Md. HMO Drawn Into Investigation
Federal, State Probes Of Ex-Senator Expand
By Avram Goldstein and Charles Babington
The criminal investigation revolves around the activities of a former state senator, Larry Young (D-Baltimore), who was expelled from the General Assembly last month on ethics charges. Young was accused of wrongfully using his office to collect money from companies and other organizations with business before the state.
Among the many violations alleged by the assembly's Joint Committee on Legislative Ethics were that Young illegally solicited $31,425 from PrimeHealth for a religious rally at Camden Yards and a health conference in Las Vegas last year.
Young, who chaired the Senate Finance subcommittee on health, and at least one other legislator had helped PrimeHealth in its hard-fought effort to win a state license in 1996 to operate a health maintenance organization. Young has denied any wrongdoing, saying that all the payments from PrimeHealth and other firms were justified.
But his activities have come under investigation by a state grand jury in Annapolis and a federal grand jury in Baltimore. Both have subpoenaed documents on Young collected by the joint ethics committee, as well as documents from health companies and Coppin State College in Baltimore.
A spokeswoman for the Maryland Department of Health and Mental Hygiene said Friday that agents from the Internal Revenue Service, FBI, U.S. Postal Service and the Maryland state prosecutor's office are looking into PrimeHealth, which serves enrollees in Prince George's, Montgomery and eight other counties.
Wayne Clark, a vice president for PrimeHealth and former Prince George's political operative, said in an interview Friday: "Our posture has basically been no comment. . . . To the best of my knowledge, PrimeHealth is not under investigation."
It's unclear whether investigators are focusing on matters that go beyond the issues already addressed by the legislative ethics report that led to Young's expulsion.
PrimeHealth isn't the only health care company caught in the glare of the Young investigation. The joint ethics committee found that Young accepted improper cash gifts from New Jersey-based Merit Behavioral Care Corp. and Kaiser Permanente, a nonprofit managed care organization.
The activities of PrimeHealth in recent years show the way health care firms often seek political help in gaining access to markets influenced to a significant degree by government decision-making. The company was founded in 1995 by a group of black health care officials, insurance and managed care experts and community leaders in the Washington area.
In an interview yesterday, Young said PrimeHealth was brought to his attention a few years ago by state Sen. Decatur W. Trotter (D-Prince George's). In January 1995, Trotter informed the ethics committee that he was employed as a "marketing representative" for Diagnostic Health Imaging Systems Inc., an affiliate of PrimeHealth that has common ownership and shares office space in Lanham.
At the time, the state was launching a new effort to cut costs by contracting with private managed care companies to take care of enrollees in Medicaid, the state-federal health program for the poor. Young said Trotter felt it was important that an African American-owned HMO, such as PrimeHealth, be among those licensed by the state to enroll Medicaid patients.
Young said he agreed, and urged state officials to help PrimeHealth obtain the necessary approval.
Trotter said in an interview Friday that he no longer works for Diagnostic and was unaware of any criminal investigation into PrimeHealth.
A third state senator, Ulysses Currie (D-Prince George's), also urged state officials to help PrimeHealth become licensed as an HMO by the Maryland Insurance Administration. Currie said he has no financial connection to PrimeHealth but helped because he, too, wanted a black-owned firm to succeed in the burgeoning field of managed care.
Currie said he first met PrimeHealth officials at his January 1995 campaign fund-raiser. In 1996, he organized a meeting involving himself, then-Insurance Commissioner Dwight K. Bartlett III, PrimeHealth's Clark and company president Edward A. Thomas. The company was trying to convince Bartlett that the bulk of the company's assets -- medical equipment that had been donated to the firm -- was, in fact, owned by PrimeHealth. Otherwise, the company would not be financially qualified to hold an HMO license or obtain any state business.
Currie said he acted properly as a legislator trying to help a constituent with a government matter. "I'm sure I didn't have any undue influence," he said.
Bartlett said in an interview Friday that the state had "some question as to whether they had clear title to the equipment. We asked them to get releases from the donors, and they seemed to have problems with that. It went on for the better part of a year. They were pretty upset with us, but we stuck to our guns, and they finally did come up with releases."
Bartlett described one meeting with Currie as "rather unhappy." He said Currie complained that Bartlett was picking on PrimeHealth and applying unreasonably high standards to its application.
PrimeHealth won approval late last summer to enroll Medicaid patients as part of the state's new managed care program. The company has not been among the most successful HMOs in the new program. Enrollment stands at about 12,500, far behind the two largest managed care plans, Prudential and Free State, which each have nearly 80,000 Medicaid members.
To date, PrimeHealth has collected $14.5 million in payments from the state, according to state health officials.
Barbara Shipnuck, a Maryland deputy health secretary, said PrimeHealth did not start the Medicaid services in June when the program officially began because the HMO had not yet met all the requirements for managed care contractors.
During those months, a number of Maryland legislators made inquiries to Shipnuck and perhaps other officials about the status of the PrimeHealth application. They included Currie, Young, Del. Nathaniel Exum (D-Prince George's) and Del. Nathaniel T. Oaks (D-Baltimore), Shipnuck said. She said the inquiries had no effect on the process.
"They never told the department what to do about the application," Shipnuck said. "They inquired about how it was progressing, and they had no effect on the process."
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