[Nfbmd] FW: O'Malley-Brown Administration Mismanagement of $38 Million in funds for the Disabled

Thu Nov 7 02:37:36 UTC 2013

fyi. Has anyone heard this?

<http://marylandreporter.com/2013/10/31/whistle-blower-at-disabilities-agenc
y-fired-by-omalley-brown-administration-she-alleges/> Whistle blower at
disabilities agency fired by O'Malley-Brown administration, she alleges

October 31, 2013 at 1:03 am

For two years, MarylandReporter.com has been covering the financial problems
with the Developmental Disabilities Administration.
<http://watchdogwire.com/maryland/2013/10/30/omalley-administration-fired-de
velopmental-disabilities-admin-whistle-blower/> The following story by Mark
Newgent was published Wednesday evening on Watchdog Wire-Maryland. Rather
than just linking to it, we are publishing it in its entirety as it uses
court documents to describe corruption and fraud at DDA as alleged by a
whistle blower later fired.

By Mark Newgent

 <http://watchdogwire.com/maryland/> Watchdog Wire-Maryland

<http://marylandreporter.com/wp-content/uploads/2013/10/Whistle-by-Katerha.j
pg> Whistle by Katerha

Whistle by Katerha

At the time advocates were lobbying for an alcohol tax increase to raise
revenue for the disabled, the Developmental Disabilities Administration knew
about and covered up
<http://marylandreporter.com/2011/11/09/agency-left-38-million-unspent-on-di
sabled-people-needing-care/> $38 million in unspent state and federal funds
from fiscal year 2010, according to court documents filed by a
whistleblower.

Carrie Phillip, former Chief Financial Officer of the
<http://watchdogwire.com/maryland/2013/10/15/more-problems-at-md-development
al-disabilities-administration/> much-beleaguered agency tasked with
administering services to Maryland's disabled community,
<http://www.scribd.com/doc/180318259/Phillip> filed a complaint in Baltimore
City Circuit Court, alleging she discovered and notified top agency
officials about the unspent funds, top officials in the Department of Health
and Mental Hygiene ordered her to hide the surplus funds in 2011, and that
she was subsequently terminated for blowing the whistle.

Phillip also alleges she alerted her superiors about inadequate internal
controls, and agency staff doing work they were unqualified to perform.

During the 2011 legislative session, disability and public health advocates
lobbied for an increase in Maryland's alcohol tax, citing a lack of funding
and a long waiting list of disabled residents needing services.  They were
ultimately successful in increasing the state sales tax from 6 to 9 percent
on alcohol sales.   DDA received $15 million of the extra revenue generated.

Later that year, DDA officials revealed they had discovered a $38 million
surplus from fiscal year 2010, $25 million of which had to be reverted to
the general fund.

Phillip, a Certified Public Accountant with a Masters degree in accounting,
alleges she discovered and disclosed that DDA hid the $38 million, while the
agency denied services to the disabled to cut costs.

<http://marylandreporter.com/wp-content/uploads/2011/12/OMalley-sine-die-bri
efing.jpg> Gov. Martin O'Malley

Gov. Martin O'Malley (file photo)

Whistle blower sent letter to Gov. O'Malley

On June 2, 2011 Phillip wrote a letter to Governor O'Malley detailing her
concerns.

The latest OLA audit speaks for itself but it does not render a complete
illustration of the issues. Auditors rarely detect fraud and DDA's
uniqueness prevents auditors from acquiring the feel for the substance of
the thousands of unique transactions.  As a CPA I'm bound by a professional
code of ethics and have a duty to report the fraudulent contracts,
fraudulent transactions, and fraudulent financial reporting existing the
organization. I will provide documentation if requested.

Without objective oversight, exemption from procurement regulations has
situated the foxes to guard the henhouse.  The staffing mix is
incomprehensible for an organization with an $800,000,000 annual budget and
the financial reporting foundation of DDA is built on unreliable data making
what comes out of no value.

Within the organization, dishonest acts are greeted with nothing more than
raised eyebrows. The agency makes multi-million dollar duplicate payments
and does nothing to remediate the situation. An ongoing practice of
unauthorized interest free loans continues as well as inflating payments to
providers if they are in good favor and merely ask for it or if it creates
conveniences for DDA staff..

As troubling as this is, I enjoy my profession and do not speak from the
vantage point of someone with tunnel vision or an axe to grind and request
protection from the inevitable backlash that will result from these
disclosures.  I've had the pleasure of working for other state agencies and
have not previously encountered anything like this.  I normally disclose
questionable acts within the organization but am being pressured to falsify
documents and cannot do so.  The power at DHMH rests within a formidable
network making change from within impossible and elevating concerns is
frowned upon.  Therefore I'm pleading to your administration for guidance.

Phillip received no reply from Governor O'Malley's office.  The only reply
she received was four months later in a letter from, Joshua Sharfstein,
Secretary of the Department of Health and Mental Hygiene.

Health secretary thanks her and then she is fired

On October 7, 2011 Sharfstein wrote to Phillp that O'Malley asked him to
respond to her letter.  Sharfstein noted that he had referred her concerns
to the department's inspector general and that "the Governor appreciates
hearing from you and on his behalf, I thank you for bringing these concerns
to my attention."

On October 11, 2011, four days later, Phillip received a termination notice
from then-Developmental Disabilities Administration Executive Director,
Franklin Kirkland.
<http://msa.maryland.gov/msa/mdmanual/16dhmh/html/dhmh.html> Kirkland now
serves as a special advisor to the Acting Director, Patrick Dooley.

It took the O'Malley administration four months to acknowledge Phillip's
concerns, and only four days to fire her.

The DHMH
<http://dda.dhmh.maryland.gov/SitePages/Developments/April2012/OIG_DDA_Surpl
us_rpt.pdf> Inspector General's report was released that month as well.

The next month, in November of 2011, news of the unspent funds broke in the
media.
<http://marylandreporter.com/2011/11/09/agency-left-38-million-unspent-on-di
sabled-people-needing-care/> Maryland Reporter's story quoted Senator Ed
Kasemeyer, Chairman of the Senate Budget and Taxation Committee saying of
phone conversation with Sharfstein, "After he called me, he fired the [chief
financial officer]."

Phillip's allegations counter the narrative put out by agency officials that
they were responsible for catching the error,
<http://dhmh.maryland.gov/docs/11-30-11_dda_fy_2010_br_testimony_sec.pdf>
particularly Shafstein's testimony before Kasemeyer's committee later that
month.

Phillip, according to the complaint, filed for an appeal of her termination.
A hearing was held, but no decision was rendered.

On October 16, 2013, Phillip emailed Governor O'Malley again, stating that
DHMH has not paid out her leave or other accrued benefits.  In addition to
she says DHMH blocked her from attaining a similar position at another state
agency.

In the same email Phillip also states her disclosure of the unspent funds
hampered DHMH's ability to "continue to funnel money to personal friends
using fraudulent and improper pass through contracts," and "unrecoverable
and unauthorized multimillion dollar loans to their friends."

Complained to federal government about Medicaid overbilling

Phillip also indicates she was the originator of the complaint, which led to
a federal audit of DDA that determined the agency
<http://watchdogwire.com/maryland/2013/09/17/md-developmental-disability-adm
in-owes-federal-govt-21-million/> owed the federal government $21 million
for Medicaid overbilling.

Her accusations are in line with the string of negative audits DDA has
received from legislative auditors over the last several years, which
portrays an
<http://marylandreporter.com/2013/10/23/analysis-audits-show-problems-have-p
lagued-md-developmental-disabilities-admin-for-years/> agency in turmoil.

In April of 2010, Phillip sent an email to her superiors outlining serious
internal control deficiencies within DDA.  "Internal controls are lacking,"
Phillip wrote. "Because there aren't sufficient adequately trained fiscal
employees."  She argued that that overseeing an operation the size of DDA,
which has an $800 million budget, requires "an appropriate compliment of
subordinate supervisors."

Phillip wrote that she routinely performed tasks suited for staff level
employees, leaving her little time to perform higher-level fiscal management
duties.  "I'm performing staff level work that can't be delegated to current
staff.I have to emphasize on the job training of members of the unit will
not compensate for a lack of business education and experience gained
thereafter."

She also noted many of her subordinate employees stall and freeze items
because they don't know enough or that there is insufficient time to for her
to give hands on supervision.  Phillip warned that auditors will find an
unacceptably high number of exceptions and that a deputy would be needed to
detect and prevent errors.

In June 2013, Sharfstein hired, through a no-bid $3.1 million contract, the
firm of Alvarez & Marsal, which specializes in fixing troubled
organizations.

Read more:
<http://marylandreporter.com/2013/10/31/whistle-blower-at-disabilities-agenc
y-fired-by-omalley-brown-administration-she-alleges/#ixzz2jpFTNNvw>
http://marylandreporter.com/2013/10/31/whistle-blower-at-disabilities-agency
-fired-by-omalley-brown-administration-she-alleges/#ixzz2jpFTNNvw 
Under Creative Commons License:
<http://creativecommons.org/licenses/by/3.0> Attribution

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