Why did ‘rotten businessman’ Jeffrey Thompson get fat D.C. contract?


According to authorities, Chartered Health Plan Chairman Jeffrey Thompson — seen here in an April 2010 image taken from video provided by C-Span — made $650,000 in illegal contributions for that helped elect Mayor Vincent C. Gray in 2010. (Associated Press)
Robert McCartney
Columnist March 2, 2013

Mayor Vince Gray’s spokesman says District entrepreneur Jeffrey Thompson turns out to have been “an awful, rotten businessman.”

So one wonders why Gray, his two predecessors as mayor and the D.C. Council entrusted Thompson for more than a decade with one of the city’s fattest contracts, for a health company that manages Medicaid services for the poor.

Robert McCartney’s column on local issues appears Thursdays and Sundays in The Post’s Metro section. View Archive

Could it be because Thompson was also the District’s most generous political donor? The one who, according to authorities, made $650,000 in illegal contributions for a “shadow campaign” that helped elect Gray in 2010?

The question requires a thorough answer, given that the financial collapse of Thompson’s company, Chartered Health Plan, now threatens to cost taxpayers up to $40 million.

The meltdown has created a convoluted legal mess in which two agencies of the city government are fighting each other in court over a related claim for $51 million.

Moreover, two of the District’s premier hospitals, MedStar Washington Hospital Center and MedStar Georgetown University Hospital, have also taken Chartered to court. They sued the company in December for $29 million, accusing it in part of shortchanging them illegally to shore up its finances as it slid toward insolvency in October.

This debacle cries out for two responses. First, there should be an all-out legal effort to seize Thompson’s assets to offset any cost to taxpayers and hospitals.

Council Member David Catania (I-At Large) says the city should go after Thompson’s personal worth and has the legal right to do so. He alleged that Thompson might have used Chartered to engage in fraud.

In addition, we need a full public investigation into why Chartered imploded, and whether Thompson’s campaign largess led elected officials or other authorities to overlook any wrongdoing.

It’s not enough that U.S. Attorney Ron Machen is almost certainly examining Thompson’s business dealings as part of his probe of Gray’s “shadow campaign.” Machen isn’t necessarily focused on how Thompson’s business was ruined at potential cost to the District.

“I would like to see all the actors investigated. It’s very important that we don’t get bogged down in these kinds of contracts if we’re going to move forward in the city,” said Council Member David Grosso (I-At Large), who sits on the health committee.

So far, however, nobody in authority seems to see any urgent need for such an investigation. The mayor is satisfied to let Chartered’s receiver — a financial overseer named by the city to sell what’s left of the company — alert people if anything looks suspicious.

If the receiver’s department “finds anything that it feels it needs to forward to the U.S. Attorney, or the IRS, or the office of the attorney general, or the inspector general, we hope that they do so,” said Gray’s spokesman, Pedro Ribeiro.

He stressed there was no evidence yet that Thompson had committed crimes at the company.

“Running a company poorly is not typically against the law in the U.S.,” Ribeiro said. “Maybe the guy was just an awful, rotten businessman, and I think that’s pretty well established now. . . . He ran Chartered into the ground.”

The spokesman also said the mayor’s goal is to hold down the cost to taxpayers. But Gray has a problem there, because two parts of his own government are at odds.

The city-appointed receiver is obliged by law to do whatever he can to boost Chartered’s assets. So he’s gone to court saying that the city owes Chartered $51 million because it allegedly underpaid Chartered in the past under their contract.

If he wins, then taxpayers are out tens of millions.

But the D.C. Department of Health Care Finance is fighting that claim. Its responsibility here is saving the District’s money. It says that Chartered, a profit-making company, accepted the risk that it might lose money when it signed the contract.

Sadly, even if taxpayers win, the losers will be city hospitals, clinics and physicians. They won’t get paid for care they provided in the past.

The individual who doesn’t lose much in either scenario, at least so far, is Jeffrey Thompson. (His lawyers did not respond to a request for comment.)

The receiver is going after Thompson for $2.8 million in allegedly unpaid taxes and a suspicious $1 million transfer out of Chartered’s accounts. But that totals less than a tenth of what taxpayers, or hospitals and doctors, stand to lose.

The District needs to get to the bottom of this. It’s not just the tens of millions of dollars at stake. It’s the integrity of both city contracting and election campaigns.

For previous Robert McCartney columns, go to washingtonpost.com/mccartney.

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