A legislative panel on Wednesday signed off on changes to six state Department of Human Services contracts with Preferred Family Healthcare Inc. of Springfield, Mo., after learning that a potential conflict of interest had been resolved.
The conflict, according to documents, was that a company employee was a former division director in the department. He has since been terminated by the company.
The proposed amendments to the six contracts would increase the contract totals by about $4.2 million, according to the Bureau of Legislative Research. Without the amendments, the six contracts are authorized for about $10 million for counseling, mental-health, substance-abuse treatment and therapeutic foster-care services.
Charles Green, who resigned in January 2017 as director of the Human Services Department's Behavioral Health Services Division to start work for Preferred Family Health Care, has been terminated by the company as an executive vice president overseeing the company's services in Arkansas, company spokesman Reggie McElhannon confirmed.
Contacted after the Legislative Council's Review Subcommittee's meeting, where the contracts came up, McElhannon declined to say why Green was terminated.
Green said he's still negotiating with the Preferred Family Healthcare Inc. He said he couldn't comment further, on advice from an attorney.
The Office of State Procurement had "had concerns" with the proposed contracts that the department planned to present to the Review Subcommittee because an a former director of the Behavioral Health Services Division "was in an apparent position of control" at Preferred Family Healthcare, office Director Ed Armstrong said in an email to the co-chairmen of both the Legislative Council and Review Subcommittee.
That former division director was identified to the procurement office as the chief executive officer of Preferred Family Services in some materials and as the executive vice president in other materials that the office received from the company, Armstrong said.
Three company officials said in a memo dated Jan. 9 to Larry Walther, director of the state Department of Finance and Administration, that the firm has terminated Green permanently and will not be hiring him as a lobbyist, consultant or any other capacity, Armstrong said in his email.
Based on the information contained in the memo, the procurement office "does not plan to request that the six DHS contracts .... be pulled from the review [subcommittee] agenda," Armstrong wrote.
The company's memo to Walther came after Walther wrote in an advisory opinion dated Jan. 5 to Ralph Downs, general counsel for Preferred Family Healthcare, that restrictions under state law would bar Green from acting in connection with Behavioral Health Services Division contracts for Preferred Family Healthcare for a period of one year.
In the opinion, Walther said a a letter and an affidavit from the company states that the scope of Green's job "does not put him in a position of having any responsibilities or duties with PFH's dealings with the state of Arkansas in regard to ... contracts ... and any other conflicts listed in Arkansas Code Annotated 19-11-700, et. seq," and the affidavit states that Green is not authorized or empowered by the company to directly or indirectly participate in the company's contractual relationships with the state.
"Essentially, PFH is representing and testifying [through the affidavit] that Mr. Green is not acting as a principal or agent for PFH in connection with any of the contracts that could create conflicts, and thus there is no violation of the statutes," Walther said.
"However, because of the apparent discrepancy between the affidavit and the broad scope of Dr. Green's duties as set forth in the job description corresponding to Dr. Green's position as executive vice president (and the inconsistency in the facts before me as to what Dr. Green's position actually is), I am not confident enough in the accuracy of this representation to rely on it," Walther wrote.
While the company's letter and affidavit report that Green is an executive vice president with "absolutely no contact" with the department's contracts, the grant disclosure forms report that he is the chief executive officer for the company and provides oversight for Arkansas operations, which "would almost certainly create the appearance that he would likely have some connection" with the company's contracts with the department, Walther said.
"Accordingly, I cannot opine with any confidence that an ethical violation, as defined in the relevant statutes, would not arise if the contracts at issue were to be continued while Dr. Green is employed at PFH in a position of executive leadership," Walther wrote.
During the Review Subcommittee's meeting, Rep. Frances Cavenaugh, R-Walnut Ridge, said she wants to know whether any of the funds that the department is paying the company are "actually going to go to any of these people that are facing federal indictments."
In response, Misty Eubanks, chief procurement officer for the department, said "at this time that's not been indicated," and department officials have no reason to believe that that's the case.
Cavenaugh said, "So the short answer is, we are not going to be using our funds to pay somebody that is under federal indictment."
The company is connected to several federal court cases. One person pleaded guilty in federal court in Missouri in December to one count of conspiring with others to defraud the nonprofit company, previously known as Alternative Opportunities. The company is also connected to a federal kickback case in Arkansas involving former legislators. And in another case, a former board member pleaded guilty in June to embezzling almost $2 million from the company.
Metro on 01/18/2018