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5 posts from February 2012


DPS controls lax over hundreds of millions in federal grant dollars, audit finds

The Texas Department of Public Safety’s oversight of hundreds of millions of dollars in federal grants was plagued by slapdash controls that included paying subrecipients twice and not checking whether they were barred from receiving federal funds, according to a State Auditor’s Office report

DPS’ accounting system for some grants was so substandard that it had to rely on the federal system it used to request funds instead of its own.  

The department spent $81.1 million in hazard mitigation grants but did not have a process to verify whether its grant subrecipients were suspended, debarred or otherwise excluded from federal contracts. (Only after the audit did the state verify that none were.)

DPS did not always competitively bid out procurements. In one instance, department management overrode controls when the results of a competitive bid process were unfavorable to management’s preferred vendor. The vendor was paid $424,980. 

Adding to the mess, the department did not calculate, monitor or pay the interest money it earned on federal funds, as required. The department gave subrecipients hardship advances without obtaining proof that they actually disbursed the funds. 

DPS also did not ensure that all direct costs that it charged to federal grants were solely allocable to each federal program.  

-- Darren Barbee



Texas county coughs up $20,000 for age discrimination

Brooks County, in South Texas, will pay $20,000 to a woman repeatedly denied a salary increase because she previously filed an age discrimination complaint, which resulted in a civil suit against the county government, according to the U.S. Equal Employment Opportunity Commission.

The county, southwest of Corpus Christi, also failed to consider her for another position.Brooks county

The commission contended that the county government unlawfully retaliated against an employee for filing an age discrimination complaint.Retaliating against individuals who oppose what they believe to be discriminatory conduct on the basis of age (40 years of age or older) violates the Age Discrimination in Employment Act, according to the commission.

“The EEOC is here to protect employees who assert their rights in the workplace, even if the employer is a governmental one acting through elected officials,” said EEOC Trial Attorney Patrick Connor.  “This decree should benefit all employees in Brooks County and serve as a warning to all small, public employers to stay informed on how to comply with federal laws.”  

-- Darren Barbee


Government recovers $4.1 billion from health care fraud, a drop in the bucket

The government recovered nearly $4.1 billion stolen or improperly obtained from federal health care programs in 2011, a tiny drop in the bucket of the rampant health care fraud prevalent in the United States. 

Some estimates put the price of health care fraud as high as $100 billion.  Obama2

Nevertheless, the Department of Health and Human Services recovery is the highest ever from individuals and companies who attempted to defraud seniors and taxpayers for bogus payments.

The United States spends over $2.5 trillion on health care every year, according to the National Health Care Anti-Fraud Association, a national organization focused on combating health care fraud. Of that amount, the organization estimates that tens of billions of dollars are lost to health care fraud. “This loss directly impacts patients, taxpayers and government through higher health care costs, insurance premiums and taxes,” the association says.

The recovery findings, released this week in the annual Health Care Fraud and Abuse Control Program report, “are a result of President Obama making the elimination of fraud, waste and abuse a top priority in his administration,” according to a government press release

Say this for Obama, he has a lot of priorities. 

The Department of Justice and HHS effort utilized the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing taxpayers billions of dollars. Federal prosecutors filed criminal charges against a total of 1,430 defendants for health care fraud related crimes, the most health care fraud defendants charged in a single year in the department’s history.  Including strike force matters, a total of 743 defendants were convicted for health care fraud-related crimes during the year.

-- Darren Barbee


Houston hospital administrator traded smokes for $116 million, feds say

Government officials say they have smoked out a suspect in a $116 million Medicare fraud scheme. 

An assistant Houston hospital administrator participated in a scheme that apparently paid some Smoke beneficiaries in cigarettes, food and coupons redeemable for items available at the hospital’s “country stores,” the government says.

Anyway you look at it, that’s a whole lot of cigarettes. 

If convicted, Mohammed Khan’s experience trading cigarettes for goods and services may yet come in handy in the big house. 

An assistant administrator of an unnamed Houston hospital, Khan was arrested on accusations of a fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services.Khan faces one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive illegal health care kickbacks and five counts of paying or offering to pay health care kickbacks.  

According to the indictment, Khan, as the assistant administrator of the hospital operated a scheme to defraud Medicare beginning in 2008 and continuing until his arrest this week.  Khan allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness.   A slew of federal agencies, including the Department of Justice, the FBI and others are investigating. “The defendant charged in this indictment is accused of stealing precious Medicare resources by billing for services that were medically unnecessary or never provided," said Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office.   “Our health care fraud efforts have never been more collaborative and aggressive. We will continue to work with our law enforcement partners to protect patients and fight against health care fraud.”

-- Darren Barbee


The Burro goes to: Texas man who feds say solicited millions and keep a bit for himself

BurroThis week's Burro goes to Christopher B. Cornett, who raked in the money for his foreign currency investments and when things went sour, the government says, kept on raking in the dough (for himself). 

The U.S. Commodity Futures Trading Commission announced this week the filing of an enforcement action against Cornett, of Buda. He's accused of solicitation fraud, issuing false account statements, misappropriating pool participants’ funds, and failing to register in connection with an off-exchange foreign currency (forex) fraud. In other words, he’s accused of fibbing.

During a period from 2008 through 2010, Cornett is said to ahve solicited approximately $7.07 million from pool participants. Pool participants redeemed approximately $1.64 million and Cornett lost approximately $4.17 million of the pool’s funds trading forex, the commission says. Cornett apparently had just one profitable month during that span (break out the party balloons). In the meantime, he’s accused of misappropriating $1.26 million of the pool’s funds.

He also generated account balances that were false, the CFTC says. From October 2010 through October 2011, Cornett allegedly solicited an additional approximately $6.95 million from pool participants, and pool participants redeemed an additional approximately $2.22 million.

In the litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.

Time to break out the penny jar, man.

-- Darren Barbee