As painful as all that compliance paperwork may be, this is precisely why it’s necessary:
Only 15 years old, Baltimore Behavioral Health Center has filed for bankruptcy after finding itself deeply in (disputed) debt to, among others, the IRS. According to the IRS, BBHC owes $ 4 million in unpaid payroll taxes. Among other alleged debts is $900,000 owed to a contractor providing counseling services. The Baltimore Sun investigated the nonprofit in a series that ran between 2010 and 2011. In a recent summation of their series, the Sun described the situation in brief: “BBH has received more than $65 million over the past five years in government payments, largely from billing the Medicaid program for the poor and disabled.” The Sun’s 2010 coverage revealed unusually high Medicaid billings and detailed the clinic’s control by Hathaway and several family members who earned six-figure salaries.”
But the real facts, according to the Baltimore Sun, are much more astounding. BBH’s clinical standards were under scrutiny as was its relatively high billing. but its array of just administrative issues over the past few years was breathtaking and almost anachronistic. Remember, that this agency was a prominent local provider :
- It was fined $90,000 for hiring Dr. Roman Ostrovsky as an administrator, a position he held for 14 months he worked there as an administrator. Ostrovsky was on a federal no-hire list because of a fraud conviction;
- The agency has been sued for allegedly absconding with money that was supposed to go into staff retirement accounts;
- In 2010, a husband-and-wife team held lead administrative positions with Morris Hill as president and Sandra Hill as Vice President for Clinical and Medical services. Oddly, each was paid $252,992 in 2009. A son of Sandra Hill was paid $347,000 in 2008 for his role as chief executive and chief financial officer. Sandra Hill’s son-in-law was the chief doctor. The organization did not have audited financial statements and Morris Hill prepared BBH’s 990 and no outside accountant reviewed the group’s books;
- Six family members sat on the board which included eight trustees, all of whom were paid.
- In 2002, Nicholas Scotto was listed as chief of psychiatry though he was at the time on probation with the Maryland Board of Physicians. In the late nineties he was by his own admission addicted. He was convicted of writing inappropriate prescriptions, went bankrupt and finally entered rehab where he continued to write prescriptions.
The fact that this agency was able to do business with the government with such an abundance of flaws just re-emphasizes the need for a healthy regulatory and contracting environment and truly independent governance systems. Martha Coakley, the Attorney General of Massachusetts, believes that paying trustees gives them incentive to collude and look to their own interests rather than the interests of the public. What do you think?