Feds open inquiry into city clinic's employee retirement plan

The U.S. Department of Labor has opened an inquiry into the employee retirement plan of a taxpayer-funded mental health clinic in Baltimore after former workers said money deducted from their paychecks as far back as 2009 never reached their retirement plan accounts.

The government has instructed Baltimore Behavioral Health Inc. to provide an array of documentation related to its retirement plan, according to two certified letters obtained by The Baltimore Sun.

The federal inquiry began around two weeks after The Sun reported Dec. 10 that two former employees at the nonprofit clinic had discovered unexplained shortfalls in their retirement accounts.

Nicole Bradley, the federal official handling the inquiry, has requested payroll and financial documents in a pair of letters sent to the West Pratt Street clinic, including one dated Feb.1 explaining that "other participants" in the clinic's retirement plan have contacted her office.

BBH's chief executive, William "Kris" Hathaway, did not respond to messages from The Sun on Thursday. Nor did board members John E. Sibrea, Kent E. Schiner and Jay Miller. The three joined the board in November after a Sun investigation of BBH revealed that Hathaway and five immediate family members held voting board seats in violation of a state anti-nepotism law.

The Sun's investigation also documented high Medicaid billings from BBH and reported that Hathaway and five close relatives on BBH's payroll were paid a combined $1.4 million in 2009. Over the last two fiscal years, the clinic has received around $28 million from the taxpayer-funded Medicaid program.

Two former employees separately contacted The Sun about concerns with their 403(b) retirement plans, which are the nonprofit equivalent of 401(k) plans.

For months, both women directed BBH to transfer money from their paychecks into their retirement plans, but they say only a small fraction of that money reached their retirement accounts going back to October 2009. One of the employees had about $1,200 deducted from her paychecks that was not reflected in her retirement account, documents showed.

A second employee, Shelley Sims, who was laid off in June from a therapist position, provided documents showing that several hundred dollars in deductions had not appeared in her retirement plan. On Thursday, she said "not a dollar" more has reached her account.

In her initial Dec. 27 letter to BBH, the Labor Department's Bradley cited regulations stating that 403(b) payroll deductions must be transferred to employee retirement accounts within seven business days for plans with under 100 participants and, for larger plans, by the 15th business day of the month after the contribution was received. Hathaway hasn't said how many people participate in BBH's plan. Bradley did not return calls Thursday seeking comment.

If an employer is found to be in violation, it must deposit whatever balance is owed, plus an amount calculated to reflect lost investment earnings. In November, Bradley's agency announced a nationwide crackdown on the misuse of employee contributions. It highlighted 24 civil lawsuits, none in Maryland, that it had filed to recover more than $7 million of workers' money.

Lincoln Financial Group, the Pennsylvania company that administers BBH's retirement plan, said all money it received from the nonprofit went into employee accounts. "Any funds Lincoln has in BBH's retirement plans are reflected in their participants' retirement plan account balances," spokeswoman Anna Gauthier said in December. On Thursday she said that "nothing has changed."

Asked in November about the retirement plan, Hathaway said he expected the issue would be resolved "no later than December 15th."