was spending $12.2 million of its funds on other-Thompson owned companies, of which $7.6 million was dubbed questionable.
- A Thompson-owned clinic was charging more than double the highest rates paid to other clinics for the same services.
- A Thompson-owned transportation company was charging Chartered $5.35 per month for each of its clients. A non-Thompson-owned transportation firm was charging $1.70.
- Thompson paid himself $364,716 in 2005 for “management and consulting” fees. He said he averaged more than 40 hours a week working for Chartered even though he was also operating a major accounting firm at the same time.
- Chartered paid that accounting firm $870,000 in 2005, though there were no detailed records justifying the expense.
The audit led the District to file a lawsuit against Chartered. The company quickly settled for $12 million without admitting any guilt and continued to win city contracts totaling more than $300 million a year. And while we’ll never know for sure, a Thompson-owned Chartered might have continued to do so for many years to come were it nor for a man named Sulaimon Brown.
Illustration by Jandos Rothstein.