Inspector general: Illinois OK'd contract after fraud

Originally Posted Online: Feb. 21, 2012, 10:47 am
Last Updated: Feb. 22, 2012, 8:32 am
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SPRINGFIELD, Ill. (AP) — A transportation business received $1.7 million worth of state work over two years even after a federal conviction for hundreds of thousands of dollars in state Medicaid fraud, according to an investigation released Tuesday.

Administrators in the Illinois Department of Human Services' mental health division knew the state had blacklisted Downstate Transportation Services Inc. a year before its 2007 conviction but still did business with the company, Executive Inspector General Ricardo Meza said in the report.

The review found the division's director, Lorrie Rickman-Jones, approved a 2008 contract with the company despite knowing about its conviction. Rickman-Jones, wife of former state Senate President Emil Jones, D-Chicago, told investigators she did not recall an e-mail informing her of the court action.

Four employees whose salaries range from $81,000 to $193,000 were disciplined with verbal or written reprimands or both.

Several indicated Downstate, which received $3.9 million in state contracts from 2002 through 2006, was the only vendor willing to do the work, which required transporting patients to DHS psychiatric facilities. According to mental health division chief of staff Robert Vyverberg, the company did "a beautiful job."

"No matter how well Downstate may have performed, allowing DHS to continue its relationship with an organization that a federal jury found guilty of defrauding Medicaid of over $400,000 does not under any set of circumstances appear to be fiscally sound," the inspector general wrote.

The report was released just a day before Gov. Pat Quinn announces his budget plan for the coming year, which he says must include $2.7 billion in cuts to Medicaid to save money in tight fiscal times. Cracking down on fraud and abuse could be a key part of that.

The Department of Healthcare and Family Services yanked Downstate Transportation's Medicaid certification — a requirement to do the Human Services work — in March 2006. It found the company billed for fabricated travel or miles it drove without patients.

Downstate and its owner, Richard Wallace, were indicted in July that year and both were convicted in February 2007 on one count of health care fraud and 17 counts of mail fraud. Wallace was sentenced to three years in prison.

But DHS awarded Downstate $825,450 for the fiscal year that began in July 2006 and $935,000 in 2007 in a contract that required the company to certify it had not been convicted of a felony.

In addition to Rickman-Jones and Vyverberg, regional director Jordan Litvak and Patrick Knepler, legislative and legal liaison, were named.

Messages left at the offices of Rickman-Jones and Litvak were not returned. Knepler referred questions to DHS spokeswoman Januari Smith, who did not have an immediate comment. State records indicate Vyverberg retired in December.

A phone number for Downstate Transportation Services in Carterville is disconnected.

The report indicated Litvak and Knepler both were aware of Downstate's Medicaid decertification within 10 days of the March 28, 2006, dictum.

Then, on Feb. 14, 2007, two days after learning of the jury verdict, Litvak wrote in an e-mail to Knepler that because of post-conviction motions, it would be "business as usual" with Downstate.

In a response that also went to Rickman-Jones and Vyverberg, Knepler replied that he and Litvak planned to monitor post-trial motions and, "with the existing guilty verdict, determine at what point does (Downstate) become a non-responsible vendor."

Knepler told investigators Downstate was "the only company willing to do the job." Vyverberg agreed, reporting that he thought the company had been "restructured" and therefore qualified for the contract.

Rickman-Jones said she didn't recall the February 2007 e-mail. Litvak said he also appraised DHS assistant Secretary Grace Hou and chief operations officer Jerome Butler of the situation. Hou and Butler told investigators they were unaware of the verdict.

Human Services Secretary Michelle Saddler told the inspector general last fall that Vyverberg and Litvak were counseled and reprimanded in writing. Rickman-Jones and Knepler were counseled. The inspector general had recommended just counseling for Rickman-Jones and Vyverberg and unspecified "discipline" for the other two.

Saddler also reported that DHS now requires employees to check whether contract bidders still are in business or on a list of prohibited vendors. Saddler said agency officials also reviewed contracts from last year as well as current pacts for prohibited vendors, finding a Rockford dentist who was prohibited, and also developed an automated system to continuously weed out ineligible vendors and was working to put in place additional screening.



The inspector general's report can be found at:


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