Connie West adopted Raykwan in 2012, worried he was not getting adequate care from LifeLine. She changed his name to Ray Lewis West so he could draw strength from the former Ravens' name as he battles various conditions. (Loyd Fox/Baltimore Sun video)

Maryland's Board of Public Works, a panel that includes the governor and other top state officials, did little to scrutinize millions in contracts it awarded in recent years to the financially strapped operator of a group home where a 10-year-old boy died this month, records show. And state agency officials who recommended LifeLine for various contracts from 2011 through September did not mention the company's fiscal and quality problems to the board — even as they touted a new process to reward only top-quality contractors.

With little discussion, the state spending board approved contracts for LifeLine to care for disabled foster children even though the company was deemed to be "fiscally insolvent" and had its adult care license revoked for posing an "imminent threat" to its clients. The company is now being investigated in the wake of the death of Damaud Martin at its Laurel-area home on July 2.

Advocates say the state must remain vigilant as it reduces the number of group home operators. Shelley Tinney, executive director of the Maryland Association of Resources for Families and Youth, said that as such changes are made, the state has "not been able to create a system to ferret out which programs are quality and which are not."

Gov. Martin O'Malley, who sits on the board with Comptroller Peter Franchot and Treasurer Nancy Kopp, said they rely on the expertise of state agencies when awarding a "phone book" of contracts every two weeks. But he said the state could learn lessons from LifeLine's contracting record.

"When should the fiscal solvency of an organization trigger a termination of the state contract?" O'Malley, a Democrat, said in an interview Tuesday. "I don't know that we have a standard for that that's clear in the law. That's what we'll all be asking and looking to learn from this."

A Baltimore Sun investigation revealed that LifeLine has struggled for years to provide round-the-clock care for adults and children and that state regulators were not aware of many of the company's problems.

State lawmakers have called for hearings and legislation in response to the death of Damaud, one of about a dozen children in the Laurel-area apartments used by LifeLine for a group home. State regulators were in the process of moving all of the children from the apartments after regulators determined that care was inadequate and told LifeLine they were going to revoke its license. The last children were moved out on July 3, the day after the boy died.

Del. Sandy Rosenberg, a Baltimore Democrat, said he would propose legislation requiring state auditors to inform the Board of Public Works when a contractor was deemed insolvent and prohibiting such companies from winning contracts.

O'Malley said such flagging is best handled by agencies that are awarding contracts and licenses — in this case the Department of Human Resources and the Department of Health and Mental Hygiene.

"Whenever there is a loss of life in any group home or another setting where the state has some regulatory responsibility, we take it very, very seriously and go through a thorough investigation to look for things that we might learn from the tragedy that would help us better safeguard kids as we move forward," O'Malley said. "The Board of Public Works will generally defer to the expertise of DHR or DHMH on these matters."

State regulators are investigating the circumstances of Damaud's death. The probe will consider whether LifeLine's care was inadequate, but officials have cautioned that it is too early to draw conclusions.

LifeLine officials did not respond to requests for comment. Franchot and Kopp also did not respond.

Department of Human Resources Secretary Ted Dallas has for three years been telling the board that his new process of awarding contracts is focused on top performers.

At a meeting on March 23, 2011, Dallas explained the significance of a $245 million award that board members were being asked to approve for 71 providers to care for more than 1,300 foster children. The overall award that day marked a 41 percent decline from a year earlier, indicating the state's push to rely less on group homes.

Dallas told the board that "as we are able to safely reduce the number of group homes, we can also focus on making sure the group homes we have are of the highest quality," according to a transcript of the meeting.

LifeLine was part of that overall award. The board's approval provided a $15 million contract to the company, owned by a Baltimore County businessman who was on home detention prior to his trial for first-degree arson. (He was later convicted.)

Just five days before the board met, the health department had issued an order to immediately suspend the company's license to care for disabled adults at its Owings Mills and Laurel facilities because regulators said conditions there posed "an imminent risk to the health, safety and welfare of individuals served by LifeLine." One reason for the suspension was that inspectors found deficient care of two adult LifeLine residents who died.

On June 6, 2012, Dallas' agency returned before the board for an agenda item dedicated solely to LifeLine's contract. The agency was requesting a $4.7 million reduction to the $15 million contract and asked to place one new "medically fragile" child in LifeLine's care.

Despite the changes, DHR officials made no mention of LifeLine's problems other than to report in the agenda that the company "has been unable to fill beds" at 16 locations. "As a result, it has terminated the leases and will discontinue providing services at these locations," the report stated.

Two months after that June meeting, LifeLine filed in federal bankruptcy court to restructure its debt. LifeLine was obligated by its state contract to report the bankruptcy, according to state officials, but it never did. State officials found out about the filing but were assured by a top executive that the company was solvent.