Many North Carolina Companies With Medicaid Funding Didn't Pay Workers

by | October 12, 2015

By Mandy Locke

In September 2013, the state funneled more than $270,000 of taxpayer money to True Behavioral HealthCare of Gastonia -- payment for counseling and coaching mentally fragile patients.

The workers who delivered that care were never paid. For five weeks, more than 50 counselors, nurses and social workers toiled without wages, refusing to leave ailing clients.

But when it came to protecting the caregivers, the state failed.

Year after year, some private companies dependent on Medicaid funding don't pay their employees. Mental health agencies, home health care companies and group homes accounted for more unresolved wage payment cases than any other single industry in North Carolina in fiscal year 2014, a News & Observer review of cases shows.

Since 2006, the state has paid at least $72 million to 17 companies that ended up failing to pay workers wages they earned in 2014. The state trusted them to deliver vital services to vulnerable patients.

But when the companies didn't pay their workers, the state let it happen with impunity. Medicaid reimbursements kept coming. The businesses didn't lose their licenses. And when some employers shut down one company and opened another, they had no trouble securing more government work.

State Labor Commissioner Cherie Berry, who has the power to crack down on employers who don't pay, has long known about companies dependent on public funding that don't make payroll. She calls these cases "bugaboos" and says she's aggravated. But she has done little to solve the problem.

She pointed to the state Department of Health and Human Services as the agency to blame. In 2010, Berry sent the DHHS secretary, an appointee of Democratic Gov. Bev Perdue, a strongly worded letter. It described the volume of cases her Wage and Hour investigators handle for companies that rely on funding from Medicaid, the federal-state program that helps pay for health care for poor children, some of their parents, the disabled and elderly.

Subsequent talks between the agencies yielded little. Berry said the problem did not seem to be a priority for DHHS leaders at the time. She has not tried to engage DHHS in the five years since. During that time, the DHHS secretary was appointed by Gov. Pat McCrory, a Republican like Berry.

Dave Richard, who took over the agency's Division of Medical Assistance in June, said he and his colleagues had not been made aware of companies under their authority failing to pay workers.

While the agency's duties revolve around patient care -- not a company's financial management -- he said he will evaluate what, if anything, his staff can do.

"My expectation would be if there are multiple incidents of a company not paying its workers and that came to [our] attention ... we'd do an investigation of that provider," said Richard. "I can't guarantee you that that's what happened in the past ... but it would seem that would rise to the level of a concern."

'I was a wreck'

More than a decade ago, the state began turning to private companies to deliver care to people with mental illnesses and developmental disabilities. By 2013, Chanda Truesdell had secured state contracts to serve children with mental disabilities in six counties in and around Charlotte.

The business brought in big money: True Behavioral HealthCare collected more than $30 million from Medicaid from 2006 to 2013, records show. She earned more than $150,000 a year and soon invested in properties and vacation timeshares in Hawaii and Las Vegas, according to disclosures she made in a personal bankruptcy petition filed in federal court in 2012.

Efforts to reach Truesdell failed. Her business closed soon after the state's managed care organization in that region canceled her contract in early November 2013. Checks of available records did not show her operating another company.

56 Workers who said they were shortchanged by True Behavorial HealthCare $160,000 Money they say they earned but weren't paid $990 Unpaid wages that owner Chanda Truesdell eventually paid Truesdell's employees received their first sign of trouble in September 2013, workers told an investigator. Wages deposited on payday by a private payroll company for work the last two weeks of August were withdrawn 10 days later. Truesdell restored that money a day later, but workers say the company hadn't yet issued checks for work done the first two weeks in September.

Rebecca Bramlett, who lives west of Charlotte in Shelby, was on vacation at the beach when a colleague warned her that the money had been withdrawn from their bank accounts. She spent time on the phone with the bank squaring away the bills she had paid since her paycheck arrived. She owed $36 in bank fees for making payments with insufficient funds.

"I was a wreck. I was ready to come home from vacation," said Bramlett, 63. "I couldn't believe this was happening to me."

Bramlett and others kept going to work, worried that if they suddenly disappeared, patients' lives would be upended. Bramlett ran the patient prescription program in the agency's Shelby office, linking low-income, uninsured patients with medicine for their mental health. She knew a missed dose could send any one of them into a downward spiral.

In late September, Bramlett said she made a call to the state Labor Department, asking what to do. She remembers the woman on the phone coaching her to start collecting timesheets -- proof that she and others had put in the hours. Bramlett, who earned $2,084 a month, spread the word.

Within a week, 56 employees had gathered and began sharing with a labor investigator more than 200 pages of documents. Their eventual claims added up to lost wages of more than $160,000.

Paying without question

In some ways, the state expects much of companies entrusted to care for the ailing and fragile. Their staff must be properly licensed.

Residential facilities must be safe and secure. The businesses are routinely inspected.

But when it comes to the company's financial solvency and internal accounting, the state doesn't get involved. State officials authorize payment when a legitimate claim is filed by a company operating by the standards of its license. They ask for no proof of solvency when the company applies for a license.

Withholding payments until a company meets its payroll obligation is not within the state's authority, said Richard, whose division is responsible for the Medicaid program in North Carolina.

"If a legitimate claim and services were delivered, we'd have to pay that claim," he said. "Withholding it would not be within our purview."

A federal Department of Labor spokesman said his agency has had some success working with agencies that disburse Medicaid funds to recoup money for workers who have not been paid.

DHHS has the responsibility to distribute federal and state Medicaid funding. The state agency's authority to intervene in a company's business must be centered around patient care. Were medicines distributed appropriately? Did a resident escape from a group home because a supervisor wasn't watching?

Richard can imagine a scenario where workers not being paid would affect patient care. But first, his division must know about it. None of the current staffers recall being alerted to complaints about state-funded companies failing to meet payroll, according to Richard and the agency's communications staff.

Among the cases they never heard about:

-- Wage and Hour investigators found that Jonathan Traylor and his company, Coastal Carolina Behavioral Healthcare in Whiteville in Columbus County, owed two workers more than $13,000 in pay. Over two months, Traylor told the investigator he would not pay because he suspected falsified records. The investigator closed the case and mailed the two workers letters saying the agency wouldn't fight on their behalf.

According to Secretary of State records, the agency is still active. Traylor could not be reached.

-- Tametka Blount Pittman didn't pay four of her employees who were owed more than $5,500 in wages, records show. Pittman said that she had not been reimbursed by Medicaid for day care services to developmentally delayed children in Raleigh and then hung up on an investigator. The investigator visited Pittman's facility, but no one answered the door.

The labor investigator closed the books on the case and invited the workers to pursue Pittman in small claims court. Pittman could not be reached.

-- Another investigator closed a case against a Pitt County group home, Barbara's Love and Care, after owner Annette Johnson told investigators she had run out of money and couldn't pay nine workers more than $12,000 in wages. The business is listed as active with the Secretary of State.

Johnson could not be reached.

Andrea Showait, who worked at Barbara's Love and Care, remembers the disappointment she felt when a labor investigator called to say he would do no more to make Johnson pay; Showait was owed $4,400, according to a labor investigative report.

"I really thought they'd take her trailer or car or something to pay us," she said. "Nothing."

Instead, Showait lost her apartment; she and her daughter moved in with her mother.

Though Berry's agency has the authority to take these employers to court, she didn't. Her investigators broke the agency's own rules by failing to consider legal action.

None of these cases were reported to DHHS. There is no established line of communication between the two agencies. There is no shared database in which either agency flags a problem with one of these companies. Each tends to its own specific rules and no more.

Christine Ryan, Berry's newly appointed administrator of the Wage and Hour Bureau at the state Department of Labor, said she gets the impression that Medicaid officials don't consider employees' missed paychecks an issue they should address.

"Medicaid does not care if the employees do not get paid," she said in an interview. "That is not a Medicaid fraud violation. If the provider takes that money and buys a Range Rover, does not pay the employees -- upon whose backs they build those funds -- Medicaid does not track that. That is not of interest to them."

To the Bahamas

That's the conclusion workers at True Behavioral Healthcare drew when the Labor Department closed its investigation: No one cared about them.

I felt shortchanged. I just felt like they didn't try. Or they didn't have any compassion for all of my co-workers who worked for this agency. Nic Keith, who worked as a counselor for True Behavioral "I felt shortchanged," said Nic Keith, 41, of Charlotte, who worked as a counselor for True Behavioral. "I just felt like they didn't try. Or they didn't have any compassion for all of my co-workers who worked for this agency."

The effects have lingered. "Here it is three years, we are all still financially struggling because of that," said Kimberli Bowen, 43, of Gaston County, a former case manager for True Behavioral.

For weeks, the labor investigator had collected and studied time sheets submitted by dozens of True Behavioral employees. The investigator requested Truesdell provide payroll records.

Truesdell took a vacation to the Bahamas instead, according to the investigator's notes.

When the investigator did finally meet Truesdell in late December 2013, Truesdell said she didn't have most of the payroll records.

Truesdell admitted to not paying employees for two weeks, but not to shortchanging them for three more weeks. During the meeting, the labor investigator asked Truesdell to craft a short, handwritten affidavit admitting to not paying the workers -- for one pay period. In the affidavit, Truesdell said she was broke, with no money to settle the wages and no assets to leverage.

The next day, the investigator closed the case. She sent letters to each of the employees, telling them that she had validated their complaints for one pay period but that she would do nothing more about it. She invited them to hire a lawyer and pursue Truesdell and the company in court on their own.

Bramlett said she spoke to the labor investigator the next day to ask a critical question:

"What am I going to get a lawyer with?" she said. "I don't have my money."

Database editor David Raynor contributed.

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