Rightsizing, Streamlining, Outsourcing, Revenue Maximization, Foster Care, Beds, and their Porous Boundaries

A recent article in Arizona Law Review by Professor Daniel L. Hatcher of Baltimore University touches on the “revolving door” in the field of the human services. This revolving door phenomenon is one that is in many respects unique to the child welfare, foster care, and the poverty industries.

Ira Schwartz explains that the “boundaries between the child-welfare, juvenile-justice and mental-health systems are porous.” He explains that children released from one system are quite likely to reappear in another.

The boundaries between various compartments in the field of human services are equally as porous, with state-level human services administrators effortlessly transferring from one tidy compartment to another. Child welfare administrators in particular are apparently immune from the perils of unemployment – even in this difficult economy. Over the years I have observed that they buzz around the nation like so many busy bees pollinating the flowers that will ultimately produce the honey that is increased federal revenue.

Let’s begin our journey by looking at one high profile child welfare administrator who has managed to distinguish himself as one very busy little bee.

County supervisors were divided over Peter Digre’s appointment as head of the Los Angeles County Department of Social Services in late 1990. Then-Supervisor Ed Edelman reportedly “spoke passionately against Digre.”

According to the LA Times (January 10, 1999): “Digre had been the No. 2 man at Florida’s Department of Health and Rehabilitative Services. That agency was widely criticized for its handling of cases involving abused and neglected children, and Edelman at the time said his staff had been told that Digre was known in Florida as autocratic and difficult to work with.”

Over the course of his term in LA, Digre came to be credited as a financial genius when it came to obtaining federal funding for his agency. “He’s a genius at coming up with dollars,” said Norine Boehmer, a member of the county Commission on Children and Families.

Some years ago, I helped an associate of mine compose his deposition of Peter Digre in relation to a lawsuit that he’d filed against the Department. The lawsuit itself is not relevant, however what he saw went he went in to depose Digre is. Everywhere he looked, there were large financial charts and graphs. These were financial projections with specifically delineated forward-looking revenue targets. “They were everywhere,” he told me.

Digre was eventually dethroned amidst all manner of nasty accusations, not the least of which included a finding by Price-Waterhouse that the Department’s books were such that the agency could not be effectively audited, that his Department was in “chaos,” and that he had “thwarted efforts by his agency to shut down a foster home run by a political ally.” It got so bad at one point during his tenure that even his own social workers were threatening to go on strike against his regime.

Where do you suppose that Digre went from there? The next mention that I found of him was in the Miami Herald (April 25, 2003) where he was described as “a former Florida and Los Angeles child welfare administrator who now works for Maximus.” This was in reference to a “plan,” reported as “the result of nine months of research by Florida State University’s Institute for Health and Human Services and the private firm Maximus.”

Reporters at the Herald did what good reporters should do – they investigated further. On July 23, 2004, the Herald’s Carol Marbin Miller reported that “A Virginia firm whose lobbyist is a former state agency head with ties to the DCF secretary makes millions from child welfare.”

Miller explained that: “Maximus’ lobbyist in Florida is Greg Coler, who served as secretary of DCF’s predecessor agency, the Department of Health & Rehabilitative Services, from 1987 through 1991.”

Miller reported that Coler had shown up at a birthday party for Jerry Regier, then-Secretary of the Department of Children and Families, “along with a handful of department officials, at the home of Jim Bax, the head of a Florida State University research institute that accumulated $4 million in DCF work.”

She referenced also a 27-page report by the Governor’s chief inspector general, who described “an agency beset by favoritism among top administrators, who often awarded millions of dollars in taxpayer’s money to friends.”

Miller certainly did her homework, also reporting that: “In the last budget year, Maximus had six contracts with DCF, totaling about $7.3 million in payments. The largest contract, which pays about $2 million per year, is part of a three-year agreement for Maximus to review care plans for disabled people and oversee the cutting of services.”

But there was more. Maximus was trying to land a $500,000 contract to perform a public relations campaign to prevent child abuse, “but the deal was scotched after a handful of agency administrators complained the contract would be ‘tainted’ by the fact that a Maximus employee who was spearheading the effort, Jean Elder, had just left DCF to go work for the company.”

It gets even better – though this is still only the tip of the iceberg. Following the disappearance of 5-year-old foster child Rilya Wilson in the Miami district, Maximus was paid $230,000 to develop ”best practices” as a subcontractor to Bax’s institute at Florida State University, which landed a $315,000 contract to develop its “plan” to rehabilitate the Department.

By August of 2004, the Herald had figured it all out, as journalist Fred Grimm explained: “Scandal, lately, struts around Tallahassee in a $3,000 suit. Scandal has class. Lives in a nice neighborhood. Drives a nice car. Drinks fine wine. Scandal likes to fly to Vegas. Scandal prefers expensive hotels, slipping down to the spa for a complimentary massage.”

Grimm explained that at the Department of Children & Families, before former Governor Bush brought in Jerry Regier to clean house, “scandal there had been mostly about lost children, abused children, murdered children.” But Jerry Regier, he noted, had cleaned up DCF giving “scandal a makeover.”

As Grimm explained: “The new scandal has gone corporate. Scandal has become all about unseemly access by the well-connected. Scandal, once about unspeakable acts or bribes or sex, has become content to indulge in merely unethical behavior. Scandal just wants to have fun. Scandal just wants to get rich.”

Grimm’s findings are worth citing at length:

A three-month investigation by the state inspector general found that the big sin of big boys at DCF was that they accepted treats and frolicked with their favorite vendors. The report found that Regier and friends had invented ways to circumvent prohibitions against no-bid contracts by dragging Florida State University into the scheme.

DCF bypassed competitive bidding to find millions of dollars of work for Maximus Inc., a company associated with a longtime buddy of Regier. And it found a way to award a quickie $2 million contract to barely qualified Upper Mohawk Inc., whose vice president was a Regier deputy when he was back in Oklahoma.

And DCF awarded a $21 million contract to American Management Service, also associated with Regier’s buddy, though the company submitted a high bid and was rated low by DCF’s experts.

This fancy-pants kind of scandal has cost the public millions, — millions that should have gone toward children who depend on DCF for survival. But this new well-heeled scandal doesn’t generate the outrage once spawned by the old-style scandal.

Scandal was doing even better, financially, over in the State Technology Office, where yet another auditor’s report found that the governor’s boys had circumvented state purchasing laws while handing out $300 million worth of contracts. Yet, of all these lousy deals, most of the attention has been focused on a measely $2 million job by the well-lobbied Accenture — known pre-Enron scandal as Arthur Andersen — to compile a list of felons to be stricken from state voter rolls.

These felons are among the well-to-do. They are among the “connected.” They not only may vote, but they also lobby extensively, and they grease the wheels of many a political campaign.

The scandals of our modern era come adorned with Brooks Brothers suits, Rolex wrist watches, and with hefty salaries for their cushy, do-nothing and seemingly respectable jobs in the child welfare and poverty industries. They need not be concerned about unemployment, because the poverty industry takes care of its own, even as it continues to prey on its designated clientele in order to maximize federal revenue.

So, what ever happened to Peter Digre? The Miami Herald (January 19, 2008) described Digre as “a nationally regarded child welfare expert who once led Miami’s Department of Children & Families office. He now works as a consultant for the Youth Law Center, a child advocacy group based in San Francisco.” OK – so he’s back in California again.

And, where do you suppose that he is today? Back in the Sunshine State. His bio at Florida’s DCF reads, in part: “Digre was appointed Assistant Secretary for Operations in August 2009. Mr. Digre has over 40 years of experience in health and human services with an emphasis on community-based care for children, youth and families. He has held leadership positions for social service agencies in Los Angeles County, Philadelphia County and the state of Illinois. In addition, he previously served as Deputy Secretary for Operations at the Florida Department of Health and Rehabilitative Services, which precedes DCF.”

You see, it’s almost impossible to become unemployed in the human services industry if one is willing to travel, and having a background in revenue maximization quite nearly assures a lucrative position.

For example, interim Director Brian Wilbon’s bio on the Maryland Department of Human Resources web site describes him as “a result-oriented executive with more than 15 years of experience in the financial, operations and healthcare industries.” His bio continues on to explain that: “He specializes in project management, staff supervision and training, federal revenue maximization, accounting and finance, procedural compliance review and auditing, budget planning and execution, and Medicare and Medicaid reimbursement.”

Let’s review Mr. Wilbon’s qualifications a tad more closely. According to a December, 2006, press release issued by District of Columbia Mayor Adrian Fenty concerning his cabinet level nominations: “Prior to his work within the District of Columbia government, Wilbon worked for MAXIMUS Corporation in Reston, Virginia as director of the Revenue Division. In this position, Wilbon provided project and program management, information technology, and consulting services to government agencies. He managed a diverse team of consultants and assisted several clients, including Maryland and New Jersey state governments, in recovering more than $100 million in additional federal Medicare and Medicaid revenue.”

Now that’s the kind of guy that we need in charge of an agency that provides child protective services for intake into foster care; someone who understands the true mission of the agency that he heads – revenue maximization.

In case you missed the news, “Maximus allegedly filed false claims for Medicaid-funded targeted case management services, which assist foster children in obtaining needed medical, social and educational, and other services. Maximus submitted 26,683 claims for Medicaid reimbursement that were not supported by documentation. The Federal Government contends that these services were never rendered,” according to the HHS Office of the Inspector General.

Again, these felons are among the well-to-do. They won’t find themselves imprisoned, with a private contractor working to eliminate their names from the voting rosters. Instead, they will quietly and without fanfare make a lateral transfer from Maximus to Sivic Solutions Group, the company that purchased the assets of the Federal claiming practice from MAXIMUS, hiring more than a dozen former MAXIMUS employees impacted by that firm’s “divestiture of its claiming business.”

For the benefit of those who may be new to the concept of federal revenue maximization, the State of Missouri’s Department of Social Services 2008 Support Divisions Appropriation Summaries explains that: “The Department of Social Services enlists the assistance of private entities that specialize in maximizing federal program dollars and identifying other non-general revenue sources.”

The document continues on to explain that: “Contractors are paid from new federal funds resulting from successful revenue maximization projects. There may be a state match required to receive the additional funds.”

These contracts are quite lucrative for the agency. The Department of Social Services projected returns of $20 for every dollar invested in the revenue maximization program, with an extra $2 million projected as rolling into the Department’s coffers during 2009 and 2010 respectively under Title IV-E.

Having so “maximized” federal revenue, one may well imagine that the Department might give poor families some respite from the “child support” that they are forced to pay under the threat of termination of parental rights if they don’t ante up. No such luck for that state’s already impoverished families. The Department of Social Services uses the Child Support Enforcement Collections Fund to support its Director’s Office, its Mail Center Consolidation, its department of Finance and Administrative Services, its General Services department, as well as its Legal Services division.

Don’t for one moment believe the rhetoric about “protecting children while preserving families,” or any other similar mantras spun by the poverty industry. It is all about agency expansion and survival. It is all about money.

As Robert Doar, Commissioner, New York City Human Resources Administration, Department of Social Services, testified before the New York City Council Committees on Finance and General Welfare on May 18, 2010: “I believe we do a very good job of making sure we seek state and federal reimbursement for these services in a manner that both meets program rules but also maximizes revenues. However, we can always do better and continually work to improve so I challenged our Finance staff to turn over every proverbial rock they could find and they did. For example, although staff intensive we now are reviewing each of the thousands of one-shot grants issued to make sure they are appropriately categorized so that we are not inadvertently using city tax levy when we could be claiming state or federal dollars. We expect, based on our analysis, that this intensive effort will yield $1.69 million in 2011 and in the out-years.”

Similarly, according to the testimony of Kimberly S. Ricketts, Commissioner, New Jersey Department of Children and Families, before the Assembly Budget Committee on May 5, 2009: “Thanks to the efforts of our newly formed ‘Revenue Maximization Team,’ we have implemented several improvements to DCF’s revenue development, financial reporting and Title IV-E operations in order to maximize federal claiming. This team also led the effort to achieve substantial compliance with the federal foster care review for the first time ever.”

Ricketts continued, adding that: “DCF also created an impact team of Title IV-E reviewers to work on determinations for a record number of adoptions in the last few years. In five months, the team reviewed 1,811 adoption cases and determined 1,001 eligible for federal reimbursement. This operational efficiency will generate approximately $4.5 million additional federal revenue for NJ annually.”

On April 23 of the previous year, her predecessor, Eileen Crummy, testified before the Senate Budget and Appropriations Committee, saying: “DCF has been able to reduce its contract obligations in the amount of $11.8 million by right-sizing and reducing our residential contracted services for some out-of-state beds and some in-state beds and services that do not meet the treatment needs of New Jersey’s kids.”

Rightsizing, streamlining, downsizing, outsourcing, maximizing, and beds.

Call it whatever you will – the children who sleep on the beds are collectively the commodity that is being traded as the scandal of federal revenue maximization that masquerades behind the benevolent facade of rescuing children from their homes continues unchecked. It is the miniscule trickle of tragic child deaths that enables the industry to prosper and grow, notwithstanding its demonstrated ineffectiveness at preventing them.

As the Children’s Defense Fund noted years ago, children don’t count, parents don’t count, and families don’t count. All that actually counts is the financial services division of your local Department of Social Services, and, of course, its revenue maximization provider – whether the service is provided in-house or outsourced to private industry.