A Missouri-based nonprofit agency saw its Medicaid reimbursements increase from $35.1 million in 2011 to $92.8 million in 2016. This was after executives for the nonprofit group embarked on a $1 million scheme to pay for illegal campaign contributions and lobbying with the nonprofit group's money, according to federal court documents.
The Medicaid money came from four states, including Arkansas, according to the documents. The agency is Alternative Opportunities of Springfield, Mo., that changed its name to Preferred Family Healthcare in 2015.
w Donald Andrew “D.A.” Jones, 62, of New Jersey pleaded guilty on Dec. 8 in U.S. District Court in Pennsylvania to arranging to pay $90,000 to get the 2012 primary challenger of U.S. Rep. Bob Brady, D-Penn., to drop out of the race. Jones was a consultant for Brady., the 1st Congressional District representative in Pennsylvania and the ranking Democrat on the Committee on House Administration, which oversees federal elections. The district covers much of central and south Philadelphia.
• Jones also lobbied for Alternative Opportunities, a company whose lobbyist in Arkansas obtained a $400,000 General Improvement Fund grant for a company he founded while using the business address, staff and nonprofit tax status of one of Alternative Opportunities’ businesses to get the grant. Former state Sen. Jon Woods of Springdale is set to go to trial April 9 for a kickback from that project and from grants he and then-state Rep Micah Neal, also of Springdale, steered to Ecclesia College in Springdale. Neal pleaded guilty in the scheme on Jan. 4. Randell Shelton Jr. and Oren Paris III are co-defendants is Woods’ case.
• David Carl Hayes earlier this year pleaded guilty in Missouri to charges including theft from Alternative Opportunities. Hayes was Alternative Opportunities’ coordinator of merger and acquisition activity from 2006-13, according to court documents, and embezzled almost $2 million from Jan. 3, 2011 to March 31, 2014.” Hayes pleaded guilty June 12 and was found dead at his Missouri farm in November in what authorities described as a suicide.
Source: Staff report
Donald Andrew "D.A." Jones, 62, of New Jersey, pleaded guilty Monday in U.S. District Court in Missouri to one count of conspiring with three Alternative Opportunities executives to defraud the nonprofit group of $973,807 from April 2011 until January of this year. The nonprofit organization operates with private donations along with taxpayer money to oversee substance abuse treatment and counseling services in several states. There are 47 offices in Arkansas.
Money taken from the nonprofit group was used to lobby and make campaign contributions intended to increase federal and state financial support, Jones' plea shows. Federal law strictly forbids such lobbying and contributions by nonprofit corporations. The influence peddling plied state lawmakers and members of Congress.
Three executives of the company and an unnamed lobbyist from Arkansas contributed money to elected officials and their political campaigns to get more money from the government, according to Jones' plea. These types of indirect contributions are illegal, according to the guilty plea.
These illegal contributions to politicians were skimmed from the nonprofit group as costs for things like training and consulting, the guilty plea states. The fraud extended to convincing other individuals to make contributions and then submit false invoices to the nonprofit group so they could be reimbursed, the plea shows.
Once candidates supported by the nonprofit group's network of contributors were elected, Alternative Opportunities paid Jones and others to make the company's needs and wishes known to those politicians, paying for the lobbying under the false category of consulting fees to Jones and other lobbyists, the guilty plea said.
Jones agreed to provide services to the three executives and their Arkansas lobbyist that included "direct contact with legislators, legislators' offices and government officials in order to influence elected and appointed public officials to the financial benefit of AO [Alternative Opportunities.]" The agreement between Jones and the executives was not put into writing for at least four years to further conceal it, the guilty plea said.
Jones also agreed to pay kickbacks to the Arkansas lobbyist, the plea said. Jones made at least two payments to a former Arkansas legislator working for the nonprofit group, and did so at the request of the Arkansas lobbyist.
The three executives of the nonprofit corporation who conspired with Jones were not named in the guilty plea. Neither were two of the executives' associates in Arkansas who participated in portions of the scheme. Preferred Family confirmed last month that its chief operating officer, its chief financial officer and another member of its senior management team were placed on administrative leave, but declined to comment on why.
The executives placed on leave are Bontiea Goss, Tom Goss, who is Bontiea's husband, and Marilyn Nolan. Bontiea Goss is chief operating officer. Tom Goss is chief financial officer. Nolan was described by Preferred Family as a member of the senior management team.
Jane Duke of Little Rock, attorney for Tom Goss, didn't reply to requests either Monday or Wednesday for comment.
Preferred Family officials said Monday it didn't know of or consent to any such illegal activity.
The scheme to get more federal money for the company appeared to work. Alternative Opportunities' Medicaid reimbursements in Arkansas went from $22.9 million in 2011 to $33.4 million in 2016, according to court documents in the Jones case.
Medicaid is a health program for the poor that's largely federally funded but administered by states. States can, for instance, decide what kind of services it will pay for subject to federal agreement.
Jones' guilty plea makes no estimate of the amount of increase attributed to the influence peddling. For example, some of the growth could have come from an increase in payments from the takeover of Health Resources of Arkansas by Alternative Opportunities in 2014. Health Resources was based in Batesville when Alternative Opportunities took over.
The increase in total Medicaid payments from the four states went from $35.1 million in 2011 to $92.8 million in 2016 amounts, a 164 percent increase. This works out to an average annual rate of increase, factoring in the effects of compound interest, of more than 21 percent a year for five years.
Medicaid payments to Alternative Opportunities in Kansas went from $114,653 in 2011 to more than $1 million in 2013, according to Jones' plea documents. The amount then decreased and was $934,368 in 2016, according to court records.The net increase from 2011 to 2016 amounts to about 715 percent.
Reimbursements from Medicaid in Missouri went from $12.1 million in 2011 to $58.4 million in 2016, a 383 percent increase. It increased from $18.5 million in 2014 to $32.4 million in 2015. That $13.9 million one-year increase was more than the $13.7 million the company received in 2012, court records show. In 2016, reimbursements jumped again to $58.5 million, a $26.1 million increase.
None of the expanded reimbursements can be attributed to the Medicaid expansion approved in the Affordable Care Act of 2010, popularly known as Obamacare. Arkansas adopted a modified version that allowed Medicaid expansion money to subsidize private insurance. Missouri and Oklahoma accepted only a portion of the Medicaid expansion money offered to assist family planning efforts. Kansas rejected all of it.
Besides the three executives mentioned but not named in the Missouri plea, the Arkansas lobbyist referred to as "Person 4" was a resident of Rogers and a registered lobbyist with the state while an employee of the charity.
Someone identified as "Person 7" in the plea is a resident of Melbourne who was an Arkansas legislator from 2006-11. Person 7 accepted two payments from Jones, according to the court documents.
The Gosses and Nolan founded the Alternative Opportunities operation in Arkansas in 2006, state incorporation records show. Also shown on those incorporation papers as a director is Eddie Cooper.
Cooper was the state representative from Melbourne from 2005-11. He was dismissed as director of Health Resources of Arkansas in April, according to the Batesville Daily Guard newspaper. Health Resources is a subsidiary of Alternative Opportunities.
After he left the Legislature, Cooper was a lobbyist for the Cranford Coalition, the lobbying firm of Milton R. "Rusty" Cranford in Little Rock, according to records at the Secretary of State's office. Cranford is a former resident of Rogers.
Cooper was reached by telephone on Tuesday but would not comment, adding he would have no comment for at least "a couple of days." He told the Batesville newspaper in an article published Dec. 7 he was fired from Health Resources after informing the group's board he had voluntarily talked with federal investigators in Fayetteville over the course of three days earlier this year.
According to the Guard's account, Health Resources was out of money and under Arkansas State Police investigation in 2014 when Alternative Opportunities offered to take the organization over. Tom and Bontiea Goss and Nolan made the offer to Health Resource's board, according to the Guard account. Health Resources agreed and the Missouri company put hundreds of thousands of dollars into Health Resources, restoring it financially.
Cooper went to federal authorities after Cranford was removed by Alternative Opportunities as director of its Arkansas operations on Jan. 13, he told the Guard.
Cranford's departure was nine days after former state Rep. Micah Neal of Springdale pleaded guilty to accepting a kickback from AmeriWorks, a Bentonville-based company created and overseen by Cranford. Neal received the kickback, he said in plea documents, in return for Neal's cooperation in getting a $400,000 state General Improvement Fund grant in 2013. Cranford paid the kickback, according to statements made at a recent court hearing in a case against three of Neal's alleged co-conspirators. Former state Sen. Jon Woods, also of Springdale, is set to go to trial April 9 for his part in the same scheme, and for kickbacks from grants he and Neal steered to Ecclesia College in Springdale. Neal also pleaded guilty for his part in Ecclesia grants.
Cranford has not returned repeated calls and requests for comment since Neal's guilty plea. He did not return another message left at the Cranford Coalition number on Wednesday.
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Woods is accused of accepting kickbacks for his part in securing grants from the state's General Improvement Fund, including his share of the $400,000 that went to AmeriWorks. The grant approved by Neal and Woods to AmeriWorks went through the Northwest Arkansas Economic Development District, based in Harrison.
Cranford used the business address of Decision Point, one of Alternative Opportunity's companies, as the business address of AmeriWorks and had Alternative Opportunities staff help complete the grant application, grant records show. Decision Point had to accept the grant on AmeriWorks' behalf, grant records show, because AmeriWorks did not have the necessary nonprofit certification to receive the grant directly at the time.
Eight nonprofit economic development districts cover the state. They distributed the improvement grants, but deferred to local legislators on which grants to award. The process was struck down Oct. 5 by the state Supreme Court as unconstitutional use of state revenues for local purposes.
AmeriWorks received a $100,000 state grant in 2013 from the White River Planning and Development District, based in Batesville. At the time of the grant, Cranford oversaw Arkansas operations of Alternative Opportunities including Health Resources.
AmeriWorks failed to gain additional financial support and never got off the ground, according to an August 2014 letter from Cranford to the Northwest district. The $400,000 was returned to the Northwest district, according to its records. The check refunding the money bears the signature stamp of Tom Goss, grant records show.
The $100,000 grant from the White River district was redirected to a long-standing program for the disadvantaged in Batesville and to a substance abuse center in Searcy at the request of Health Resources of Arkansas, records show.
NW News on 12/22/2017
Print Headline: Medicaid payments soared to scandal-plagued nonprofit group