How do you spend $48 million in unbudgeted taxpayer money without getting an OK from elected lawmakers?
In the District of Columbia, there’s pretty much only one way, and that’s the way Mayor Vincent C. Gray is proposing to settle a high-stakes dispute with D.C. Chartered Health Plan.
Gray spokesman Pedro Ribeiro confirmed Wednesday that the plan is to pay the District’s share of the settlement — a little over $35 million, with federal Medicaid dollars accounting for the rest — out of the city’s contingency cash reserve. That reserve, by law, is available for “nonrecurring or unforeseen needs that arise during the fiscal year,” specifically including “health needs,” and can be disbursed with no more than a fiscal analysis from the Office of the Chief Financial Officer saying no other funding sources are available — no need for D.C. Council approval.
As of March 31, according to an OCFO report, the contingency reserve held $170.3 million. Under city law, any draws have to be paid back within two fiscal years.
The use of the contingency reserve avoid a potentially uncomfortable political debate over the wisdom of bailing out Chartered — and, to an extent, bailing out its battered owner, Jeffrey E. Thompson.
Gray and other elected officials have been under tremendous pressure from the city’s doctors, clinics and hospitals to intervene in Chartered’s winding-down to ensure that those entities get paid for the roughly $50 million in care they provided to Chartered members in the firm’s final weeks as a District contractor. Administration officials have said the only way to do that while securing a federal contribution was to settle an ongoing rate dispute for the best possible price, then make up the remainder with city funds.
But the optics are unsettling. To this point, the District had resisted settling the rate case, arguing that Thompson had assumed the risk that the per-member rates paid by the city might not cover the costs of providing care to those members. So, in essence, Chartered is being paid twice for the same care. That’s not even raising Thompson’s role in the ongoing federal corruption investigation — one very much involving Gray’s 2010 campaign and Thompson’s role in it.
So you might understand why Gray might choose a funding avenue that avoids having comments like these aired on the council dais: “It makes me sick to my stomach,” said council member David A. Catania (I-At Large), a longtime critic of Thompson and his health care company. “I would like to see us be more aggressive to go after the person who has the money rather than have taxpayers pay a second time.”
Chartered’s receiver has filed suit against Thompson, seeking $17 million he allegedly illegally siphoned out of the company. But Catania, acknowledging the need to get the providers paid, has pressed the Gray administration to sue Thompson as well — something Attorney General Irvin B. Nathan has not publicly ruled out — and soon: “Jeff Thompson’s assets are being spent up as we speak,” he said Wednesday. “The District of Columbia is in competition with Jeffrey Thompson’s lawyers to access these dollars. The longer we wait, the less we get.”
Another way to fund the settlement would be for Gray to send the council a supplemental budget request to vote on in September. But aside from Catania’s zeal on the matter, it is not clear the council is aching to question the settlement — what with most members having Thompson ties of their own to one degree or another and health providers ready to walk to Wilson Building halls making sure they get paid posthaste. It might be the easiest $48 million the city’s ever spent.