Chartered contract won’t be renewed

October 15, 2012

The District is moving to end its relationship with the health-care company owned by embattled campaign financier Jeffrey E. Thompson after auditors discovered significant financial irregularities in its books.

Multiple senior officials confirmed that Chartered Health Plan will not have its contract renewed to manage care for low-income city residents, its only significant source of business, and that insurance regulators are considering a move to place the company in government receivership.

The officials spoke on the condition of anonymity, citing the sensitivity of the negotiations with the company. Representatives from the insurance and health-care finance departments are set to attend a Chartered board meeting Tuesday evening, where they plan to discuss a range of potential regulatory actions.

A Chartered spokeswoman did not respond to a phone call or e-mail for comment late Monday.

Thompson, 57, stepped down as the chairman of Chartered’s board in April — less than two months after federal agents searched his home and offices, thrusting him into the center of a wide-ranging campaign finance probe. He has been implicated in the funding of a vast “shadow campaign” waged in support of Vincent C. Gray’s successful 2010 mayoral campaign.

Thompson remains sole owner of Chartered, which handles Medicaid coverage for more than 100,000 city residents. Wayne Turnage, the city’s health-care finance director, told the D.C. Council in April that it was “unlikely” Chartered would keep its contract, worth $355 million last year, after it expires in May 2013 as long as Thompson remained its owner. Since then, Thompson has pursued a sale, but no deal has been finalized.

Turnage and Gray spokesman Pedro Ribeiro declined to comment Monday.

The move toward possible receivership, the officials said, came after the company notified city officials in recent weeks that it would have to restate its financial positions after an independent auditor identified irregularities in the company’s books.

The officials declined to discuss the precise nature of the issues. One official said auditors had identified a “significant amount” of money that had been transferred out of the company.

Chartered had been in tough financial straits even before Thompson fell under federal prosecutors’ scrutiny. The company reported an operating loss of nearly $15 million in 2011, but it remains by far the largest of the city’s three managed-care providers. Should the District pursue a takeover of Chartered, members could remain with the plan until May, officials said.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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