The End of the Politically Connected Medicaid Money Makers?
An accountant and a lawyer—both among the most politically connected this town's ever seen, neither with any background in health care—made small fortunes off of city's Medicaid contracts for the poor and disabled. Now, both of them, within weeks of each other, have announced they are getting out of the health care business. What the hell is happening?
The accountant is Jeff Thompson, one of the biggest campaign contributors to District pols, whose home and offices were raided last month by federal authorities as part of an investigation into campaign finance issues. Thompson is trying to unload Chartered Health Plan, a managed care organization which currently holds a $322 million city contract providing insurance for the District's poor. The reason for the sale is clear: Thompson has to. Last week, Department of Health Care Finance Director Wayne Turnage, who oversees the $2 billion the city spends each year on publicly financed health care, said it was unlikely the District would award Chartered another contract with Thompson at the helm. According to the Post, Turnage says there are several reasons why, but wouldn't say what they are. More than likely, the dark cloud hovering over Thompson's head has made him politically untouchable.
The lawyer is David Wilmot, one of the most powerful (and best paid) lobbyists in D.C. politics, who said yesterday at a council hearing that he's selling his group homes for the District's developmentally disabled. Wilmot says his nonprofit company, Individual Development Inc., has been unfairly targeted by a biased court monitor, making it impossible for him to continue to operate. What Wilmot didn't talk about is why a court monitor might be keeping a close eye on IDI: The company has been in plenty of hot water in recent years. Former D.C. Attorney General Peter Nickles sued it for "systematic" problems. The D.C. Inspector General found that Wilmot was paying himself well over the industry standard. And a union charged that Wilmot underpaid his staff and treated them unfairly.
The stories of how both Thompson and Wilmot got into the Medicaid business are similar. Thompson bought Chartered at a bankruptcy sale in 2000, and as the Post's Mike DeBonis noted, "consistently grew its premium revenue and profits—doubling both, in fact, between 2003 and 2007." Chartered's growth was helped by former Mayor Anthony Williams' decision to close D.C. General Hospital. Williams and Thompson were close allies, by the way, and Thompson showered Williams' political causes with donations. The profitable times for Chartered ended in 2008, after Nickles sued the company for allegedly defrauding the District of millions of dollars by overcharging on Medicaid bills though his surrogate companies.
And Wilmot? In the early '90s, the District moved dozens of its mentally disabled wards out the decrepit and rundown Forest Haven institution and into group homes run by a man named Charles Dorsey. How did Dorsey get the gig? It might have had something to do with his position as an unpaid constituent service aide for former Ward 7 Councilmember H.R. Crawford. It definitely wasn't for his background in healthcare work (of which he had none). "I'd never really come into contact with a mentally retarded person," Dorsey told the Post in 1996.
Predictably, Dorsey attempt at running group homes ended in failure. Wilmot, working for one of the group homes' creditors, the Bank of New York, was tasked to take over. The first few years running IDI, Wilmot didn't take a salary. But that didn't last. From a former LL's piece:
But by 2000, he was making $105,000 for a reported five hours of work per week. By 2002, that had risen to $161,400 yearly. And then, in in 2003, his pay more than doubled, to $346,743. (His reported hours also surged, to 40 per week.)
The inspector general raised questions about whether Wilmot, who once told the Washington Business Journal he's a such successful lobbyist because he practically lives at the Wilson Building, was putting in all the hours at IDI he claimed he was. (Wilmot, by the way, has lobbied on behalf of Chartered, and Thompson's accounting firm does IDI's taxes.) Wilmot, along with fellow IDI board member A. Scott Bolden, also took out sizable loans from IDI, a no-no in the nonprofit world.
Like Thompson, Wilmot saw his bottom line shrink after tangling with Nickles. In 2009, tax records say Wilmot made $280,000 from IDI. In 2010, that was cut to $154,000.
"Medicaid just doesn't pay the way it used to, does it?" a giddy At-Large Councilmember David Catania tells LL of Wilmot and Thompson's departure from the city's Medicaid contracting. "I'm thrilled, it's about time."
Catania, who chairs the D.C. Council's health committee, has long been an outspoken critic of Thompson and Wilmot. (It was an audit that Catania insisted on that led to Nickles' lawsuit against Chartered.) Both men, Catania says, have used their political connections to make outsized profits on a program designed to help the poor. (Neither Wilmot nor Thompson's attorney immediately returned requests for comment.)
"Never have so few earned so much doing so little," Catania says.
Photo by Darrow Montgomery (left) courtesy of C-SPAN (right)