The U.S. Department of Labor is suing Baltimore Behavioral Health Inc. and Chief Executive William "Kris" Hathaway for allegedly failing to turn over payroll and retirement account records that had been demanded by federal investigators, the agency announced Wednesday.
The department's Employee Benefits Security Administration has been investigating alleged legal violations involving the retirement plan at the West Pratt Street mental health clinic. The lawsuit, filed in federal court in Baltimore, alleges that the clinic failed to comply with two administrative subpoenas issued in May. A hearing is scheduled for Nov. 29.
"The company's refusal to provide the requested documents is hindering our investigation, and it must comply immediately," Mabel Capolongo, director of the administration's Philadelphia regional office, said in a statement.
Jay Miller, a member of the BBH board of directors who has represented the clinic on other legal matters, said Wednesday that he was unaware of the lawsuit and had no immediate comment. Later attempts to reach him and Hathaway were unsuccessful.
The federal government opened its inquiry late last year after former workers said money deducted from their paychecks as far back as 2009 never reached their retirement plan accounts. The government instructed BBH to provide documents related to its retirement plan, according to two certified letters obtained by The Baltimore Sun.
The federal inquiry began about two weeks after The Sun reported in December that two former employees at the nonprofit clinic had discovered unexplained shortfalls in their retirement accounts.
A nonprofit company founded in 1997, BBH has received more than $65 million over the past five years in government payments, largely from billing the Medicaid program for the poor and disabled. It specializes in treating patients with both mental illness and drug addiction.
The clinic was the subject of a Baltimore Sun investigation last year that revealed unusually high Medicaid billings and detailed the nonprofit organization's control by Hathaway and several family members who earned six-figure salaries.
BBH, which has long been one of the city's largest providers of drug treatment, has faced a series of challenges this year. The clinic is a defendant in a separate lawsuit filed in April by Bank of America alleging that the clinic defaulted on loans of up to $2.5 million and refused to give the bank critical financial information. Miller and a Bank of America spokeswoman said they are negotiating a settlement.
In July, the clinic's admissions director filed a federal lawsuit alleging that BBH officials "diverted and stole" thousands of dollars from employees by failing to deposit payroll deductions into their retirement and disability plans.
Miller, in a brief interview Wednesday morning, said the clinic had reached an agreement to sell its Southwest Baltimore campus and lease back a portion, though the deal hasn't been finalized. Miller offered few details but said revenue from the sale would help the clinic, which has had problems making payroll.
"This should help us reduce a lot of overhead and enable us to render the kind of patient care we're used to giving," Miller said.Copyright © 2015, The Baltimore Sun