Sen. Marc Dann (D-Liberty Twp.) recently (09/08) put what could be another emerging scandal at the Bureau of Workers' Compensation (BWC) squarely on the shoulders of Republicans going back to former Gov. George Voinovich, even though the largest beneficiary of privatized managed care has former links to the Democratic Party, and even though Dann admitted he had heard rumblings of a potential problem before.
Dann followed media coverage of ballooning costs at BWC's managed care organizations (MCO) with a press conference of his own, choosing the regular quarters of the Senate Insurance, Commerce, and Labor Committee to raise serious questions about bureau payments to MCOs since partial privatization of the BWC was completed under Voinovich in 1997 -- payments that went from roughly $120 million in 1998 to more than $170 million in 2005, even though the number of claims processed by MCOs plummeted by more than 40 percent in that time. After correcting for inflation, said Dann, the BWC may have overpaid $1.6 billion in public moneys.
The privatization effort began in 1993, when the MCO system took hold under former House Speaker Vern Riffe (D) and former Senate President Stanley Aronoff (R). Calling the BWC the "silent killer of jobs," Voinovich finally brought the Health Partnership program online four years later behind promises of 15- to 30- percent savings. He also regained control of the bureau within the governor's office after it had briefly resided under an industry board of management and labor interests.
During that time, however, former Riffe staffer William Pfeiffer moved first to the BWC and then to the bureau's largest contracting MCO, Dublin-based CareWorks, which Pfeiffer now heads. Out of 26 current MCOs contracting with BWC, CareWorks controls at least 30 percent of all the managed care business. According to The Plain Dealer, the former chair of the Ohio Democratic Party, Paul Tipps, also helped launch CareWorks with the aim of tapping in to "millions and millions" of dollars from the relationship.
Despite the bipartisan underpinnings of MCO privatization, Dann exonerated Democrats Friday and suggested a long line of Republicans, including the current auditor and attorney general rival Betty Montgomery, were responsible for any malfeasance or collusion around the BWC.
"No Democrat has ever given out an MCO contract for the BWC. If there is a scandal, it is a 100-percent Republican scandal," he contended, suggesting the governor, the auditor, and the attorney general should have prevented any wrongdoing. "Lee Fisher was out of office as attorney general before the MCO ever took effect. It appears Betty Montgomery and Jim Petro did not do their job, along with Gov. Taft as the appointing authority over the BWC."
Dann had already divulged $60,000 in campaign donations of his own from the second biggest bureau MCO, 1-888-OhioComp, but said he was returning the money immediately to avoid "even the appearance of impropriety." The company is led by convicted felon Sam Lucarelli. Dann suggested in an earlier statement that there had been no public allegations of wrongdoing in the managed care system when he accepted the money, and that he "viewed them as reputable business people." Dann clarified his position at the press conference.
"I had heard some of those rumors and tried to run them down, but was unable to put anything together," he said. "The Legislature had looked at the BWC's private investment practices. The person in the best position to monitor MCO payments was the auditor and her large staff."
Along those lines, Dann issued a letter to Montgomery Friday demanding immediate performance audits of all MCOs certified by the bureau.
"The Ohio Revised Code Sec. 117.10 requires the auditor to conduct audits of all public offices and the discretion to audit private institutions, associations, boards, and corporations receiving public money for their use," he said. "This section was explicitly explained in Oriana House, Inc. v. Montgomery."
Her campaign reacted to the letter later in the day:
"Marc Dann should be ashamed of himself," said Montgomery campaign manager Shane Ostrowski. "Nearly 10 percent of Marc Dann's current campaign efforts have been underwritten by a convicted racketeer and his family. It's shocking that, as a candidate for attorney general and potential chair of the Ohio Organized Crime Investigations Commission, he would accept these dollars."
Afterward, a representative of Montgomery's office confirmed that annual audits of the BWC included the "claims processing component" governing MCO billing of the state insurance fund, but that the analysis did not go beyond pure accounting.
"If the Legislature wants the auditor to review the contractual obligations of the bureau, she'd love to help," said spokesperson Jaclyn Reynolds. "Otherwise, the terms of those agreements fall under the authority of the BWC."
The preceding article is an excerpt from The Hannah Report, Ohio's daily legislative newsletter providing independent, timely and comprehensive coverage of state government. For more information, please contact Hannah News Service at 614.228.3113. From Hannah News Service