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This is the former office of Lifeline Inc., a state contractor which was paid millions to care for disabled foster children.
This is the former office of Lifeline Inc., a state contractor which was paid millions to care for disabled foster children. (Barbara Haddock Taylor, Baltimore Sun)

Maryland's top health official announced Sunday that his agency is reforming the way the state regulates group homes for disabled foster children.

In a report sent Sunday to Maryland lawmakers and The Baltimore Sun, the state health department identified five steps it is taking to improve coordination among the multiple agencies that supervise group homes, increase scrutiny of contractors' finances and appoint an employee to implement and oversee the enhancements.

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The announcement follows investigations by The Sun that detailed significant problems with the state's two largest contractors for such care, including reports of abuse and management issues.

Dr. Joshua Sharfstein, Maryland's health secretary, also announced the formation of a task force that has been charged with recommending more improvements by January for services to all disabled adults.

"With limited resources, we must focus our skills on the timely investigation and resolution of complaints and self-reported incidents to best protect individuals," the report states. "Through these actions, we can create a system that will better protect the health and safety of individuals with intellectual and developmental disabilities throughout Maryland."

The department began reviewing group homes for disabled foster children after two dozen lawmakers met in July to discuss a Sun investigation of a state contractor called LifeLine. The Sun had found that the state awarded contracts worth millions of dollars to LifeLine despite numerous deficiencies at its Laurel-area operations — problems with medical care, a founder imprisoned for arson, unpaid taxes and police reports of abuse and neglect unknown to regulators.

A 10-year-old Baltimore boy, Damaud Martin, died at the Anne Arundel County home July 2 as regulators were in the process of relocating him and others to a new facility. At the time, regulators had told LifeLine that they were going to revoke its license. LifeLine responded by announcing it would close due to inadequate reimbursement from the state.

State health officials are continuing to examine the care Damaud received before he died. His death was ruled a homicide by the state medical examiner, who found that Damaud died of complications from cerebral palsy and head trauma — injuries that arose before he was in LifeLine's care. Damaud's mother was convicted of first-degree child abuse for inflicting the injuries that led to his partial paralysis, although she has said she did not hurt her son.

The Sun also found problems at the homes where most of LifeLine's children were moved. Those homes are operated by the state's largest contractor, Second Family. The Landover-based nonprofit's executive director was convicted of theft in a worker's compensation case. Also, its top executives personally owned the homes that the charity leases, despite a state requirement to avoid such deals. The health department has referred the real estate matter to its inspector general. In addition, two Second Family employees were fired in January for hitting and kicking an autistic child.

The state Board of Public Works in September 2013 approved $35 million contracts for two years with Second Family, LifeLine, and two small operators to provide 62 beds for disabled foster children in apartments or homes with around-the-clock nursing care.

The report showed that state inspectors found 192 violations of state regulations at the four contractors' homes between January 2011 and August of this year. The most frequent violations found that the contractors could not provide documentation that staff members were properly trained to treat special needs children, including with discipline and how to identify abuse and neglect.

Still, the state's review "did not find unexpected serious gaps in the oversight of group homes for medically fragile foster care youth," the report states. "However, the review did find multiple areas for improvement."

The report acknowledged that state inspectors from the health and human resources departments lacked expertise in "reviewing business plans, assessing the sustainability of financial models, and identifying fraud and abuse."

Proper medical care can be jeopardized if contractors do not have a "sound business plan," the report states. It recommends revising the licensing process by February "to ensure that the applicant has a sustainable business model."

"The potential for financial strain to impact continuing of care makes the business plan a critical component to initial licensure," it states. "The importance of tightening up the initial licensure process is paramount in our long-term ability to serve this population."

Nancy Pineles, managing attorney for the Maryland Disability Law Center, said the state already has the ability to spot such business problems but does not do enough to follow up to make sure group home operators implement fixes that inspectors require. For example, when regulators discovered that LifeLine had filed for bankruptcy protection in 2012, the state simply allowed the firm to propose a plan to correct its financial problems. Yet regulators were unaware that the company was facing a $1.2 million tax bill from the federal government when they cleared it to win a contract in September 2013.

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"What happened at LifeLine was so blatant you don't need sophisticated financial analysis," Pineles said. "The real issues are quality and taking action when they see problems."

The report does recommend changes to improve "timely" action when inspectors find problems with the quality of care being provided to disabled children. The health department's Office of Health Care Quality is being ordered to develop a formal process to improve coordination between its inspectors and police, local child protective services offices and other state agencies that are identifying — but not always sharing — problems at group homes.

That includes a recommendation to implement a data-sharing system among all of those agencies.

"There are multiple systems that track large amounts of data, but unfortunately not all of these systems can communicate with each other," the report states. "Some tracking is still done manually or on a Microsoft Excel spreadsheet."

"The process is too informal," Sharfstein said in an interview.

Pineles said the state has all the data it needs to track system-wide trends that could help head off problems before they get worse. She questioned why the state simply doesn't hire someone to build a system to consistently provide such data. Such systemwide data analysis — as well as plans to correct problems spotted in the data — is a federal requirement in order for the health department's disabilities office to receive Medicaid funds, said Pineles, whose organization is the state's formally-designated advocacy agency.

"The department has a vast reservoir of information about events that affect or harm people with developmental disabilities," she said in a statement after reading the state report. "Provider agencies are reporting much of what is required of them, but the state cannot analyze the information because of poor system design."

The state's report calls for improving coordination among agencies and defining each agency's role in the oversight process by January. The state has called for improvements for using data by June.

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Sharfstein said he has already authorized the hiring of a new staff person by December to provide oversight of group homes for disabled foster children who often rely on machines to eat and breathe.

Pineles questioned whether the recommendations would result in significant changes because Sharfstein can not guarantee that other agencies that he does not manage will cooperate. She also said that state lawmakers need to provide his agency with funds to hire more inspectors.

"I just don't have any confidence that without some additional support that those recommendations are very meaningful," she said.

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