City mental health clinic having trouble meeting payroll

Employees of the West Baltimore mental health and substance abuse clinic Baltimore Behavioral Health Inc. have complained of bounced paychecks in recent weeks, and state health officials say they are monitoring to make sure patient care doesn't suffer as a result of low morale among the staff.

Executives at the private, nonprofit clinic acknowledge recent financial struggles and say they have moved to resolve them, getting up to date on the payroll and negotiating a deal to sell and lease back a portion of the clinic's West Pratt Street campus.

Nancy Grimm, director of the state's Office of Health Care Quality, said the payroll situation at BBH "concerns us," however. Her agency dispatched a team of regulators there earlier this month and found that "things appeared to be operating normally," she said.

Although Grimm's team found that one staff member had resigned, she said other clinic employees were carrying out their duties professionally. "They were hanging in there and doing their job, and doing a good job," Grimm said. "We didn't have any care issues, although we'll continue to monitor."

The payroll issue is the latest challenge for BBH, long one of the city's largest providers of drug treatment at its sprawling outpatient mental health clinic near Hollins Market. The clinic, which carved out a specialty treating patients with both mental illness and drug addiction, is a defendant in two lawsuits and has been the subject of a federal inquiry from the U.S. Department of Labor.

After a steady rise in its Medicaid billings much of the last decade, BBH saw a reversal in late 2009, when state officials curtailed its ability to bill for high-cost treatment. Some years, it had received 85 percent of public funds spent on "intensive outpatient" mental health care statewide. Today the clinic treats more patients on a traditional outpatient basis, which costs the state less.

BBH vice president Terry Brown said the clinic now treats roughly 150 people a day, compared with 225 in the spring of last year. He said it employs just over 100 people; two years ago the staff exceeded 250.

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 several family members who earned six-figure salaries.

In its most recent tax filings to the Internal Revenue Service, BBH reported total revenue last year of $9.6 million, down from $16.8 million in 2009. Also, salaries of the family members have dropped. For example, CEO William "Kris" Hathaway earned $209,200 last year, down from $236,250. His sister, Susan Scotto, made $185,002 as chief clinical officer, compared with $273,703 the year before.

BBH's difficulty meeting payroll, which Brown acknowledged, is detailed in emails obtained by The Sun from a clinic employee.

In an email sent to the staff Aug. 26, Hathaway told employees they would not receive paychecks that day, a Friday. Instead, he said, payroll would be delayed until the following Tuesday "because not all deposited receipts are clear and available for withdrawal today."

He said "similar circumstances existed last pay cycle," and that "resulted in some paychecks not being honored when first presented." Because of the short notice, Hathaway said, all employees were to receive $300 "advances" to tide them over.

Hathaway concluded the email by noting that once BBH's "sale/leaseback package is completed," the clinic's banking operations would improve.

That Wednesday, BBH President Morris A. Hill, who is Hathaway's stepfather, sent the staff an email. "Due to cash flow problems, some of you were unable to cash your belated salary checks yesterday," he wrote.

Hill blamed several "banking issues that resulted in checks being returned." He mentioned Hurricane Irene and said that Bank of America was holding deposits for "extra days" before letting them clear.

Bank of America spokeswoman Shirley Norton responded in a statement. "If the bank returned items presented for payment on Baltimore Behavioral's account over the past 30 days, it would have related strictly to insufficient balances in the account," Norton wrote.

She added that, while the bank does sometimes place holds on customer deposits, including BBH's, "our customers, including BBH are advised of any holds at the time of each deposit."

In his staff email, Hill wrote: "Any employee who would like to resign because of the salary check or other problems may do so without prejudice. Those employees who choose to stay and help BBH ride through the current crisis will be rewarded."

Brown said that the most recent paychecks were issued without any problems. "Payroll's current right now," he said.


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