Maryland tapped the nonprofit Seedco to help implement health care reform despite a $1.7 million settlement the agency agreed to in December to resolve a federal fraud suit.
The U.S. government sued the agency, saying it defrauded a federal employment program by falsely saying it found jobs for hundreds of New Yorkers. As part of the agreement, Seedco admitted to the false reporting.
Maryland health officials announced last week that Seedco, headquartered in New York but with operations in Maryland, was one of six agencies chosen to educate people about reform and help enroll them in health insurance plans. The agencies will share in $24 million in federal funds.
Board members of the Maryland Health Benefit Exchange, an independent agency responsible for administering the open market where people will buy insurance under health care reform, said they knew about the settlement before choosing Seedco.
Several state officials participated in the decision, including members of the exchange's nine-member board of trustees, which voted for final approval. The Maryland Department of Human Resources and the attorney general's Health Education and Advocacy Unit also were part of a separate committee that helped narrow down applicants.
Seedco is an acronym for Structured Employment Economic Development Corp. As a community development organization, it works to promote economic opportunity in low-income areas nationwide.
In the New York suit, Seedco was accused of saying it found employment for job seekers who still were unemployed or had found jobs on their own, according to the U.S. attorney's office in Manhattan. It said Seedco used the inflated numbers to get increased federal funding and as support to open a job placement center.
As part of the settlement, Seedco was ordered to institute a compliance program, create an internal fraud hot line and hire an independent consultant to perform annual reviews of the compliance program.
A Seedco executive called the New York incident an isolated event in just one of the nearly two dozen programs the organization operates.
"We don't feel it has impacted our work," said Brian Robinson, Seedco senior vice president of external affairs. "We think in the long run, it has made us a stronger organization."
Robinson said Seedco has new senior leadership and a compliance officer who conducts quarterly audits of the program in addition to the other requirement the federal settlement outlined.
Board members of the benefit exchange knew about the New York settlement as they debated and ultimately approved Seedco's application, said Rebecca Pearce, the group's executive director.
She said the board asked about the settlement as part of the approval process and was satisfied the group had implemented enough controls to prevent something similar from happening in Maryland. She also said Seedco had an established history in Maryland, where it helps people gain access to the food stamp program and CHIP, the federal health insurance program for poor children who don't qualify for Medicaid.
"They are complying with the federal government with all matters related to the settlement," Pearce said. "They have strong controls in place. They have a compliance program, a whistle blower policy. The executive staff that was there is no longer there."
Seedco and the other groups chosen by the benefit exchange will hire counselors to enroll residents into qualified health plans. Residents also will get information on eligibility requirements for subsidies and other financial assistance. The groups will work with 50 subcontractors — homeless shelters, hospitals, community groups and health departments — that will help with outreach.
The groups chosen in addition to Seedco were: HealthCare Access Maryland, Worcester County Health Department, Montgomery County Department of Health and Human Services, Calvert Health Solutions and Healthy Howard.
Maryland has been an early adopter of reform, and Lt. Gov. Anthony G. Brown has made it one of the key issues on his agenda. His office released the announcement that named Seedco and the other organizations.
A spokesman for Brown said that the exchange board, created under health reform rules, makes the ultimate decision.
"We expect that all 50 prime and subcontractors will operate in an efficient and transparent manner as we work to provide hundreds of thousands of Marylanders with health insurance," said spokesman Jared Smith. "We've spoken with the exchange and have been assured that there will be stringent oversight of this and all contracts that they issue."
Dr. Joshua Sharfstein, who is secretary of the Department of Health and Mental Hygiene and sits on the exchange board, said there will be strong oversight of Seedco and the other groups, he said.
"We were aware, and it was evaluated as part of the discussions," Sharfstein said of the New York settlement.
Board member Jennifer Goldberg, assistant director of Advocacy for Elder Law and Health Care at the Maryland Legal Aid Bureau, said she had worked with Seedco in the past and felt they had a strong proposal. They have experience in helping people access government programs and had identified a variety of organizations they could work with, she said.
"They had a terrific plan and really had thought through very well how they were going to meet the outreach goals and objective that we had," Goldberg said.