County Re-Approves Welfare Contractor Amid New Concerns

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Orange County supervisors voted unanimously Tuesday to continue contracting with a firm at the center of an alleged Medicaid fraud scheme, as union leaders raised concerns about the company’s work for the county.

Virginia-based Maximus, Inc. was sued by federal prosecutors for allegedly defrauding Medicaid out of millions of dollars intended for foster children services by making false reports.

The firm – which is a maxed-out campaign contributor to all Orange County supervisors – ultimately settled the case for $30 million.

At Tuesday’s supervisors meeting, Social Services Director Mike Ryan assured county leaders that there have been no problems with the firm’s performance for the county.

“We have a good relationship,” said Ryan, adding that the county inspects about 200 of Maximus’ cases each month. The firm manages most of the county’s welfare-to-work cases.

The county’s main public employee union, meanwhile, told supervisors that in the wake of Voice of OC’s articles, county workers have come forward to raise concerns about Maximus.

The workers “outlined several issues that were similar” to the issues raised in the articles, including “messing with the numbers,” said Jennifer Muir, assistant general manager at the Orange County Employees Association.

The union is in the process of getting to the bottom of the concerns, added Muir, who urged supervisors to postpone their vote.

“We think it would be prudent for the board to consider that information,” she said. “This service really is critical.”

Supervisors ended up voting 4-0 to approve another year with Maximus. Vice Chair Bates was absent.

Supervisor Todd Spitzer said Ryan “addresses each of the issues that have been raised” and represents “that there’s nothing of the sort that’s consistent” with the past controversies reported by Voice of OC.

A Maximus representative also told supervisors they’re meeting their contract requirements.

“We ensure that we are auditing our cases” in addition to the county’s reviews, said Maximus executive Colleen Moskal. She didn’t say what the results of those audits were or what auditors review.

The union, meanwhile, said that their understanding was that the county would conduct yearly internal audits of Maximus’ work starting in 2009, but that were surprised to learn recently that none have taken place since then.

The employees’ concerns did prompt Nelson to arrange a meeting between himself, the union, county executives and the social services director to vet the concerns and “find out if we have some more work to do.”

In their lawsuit, federal prosecutors alleged that a Maximus vice president helped facilitate a scheme to bill Medicaid for foster children services in Washington, D.C. that company officials knew were never provided.

“After obtaining confirmation that such services were not performed through a [social services agency] computer search, and in the majority of instances after contacting the social workers who confirmed the services were not performed, Maximus nevertheless created files that indicated services were performed, and used such information to demand Medicaid pay for services not rendered,” the suit states.

Under the Maximus’ contract with Washington, D.C., the firm was given 10 percent of the Medicaid funds it helped the the city obtain.

(Click here to read the fraud lawsuit against Maximus.)

At Tuesday’s meeting, Maximus painted a picture of a company that stepped up and took responsibility for its failings.

“Maximus accepted responsibility for this matter,” Moskal said of the Medicaid case.

In its settlement agreement with prosecutors, meanwhile, Maximus stipulated that it was not admitting wrongdoing.

“This agreement is neither an admission of liability (or admission of any matter of law or fact) by Maximus nor a concession by the United States that its claims are not well founded,” the agreement states.

The firm’s alleged fraud was apparently revealed when a whistleblower inside the company came forward.

According to campaign records Maximus has given maximum-level donations to the campaign coffers of all five county supervisors.

In total, Maximus, its lobbyists – Ruby Wood and Robert Love – and their clients have supported supervisors with more than $30,000 in contributions, according to a Voice of OC review of campaign finance data facilitated through a special partnership with the National Institute for Money in State Politics.

About $12,000 went to Nelson, $8,800 to Bates, $4,750 to Moorlach, $3,400 to Nguyen and $1,800 to Spitzer.

(Click here to see a list of campaign contributions related to Maximus and its lobbyists.)

Two contributions from separate clients represented by the lobbyists – Maximus and SAIC – were provided to Bates on the same date: Sept. 30, 2010, a day in which Bates received four donations in total.

Supervisor John Moorlach, meanwhile, has said that campaign contributions don’t play a role in his votes on contracts.

“I rely on the fact that the bid that you’re making is the lowest, most responsible bid in the pack. And I don’t really memorize who contributes to me,” Moorlach said in an interview earlier this week.

The other four county supervisors – Pat Bates, Todd Spitzer, Janet Nguyen and Chairman Shawn Nelson – didn’t return messages Monday seeking comment.

You can reach Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.

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