In March 2008, the District sued Chartered. Had the action gone to court, the company could have been liable for tens of millions of dollars in damages. Thompson settled the case, agreeing to pay $12 million and to restrict Chartered’s transactions with companies he has an interest in.
“He was unhappy,” said Peter J. Nickles, who signed the settlement as the District’s acting attorney general and speculated that Thompson agreed to do so to protect his business interests with the District.
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Ray said the case was settled against his advice. “Chartered felt that they just needed to get along with the city,” he said.
Amid the litigation, the District entered into a new contract with Chartered. But financial statements show that the settlement had a significant effect on Thompson’s bottom line. The clinic has since been sold, and RapidTrans has ceased operations. Chartered recorded a $5.47 million operating loss in 2009, and it has not paid a dividend since 2008.
In 2010, Thompson sought an additional payment of nearly $15 million from the city, on the grounds that it set “actuarially unsound” reimbursement rates for certain dental procedures. Thompson went to Nickles and other Fenty administration figures pleading his case. Nickles said that he thought the claims had some merit but that he insisted that Thompson take the dispute to court.
Chartered filed a contract appeal in September 2010, weeks after Fenty lost the Democratic mayoral primary to his eventual successor, Vincent C. Gray — to whose campaign’s, like Fenty’s, Thompson had donated heavily.
The dispute was settled by the Gray administration in September, with the city agreeing to pay Chartered $7.5 million.
Uncertain recovery
It is unclear whether Chartered, which manages the health care of more than 110,000 city residents, is solidly in the black again. Chartered’s most recent regulatory filing showed the company running a $763,000 surplus. But the $7.5 million settlement appears to have been booked already, offsetting a $7.13 million underwriting loss.
The District’s other current managed-care contractor, UnitedHealthcare, has reported a $15 million loss in its annual filing for 2011. Chartered’s 2011 annual filing has been delayed to April for unspecified reasons.
Since last month’s raids, Thompson has seen another setback in his D.C. government business.
His accounting firm recently missed a chance at a major business opportunity when a contract to develop a new property tax system, worth as much as $8 million over two and a half years, was unexpectedly canceled March 22 by the Office of the Chief Financial Officer.
A letter to losing bidders in January said Thompson, Cobb had won the contract “pending Council review and approval,” but the award was never forwarded for approval. Another letter sent to bidders after the cancellation said the agency “determined that a complete review of the requirements is necessary as specifications have been found to be inadequate and in need of revision.”
David Umansky, a spokesman for the finance office, said the cancellation was not related to the federal investigation.
But it spared council members from voting on a Thompson-related contract while several of them are under federal subpoena to produce records relating to donations they took from him.
On March 21, Thompson stepped down from Thompson, Cobb’s management, according to a letter sent to at least one of its clients and first reported by WAMU-FM.
“To assure that the current investigations do not impact the firm and our clients, Mr. Jeffrey E. Thompson has withdrawn from the firm,” read the letter from partner Ralph B. Bazilio. He has assumed Thompson’s roles as president and chief executive. He has not returned several recent calls for comment.
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