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Mental Health Authority's botched CEO search brings attention to its spending practices

Dec 8, 2017

The Detroit Wayne Mental Health Authority can't seem to seal the deal with a new CEO.

The state's largest such authority is responsible for a more than $700 million Medicaid budget to care for 80,000 people with mental illness, developmental disorders, and substance abuse disorders.  

The decision by two consecutive CEO choices to pull out of contract negotiations with the authority is bringing long-overdue attention to the way the authority spends its money and manages contracts.  

That's according to many sources who say the authority is wasting and mismanaging large sums that could be used to help people who need services. Many of the sources spoke to Michigan Radio on background because they fear retaliation from the authority's board, or because their current employer has a relationship with the authority.

The so-far unsuccessful search for a replacement for Tom Watkins

This summer, Tom Watkins, the authority's first CEO, elected to leave DWMHA at the end of his three-year contract. Sources say he was frustrated by board interference in management decisions.

After a national search, the authority's board offered the job to Willie Brooks, who currently runs the Oakland Community Health Network, an agency that provides services to Oakland County residents.

Brooks withdrew from contract talks in October, after "unsatisfactory" changes were made to the contract, he told Crain's Detroit Business.

The board then turned to its second choice, Joy Calloway, who is CEO of the social service agency New Center Community Services.

That's when Warren Evans decided to step in.

One letter, then another, urging DWMHA not to hire Calloway

Evans is the Wayne County executive, and he recommends six of the authority's board members to the Wayne County Commission, who make the appointments to the authority; Detroit Mayor Mike Duggan recommends the other six.

Evans urged DWMHA Board Chairman Dr. Herbert Smitherman, a Duggan choice, to drop Calloway because an audit discovered that her agency had overbilled the authority. The audit also found missing progress notes and other documentation problems. 

The overbillings may have amounted to more than $1.8 million, but the authority chose to settle for $95,000.  That was the amount of overbilling found in a 5% sampling of New Center's claims. Evans told Smitherman this constituted a serious conflict of interest. 

Smitherman replied he was satisfied the issue had been resolved.

But after the letters and details of the DWMHA's settlement with New Center received media attention, Calloway withdrew from contract talks, too. In her letter to the board, she accused Evans of unfairly maligning her reputation.   

The DWMHA is now being led by an interim CEO, Dana Lasenby, while the search for a permanent CEO continues.

New Center Community Services not the only problematic contract for DWMHA

One of the financial problems former CEO Tom Watkins and his staff tried and ultimately failed to resolve was a problem-plagued contract with Integrated Care Alliance (ICA.)

ICA is one of five agencies that receive direct funding from DWMHA; these agencies then enter into contracts with service providers. The agencies are an extra layer of administration that other mental health agencies in the state do not have.

ICA had long struggled to stay within its budget; bailout requests were often approved by the board. ICA also was caught padding its claims to the authority by tacking on an unauthorized 2% administrative fee.  The authority could have required ICA to pay back six years of the fees; instead, it forgave five years of the overbilled amount.

Former DWMHA COO Jeff Delay estimates ICA overbilled the authority about $20 million over the years.

In early 2016, the state told the authority it could eliminate these agencies, including ICA, and enter into service provider contracts directly -- a money-saving move strongly favored by Watkins and his executive staff. 

But the authority's board overruled Watkins and voted to keep the agencies.

The board also overruled Watkins' decision to get rid of just ICA. Then, in what was essentially an administrative coup, the board voted to eliminate the CEO's authority to make any agency contract decisions. 

Today, all such decisions are the board's to make, not the CEO's.

People fear retaliation from the board if they criticize waste and favoritism

The authority's former chief operating officer, Jeff DeLay, is one of the few people who agreed to speak on the record. Michigan Radio verified the information DeLay provided by interviewing numerous sources who spoke on background.

DeLay says everyone is aware of the waste that's going on, but they have too much to lose to rock the boat.  Direct service providers would come to him to complain that other providers were getting paid many times more than they were, for the same service.

"And I would say, 'Why don't you go on the record?'" says DeLay. "You know, it's an open meeting. And they would all look at me like I was from Mars, because the biggest fear is, if you go on record against the board, you're gonna lose your contract."

DeLay says there are also some serious conflicts of interest among board members, especially when it comes to Board Chairman Herbert Smitherman. 

Smitherman, for example, works at Wayne State University Physicians Group, and he sees patients at Detroit Receiving Hospital. Detroit Receiving receives funding for emergency mental health from the authority. 

DeLay says that funding is improper, and Detroit Receiving should be billing Medicaid directly for emergency mental health. He brought his recommendation to the board.

"Dr. Smitherman would be up at the board meeting wearing his Detroit Receiving badge while he would be making comments in a public forum, 'I should just pay this and I don't know what I'm talking about,' says DeLay.

Smitherman also came into a meeting that Watkins, DeLay, and other executives at DWMHA were holding with state officials and DMC to explain why the funding was improper. DMC is the health system under which Detroit Receiving operates. Again wearing his Detroit Receiving badge, Smitherman demanded that the hospital retain the funding.

"It was the most uncomfortable meeting I've attended in my life," says DeLay.

Michigan Radio made three requests for an interview with Smitherman. They were declined.

Michigan Radio also made multiple interview requests with Detroit Mayor Mike Duggan, who recommended Smitherman and five other members of the Board. The requests were declined. 

Wayne County Executive Warren Evans declined an interview request, saying his two letters "speak for themselves."

We also reached out to several Wayne County commissioners. The calls and emails were either not returned or the interview requests were declined.  

One board member initially agreed to talk on the record with Michigan Radio, but after Calloway withdrew from contract talks, that board member also declined to be interviewed.

Why doesn't the state do anything?

We requested an interview with Nick Lyon, head of the Michigan Department of Health and Human Services; that interview request was denied.

We were permitted to interview Stacie Sampson, director of the Integrity Division within the Office of Inspector General.

Sampson says the state's next contract with the Detroit Wayne Mental Health Authority will have some changes to make sure its oversight of contracts with agencies is better.

She also said some of the issues with chronic overbilling by contractors, the authority's history of forgiving large sums of overbilling, and conflicts of interest that result in improper decisions by the board were the first time she had heard of them.

"Now that you've brought these other instances to my attention, we will be reaching out to Detroit Wayne to obtain additional information to determine what if any action should be taken," she says.

People fear DWMHA's troubles could bring down the whole system

Many of our sources expressed fear that the increased attention to the DWMHA's problems is coming at exactly the wrong time. 

Advocates say, despite the issues with this authority, public health agencies are effective at providing cost-effective, individualized, wrap-around services that people with mental health or substance abuse issues and developmental disabilities need. 

They say the DWMHA's board should be restructured, perhaps by adding term limits, or having the governor also appoint some members. The state could also increase its oversight of mental health authorities.

But the state Legislature has already taken the first step towards dismantling the current system. 

It has approved five pilot projects, funded with part of the state's Medicaid funding, to allow insurance companies to attempt to do what public agencies are doing now.

 

UPDATED:  This post was updated to include audio of a feature story and followup interview with Cynthia Canty on Stateside.