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Wayne County exec says mental health authority board's choice for CEO has conflict of interest

Nov 29, 2017

Wayne Co. Executive Warren Evans.
Credit Warren Evans on Instagram

  The state's largest mental health authority has selected Joy Calloway as its next CEO, but Wayne County Executive Warren Evans says the board should resolve a conflict of interest before hiring her.

The Detroit Wayne Mental Health Authority is currently in contract negotiations with Calloway. 

The authority has a budget of over $700 million, and cares for 80,000 people with mental health and substance abuse disorders and developmental disabilities in Detroit and Wayne County.

New Center Community Services CEO Joy Calloway
Credit NCCS / NCCS

Calloway is currently CEO of New Center Community Health, which contracts with the authority to provide mental health services. Evans says her selection poses a conflict of interest, because her agency may have overbilled DWMHA by well over $1 million.   

That amount is according to DWMHA's own Corporate Compliance Officer, Eric Doeh, who sampled 5% of New Center's billings to DWMHA.  He found multiple instances of missing treatment plans for patients being seen at New Center, no progress notes for people attending a New Center psychosocial rehabilitation program, and technical errors in the agency's reports.

The audit looked particularly closely at billings associated with a psychiatrist employed by New Center, Nagy Kheir. There were numerous instances of services provided by Kheir that overlapped with other services, and billings for the wrong time period, including services ostensibly provided after 10 p.m.

Kheir still works at New Center.  

DWMHA eventually settled with New Center for $95,000, a fraction of what it was probably owed.  Doehl's memo indicates the MDHHS Office of Inspector General did not require the 5% sampling he performed to be extrapolated to include all of the New Center's overbillings, and so DWMHA chose not to do it.  

The overbillings may have never come to light, were it not for a whistleblower within New Center, according to Doeh's memo.  

"Given the serious nature of the findings by the audit ... I ask that the DWMHA suspend its decision to appoint a new CEO until those issues are favorably resolved," Evans said in a letter to Herbert Smitherman, the chairman of the mental health authority.

In a letter in response, Smitherman wrote, "This type of audit and findings are not uncommon. There were no findings of fraud or criminal activity by New Center or any of its employees."

Herbert Smitherman, Chairman of the Detroit Wayne Mental Health Authority Board
Credit DWMHA

Smitherman indicated the board feels there will be no conflict of interest once New Center reimburses the authority, so the contract negotiations with Calloway will continue.  

But a spokeswoman for DWMHA says there is no deadline for New Center to pay back the money.

The settlement with New Center is not the first time the mental health agency decided not to pursue large sums that were overbilled by a contractor.

DWMHA's board voted on March 15th to forgive $1.4 million in unauthorized payments to Integrated Health Alliance, as reported by Jay Greene of Crain's Detroit.

The authority's then-CEO, Tom Watkins, tried to terminate the contract with IHA in 2016.  The board reversed his decision and instituted a new policy to require board approval for contract changes.

Watkins resigned in August, sparking the current search for a new CEO.

* Correction - This story was corrected and updated to include new information about the DWMHA's settlement with New Center, information about Nagy Kheir's continued employment at New Center, as well as information about DWMHA's forgiveness of overpayments to IHA.