Category Archives: Perdue

CSC, the Creator of NCTracks, Pays $97.5 Million in Settlement for “False and Misleading Information” Regarding the Company’s Performance as to a Computer Records Contract

You know the magazine Cosmopolitan?  Well, back in 1999, Cosmo decided to branch out from magazines and create a Cosmo yogurt.  Never heard of it?  That’s because Cosmo pulled the yogurt off the market within 18 months of entering the market.  Cosmo yogurt was a complete flop.  But, still, Cosmo yogurt was on the market for 18 months.

Remember “New Coke?” (I’m showing my age).  But back in the late 70s and early 80s, Coca-Cola launched the “New Coke.”  It was an utter flop and consumers demanded the original Coke to return.

If it takes 18 months for NCTracks to be “pulled from the market,” a great number of our Medicaid providers will either be (1) out of business; or (2) no longer accepting Medicaid.

It is indisputable (at least if you do not work for the Department of Health and Human Services (DHHS)) that NCTracks is severely OFF-TRACK.

Providers are going out of business because they are not receiving Medicaid reimbursements.  Or the reimbursements are below the standard reimbursement rates.  There are Medicare and Medicaid crossover problems.  Not to mention providers are extremely frustrated with the amount of time they need to devote to NCTracks issues.  See September 19, 2013, article by Rose Hoban.

Why has NCTracks been such a failure?

Obviously, I do not have the answer to that haunting question.  Believe me, I have heard it all.  I’ve heard that McCrory wants NCTracks to fail because NCTracks was past Gov. Perdue’s baby.  I’ve heard that McCrory wants NCTracks to fail because then he can privatize Medicaid.  I’ve heard that Computer Science Corporation (CSC), the company that writes the computer language for NCTracks is inept.  I’ve heard that CSC begged Wos not go “live,” but Wos pushed the go “live” date.  I’ve heard that the employees at CSC have no idea what they are doing.  I’ve even heard that all the Republican governors have conspired to fo everything in their power to derail the Affordable Care Act (ACA) and this is just one example.

Most likely, none of the above is completely correct…or a small bit of everything.  Regardless, the NCTracks system is hurting our providers that accept Medicaid.  It should not be a party issue.  It is a North Carolina issue.  And, just think how popular the administration would be if they came out tomorrow and trashed the whole NCTracks system….Now that would be something!!!

With all that said, I found an interesting tidbit the other day about CSC.

September 9, 2013, CSC settled a lawsuit with its shareholders for $97.5 million.  Is this germane to the NCTracks tomfoolery that we are all enduring?  Perhaps not…but…perhaps.

Shareholders of CSC (which, BTW, is a BILLION dollar company) brought a class action lawsuit against CSC over alleged false statements about accounting and the company’s performance on a multibillion-dollar contract.  Click on “class action lawsuit” to read the Complaint.

A Memorandum filed in support of the Complaint alleged that CSC “made false or misleading statements or omitted to disclose material facts” about internal controls over financial reporting and about CSC’s performance on a $5.4 billion electronic patient records contract with the U.K.’s National Health Service.

The plaintiffs alleged that the false and misleading statements regarding the controls over financial reporting and CSC’s performance on the $5.4 billion contract caused the stock to artificially inflate then plummet when the truth came out.

After reading the Complaint, this is what I gleaned that CSC allegedly did with respect to the electronic patient records contract (sound like what CSC has here in NC?):

Under the National Health Service (NHS) Contract, CSC agreed to build a computerized medical records system and develop the necessary software to create digitized medical records for all UK residents living within the regions covered by the contract.

This is directly from the Complaint…I find it very interesting…(the non-italicized words are mine):

The core component of the NHS Contract—the software system called Lorenzo , [NCTracks] intended to enable the digital medical records system—was to be delivered by 2012 [July 1, 2013]. The significance of the NHS Contract to CSC placed the project squarely in the spotlight of Wall Street analysts. Accordingly, virtually all conference calls between the Company and investors and virtually all public announcements during the Class Period addressed the progress and status of the NHS Contract. Throughout the Class Period, Defendants repeatedly asserted that CSC was “on track” and “making progress” and that the contract remained profitable to the Company. Likewise, CSC and the Individual Defendants continuously denied media reports critical of CSC’s performance of the contract. As analyst reports throughout the Class Period demonstrate, investors believed Defendants. However, Defendants’ representations were false because they had known, at least since May 2008, that CSC could not deliver the Lorenzo system [NCTracks] as promised. The Class Period begins on August 5, 2008, the date of Defendants’ first public misstatements following May 2008. Lead Plaintiff’s investigation has revealed that, as of May 2008, CSC and the Individual Defendants knew that the NHS Contract could not be fulfilled. In early 2008, CSC’s Board of Directors dispatched an internal team of experts to the UK to review progress on the NHS Contract. The team concluded that “from a technology and operational perspective,” CSC could not perform the NHS Contract [NCTracks]. The members of the team were in agreement that CSC simply could not deliver the software necessary to perform under the contract. As such, the contract was a “loser,” and, per Generally Accepted Accounting Principles (“GAAP”), CSC should have recognized a loss on the NHS Contract in 2008. CSC and the Individual Defendants concealed these facts from the public, and have never taken a loss on the contract. In the midst of public scrutiny, the UK Government commenced an investigation through a committee of Parliament with oversight over public spending. The committee reached similar conclusions: CSC could not deliver on the NHS Contract. Indeed, the Parliamentary inquiry revealed evidence that CSC had likely known it could not deliver since 2006.

If I am reading the allegations correctly, the plaintiffs asserted that CSC promised a computer program regarding electronic patient records that CSC knew it could not deliver.


As an aside, CSC’s reported revenue for fiscal year 2011 (ending April 1, 2011) was $16.04 billion, and net income attributable to CSC shareholders was $740 million. CSC common stock is listed and trades on the NYSE under the ticker symbol “CSC.”

 Companies deal with marketing/products failures every day.  Just look at Cosmo’s yogurt failure. Or Coca-Cola’s “New Coke” flop.

Cosmo pulled the yogurt off the market within 18 months.  Consumers demanded that Coca-Cola return to the original Coke recipe.

Could it be possible that CSC has 2 product failures???

The Lorenzo system???



Adult Medicaid Group Homes: Forgotten Again?

In the wake of such tragedies such as the Colorado movie theatre last July, the Sikh temple in Wisconsin in August, Minneapolis in September, then the unthinkable massacre at the Connecticut elementary school in December, and, of course, the Boston bombing in April, you would think that mental health would be a top priority.

Instead, politicians across America are advocating gun laws.  Without commenting on gun control (as this is a Medicaid blog), mental health seems to be getting placed on the back-burner.

In the North Carolina budget passed by the Senate last week, mental health, in particular, group homes for adults with severe mental illnesses, again, was forgotten.  Whether on purpose or by accident, I have no idea.  But the fact remains a large part of metal health simply was not contemplated in the budget.

I am sure most of you remember the comedy of errors that occurred at the beginning of the year when the criteria for personal care services (PCS) was revised.  Basically in January 2013, the criteria to receive PCS became more stringent.

According to DMA, effective January 1, 2013, PCS “is available to individuals who has a medical condition, disability, or cognitive impairment and demonstrates unmet needs for, at a minimum three of the five qualifying activities of daily living (ADLs) with limited hands-on assistance; two ADLs, one of which requires extensive assistance; or two ADLs, one of which requires assistance at the full dependence level. The five qualifying ADLs are eating, dressing, bathing, toileting, and mobility.”

Prior to January 1, 2013, individuals who qualified for Medicaid special room and board assistance were automatically granted approval to receive PCS funding regardless of need. This applied for both in-home and facility-based services.

Due to the more stringent 2013 criteria, thousands of adults in group homes in NC who depended on Medicaid were no longer eligible.  Former Gov. Perdue was forced to shimmy around funds in order to keep these disabled adults from losing their homes.  The whole debacle created terror and stress for those disabled adults whose residences were threatened, for the families of the threatened disabled adults, for the group home executives who did not want to evict these disabled adults, and for any mental health advocate or person with empathy toward the mentally ill.

The trainwreck of the adult PCS group homes only occurred 4-ish months ago.

Yet, lawmakers, seemingly, failed to address the recurrent problem of funding for group homes for adults with severe mental illnesses, who are no longer eligible for PCS, in last week’s budget passed by Senate.

Wednesday afternoon (if you work downtown, then you know what I am talking about) a group of protesters rallied outside the General Assembly clad in blue shirts, holding signs saying, “Save Group Homes!” and “Disaster Relief! Save my Home!,” and some simply said, “Help!”

The Senate’s budget failed to provide funds for approximately 1,450 people living in 6-person group homes.  Each group home resident currently receives $16.14 a day, or about $6,000 a year, from the state program.  The fear is that group homes are so underfunded as it is that any amount, no matter how small, of decreased funds would drive the group homes out of business, forcing residents onto the street.

In general, group homes are not huge money-makers for the owners.  The workers at a group home make approximately $9-10/hour.  Group homes must be staffed 24/hours/day and 365/days/year.  The group homes must use the state-funded money to staff the home, keep up the maintenance of the home, feed all the residents and care for all the residents, plus all overhead (i.e., electricity, heat/air conditioning, any extras for the residents, such as TVs or cable, blankets, etc.).  Plus group homes must provide a small, monthly stipend for the residents in order for the residents purchase medicine (co-pays) and personal hygiene products.

Logically there must be SOME profit in group homes in order for anyone to want to run a group home.  But the profit is minimal.

Similar to the low Medicaid reimbursement rates to physicians, causing physicians to not accept Medicaid, any sort of cut to group home funding (including the residents not qualifying for PCS due to the new criteria and without special funding to cover the difference), group homes will inevitably close.  You simply cannot expect a person to keep a group home open when no profit is made.  Just as if you cannot expect a doctor to accept Medicaid patients if no profit is made.

So, is the State of North Carolina saving money by not providing additional funding to those PCS recipients who no longer qualify for PCS? Hey, the Medicaid budget goes down, right? But what happens to those adults with severe mental illnesses when, because of the lack of PCS funds, the group homes either close or turn out those residents who no longer qualify for PCS?

In a perfect world, I guess the families of the adult Medicaid recipients would take them in and all would be fine.  But I gather there is a reason that these recipients are in a group home and not with family.

No, since this is not a perfect world, most of these adults with severe mental illnesses, without a group home, would be homeless and, eventually, if not immediately, would be hospitalized at a much higher price that a group home.

So these adult Medicaid recipients are stable in a group home. Well-cared for. Most likely, have relationships with the staff and other residents.  But because of the new PCS criteria and the fact that the NC budget does not provide funding for Medicaid residents that no longer qualify for the PCS funding, we will uproot the adults with severe mental illness, send them into the world, expect them to be ok, and, then, later, pay much more money to the hospitals that are forced to take in these Medicaid recipients due to whatever issues caused the hospitalization.

Hmmmm….at least the Medicaid budget is lower.

Secretary Aldona Wos: Inherited a Medicaid Money Pit? (It’s Not All Her Fault)

Have you ever bought a used car only to find out it is a lemon? Or a house only to find it is a money pit? Well, I suspect that sinking feeling is much like how Secretary Aldona Wos feels after inheriting the NC Medicaid system.

There is no question that Secretary Wos inherited a lemon…or, even more apropos,…a Medicaid money pit.

Remember, in the January 2013 Medicaid Audit conducted by State Auditor Beth Wood, the audit found Medicaid to be a total of almost $1.2 billion over budget during the past three fiscal years.  (FYI: The Fiscal Year begins July 1 and ends June 30.  Hence, the need for a new budget now that this Fiscal Year is fast-ending.) The January Audit concluded that (not this year) but the last 3 years, Medicaid was over budget by a total of almost $1.2 billion.  The past 3 Fiscal Years were, obviously, before Secretary Wos’ stent as NC Director of the Department of Health and Human Services (DHHS).

Secretary Wos did not only inherit a “money pit” Medicaid system as it pertains to the budget.  Think about how expensive NCTracks is turning out to be.  But NCTracks was not Secretary Wos’ “baby.”  The past administration implemented the new NCTracks system, which is still not “live.”  Originally NCTracks was set to go live August 2011 at a cost of $265 million.  When the contract was put out for bid in 2008 (for the second time), Computer Sciences Company (CSC) hired former legislator and DHHS Deputy Secretary Lanier Cansler as its lobbyist. Shortly after CSC landed the contract, Perdue named Cansler as her DHHS secretary. (Hmmmm).

NCTracks now brags the hefty price tag of $484 million and is scheduled to go live July 1, 2013. The project is now the most expensive contract in state history.

A new audit released Wednesday says DHHS failed to fully test NCTracks.  According to the N&O, “[o]f 834 “Critical Priority Test Cases” set to be performed on the new system, it failed 123. The audit says 285 of the “critical” tests, more than one quarter, were never performed.”

Now many people are criticizing Secretary Wos for the price tag of NCTracks. But prior to pointing fingers, remember from where NCTracks came. And the $1.2 over budget for the last 3 years.

Now this blog is NOT a “let’s all get to together and applaud the new Secretary; we all think she is the bee’s knees; all our Medicaid questions have been answered.”

I am merely pointing out that inheriting a money pit must be a burden.  After only five months or so on the job, Secretary Wos has received much criticism; yet many critiques are aimed at “inherited bads.”

Believe me, the current MCO situation (which, although new and may or may not have been Sect. Wos’ doing…although I tend to think not since PBH has been our pilot for years prior) is as catastrophic for the behavioral health providers as a warm day is to Frosty the Snowman.

But at a recent, town-hall-style meeting in Durham, I asked my tugging question.  My tugging question for so long has been, “How is the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) supervising the Managed Care Organizations (MCOs)?” Well, I asked the question. (Important legal disclaimer…I did NOT ask this question as an attorney. I asked this question as a quasi-journalist for this blog at a public forum. I was NOT representing any party, only my mere legal curiosity).

Sect. Wos’ answer? “Call me.” (These quotes may not be exact…but very close).

“If you have specific questions for specific providers, call me and I will see what I can do.”

Wow! Really? Someone who will actually listen?  Well, I got the phone number of her assistant.  A Ricky Diaz.

The next day I realized sadly that IF I DID contact Sect. Wos for a specific provider, that as an attorney, if I spoke to Sect. Wos about a specific provider, that I could be accused of ex parte communications with a represented party. And they would be right.  So I was stuck between a rock and a hard place.  (We’d all be fine if not for these dag on laws…)

So, here we are, a real possibility that going straight to the top could help my clients, but this legal, ethical dilemma overpowers.  So I contacted the AG’s office and asked for a telephone conference with Emery Milliken, the general counsel of DHHS, any AG that would like to be involved, Sect. Wos and me.  I also contacted Ricky Diaz and asked to schedule a telephone conference with Sect. Wos, me, and whatever counsel Sect. Wos wants.

That was over a week ago.

The lack of supervision over the MCOs has put many good providers out of business, has neglected to provide many Medicaid recipients of their medically necessary needs, has forced so many good providers to fire staff and not provide Medicaid services (due to the MCOs denying services of Medicaid recipients and refusing/terminating Medicaid contracts with good behavioral health care providers).

Call me naive, but I actually think if I spoke to Sect. Wos, she would care and try her best to remedy the catastrophic situation for behavioral health providers.  Maybe not. But one can dream.

NC Group Home Residents Lose Medicaid Funds: May Lose Homes

NC residents who live in Medicaid-funded group homes suffer mental illnesses or developmental disabilities.  Group homes allow the residents a home-like atmosphere and 24/7 health care and personal care services, such as help with toileting, bathing, and eating.

The federal government informed NC that the state was using the wrong eligibility criteria for Medicaid recipients receiving personal care. Personal care services (PCS) is a paraprofessional service that covers the services of an aide in the recipient’s private residence or group home to assist with the recipient’s personal care needs that are directly linked to a medical condition.

To fix the eligibility problem pointed out by the feds, the General Assembly set up a $39.7 million fund to pay for adult care homes, but group homes were unintentionally excluded. If the legislators did not use the word “only” in the legislation, most likely, group homes would have been covered. But in “only” covering adult care homes, group homes were excluded.

The result of the General Assembly’s oversight is that approximately 1400 people may be homeless starting January 1, 2013.

Despite an outcry from the General Assembly for Purdue to call a special session, Purdue refused. Instead, last week, Purdue announced that she was moving $1 million dollars within the Department of Health and Human Services to pay for group homes through January 2013. This allows the group home residents one extra month before Medicaid funding is gone.

The General Assembly organizes January 9th, but is not scheduled to conduct business until January 30, 2013….the day Medicaid funding will cease for the group homes.


Medicaid Budget Increased By Medicaid Fraud

The State of North Carolina and the federal government is on a “Fraud Rampage!”  Those entities engaging in Medicaid fraud: Beware!

North Carolina authorities have arrested 18 health care providers accused of defrauding the state Medicaid system, Attorney General Roy Cooper said Monday.

The charges allege more than $500,000 in fraudulent payments combined. The state is pursing criminal convictions as well as restitution of money from the accused, Cooper said.

These arrests come on the heels of North Carolina receiving $16 million from Abbott Laboratories a couple months ago.  Abbott settled a national Medicaid fraud case, and $16 million was North Carolina’s portion.  Abbott was accused of advertising its anti-seizure drug Depakote for non-FDA approved health conditions, such as dementia and autism.  A doctor may prescribe a drug for off-label purposes, but a manufacturer may not advertise its drugs for off-label purposes.

Whew…that $16 million padded the Medicaid budget, right?  Well, not so fast. Remember Perdue just took $20 million from Medicaid.  Maybe the settlement helped out Perdue’s decision to take $20 million from Medicaid to give to pre-K programs. Who knows? I guess with $20 million out and $16 million in, the Medicaid budget is still lacking.

So, North Carolina will need to find more fraud. Already, we can expect approximately $500,000 from 18 health care providers arrested for Medicaid fraud.


Perdue: Takes $20 Million From Medicaid, Gives to Pre-K Programs

In one last hurrah, Perdue took $20 million from DHHS, or the Medicaid budget, and redistributed it to the Pre-K Program, formerly known as More at Four. The Medicaid budget is extremely tight as it is; the budget cannot even cover all the Medicaid services, much less fund another program.

At the end of the last fiscal year, the General Assembly needed to appropriate an additional $212 million to Medicaid to cover a budget shortfall that had grown over the previous year.

NC Secretary of DHHS, Al Delia, stated that the $20 million came from the AIDS Drug Assistance Program, foster-care services, funding reversions and unspent salaries.  Which begs the question, if there were unspent monies in the Medicaid budget, why did DHHS ask the General Assembly a few months ago for $212 million to finish the fiscal year?

Although it is important to note that Perdue was acting via a Court Order. Personally, I’d like to see the Court Order. I’d like to see whether the Order ordered the funds to come from DHHS. Because Medicaid funding is the one of last budgets I would dip into.

Perdue Deciding the Fate of Medicaid While McCrory Out-Of-Town?

Perdue Deciding the Fate of Medicaid While McCrory Out-Of-Town?.