D.C. officials agree to plan to settle D.C. Chartered’s finances

District officials have agreed to pay $48 million to settle the accounts of D.C. Chartered Health Plan, the once-prominent Medi­caid contractor that unraveled over the past year amid financial stress and allegations of its owner’s involvement in political corruption.

The settlement, between the company’s receiver and city health-care finance officials, was filed Tuesday in D.C. Superior Court and awaits the approval of a judge and federal Medicaid officials.

If the deal is approved, the company is expected to begin making payments to health-care providers who have not been paid for nearly $50 million worth of care delivered to Chartered members earlier this year.

A portion of the settlement — $18 million — represents an upward adjustment to rates paid to Chartered in prior years; the federal government is expected to pay its standard 70 percent share of those costs. The remaining $30 million will not be paid to Chartered directly; it will go straight to providers or to a third party of the city’s choosing for disbursement.

Pedro Ribeiro, a spokesman for Mayor Vincent C. Gray (D), declined to comment on the settlement.

Chartered, which once received in excess of $350 million a year to manage the health care of more than 100,000 low-income District residents, lost its contract with the city in May.

When the outlines of a potential deal emerged last month, health-care providers expressed relief that the city was working toward a solution allowing them to receive the money they are owed. But the settlement opens Gray and deputies to criticism for using taxpayer funds to settle debts incurred by Chartered, owned by businessman Jeffrey E. Thompson.

Thompson, a key figure in the ongoing federal investigation into District political corruption, including in Gray’s 2010 election, has claimed in contract appeals that the city unfairly underpaid Chartered by more than $6o million. But city officials had, to this point, resisted those claims, saying Thompson bore the risk that the per-member rates paid by the city might not cover Chartered’s costs.

The receiver is suing Thompson for $17 million, alleging he siphoned cash out of the business before its precarious financial condition led the city to pursue receivership last year. Thompson, according to persons familiar with the federal probe, is the unnamed co-conspirator mentioned in several recent prosecutions. He has not been charged

Thompson, who unsuccessfully challenged the receiver’s sale of company assets earlier this year, could object to the settlement. His attorneys said in a court filing last week that they would seek “a full and fair opportunity to examine” any proposed settlement.

It is unclear when the settlement could gain approval from the judge in the case, Melvin C. Wright. A hearing is set for Aug. 21.

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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