State officials said at a legislative briefing Thursday that their agencies must do more to flag financial mismanagement at group homes — problems similar to those that went unheeded at an Anne Arundel County facility where a 10-year-old disabled foster child died this month.
Maryland's health and human resources secretaries appeared together before a joint committee of state lawmakers in Annapolis to answer questions about oversight of LifeLine, the operator of the group home where the boy died. They also recommended legislative action to enhance their oversight of contractors that care for such foster children.
The hearing was triggered by a Baltimore Sun investigation revealing that the state awarded contracts worth millions of dollars to LifeLine despite numerous issues — problems with past care, an imprisoned founder, unpaid taxes, and allegations of abuse and neglect — that several lawmakers said should have prompted officials to act sooner.
"How many chances do we give these providers?" said state Sen. Joanne Benson, a Prince George's County Democrat. "Do we keep on giving them chances hoping and praying that it'll get better?"
Maryland Health Secretary Dr. Joshua M. Sharfstein shot back: "Absolutely not."
He defended health inspectors, saying they acted quickly once serious issues with LifeLine's care were identified this year. But he and Ted Dallas, secretary of the Department of Human Resources, said both agencies need to do more when contractors display questionable management.
"I think we probably give people too many chances on the administrative and financial side," Sharfstein said. "That's why we're here very clearly saying we can do better and that the way that we can do better is to pay more attention, have more tools and be able to be more aggressive around administrative and financial issues before they start to affect clinical care."
Dallas, sitting next to Sharfstein before two dozen lawmakers, provided a similar message: "We think both agencies need to be more sophisticated and have better resources when we're looking at fiscal issues as opposed to quality of care."
The state began the process of removing 11 children from LifeLine's Laurel-area apartments in early June, after confirming complaints of poor care in February and May, and after learning from The Sun that the company had failed to report numerous calls to Anne Arundel police and fire departments alleging abuse and neglect.
But on July 2 — before all of the children were moved to a new facility — Damaud Martin died. His LifeLine nurse told The Sun that the apartment he was living in was understaffed that night. Officials are investigating his death and whether inadequate care might have played a part in it; they have said it is too early to draw conclusions.
LifeLine officials did not respond to requests for comment Thursday.
Lawmakers went out of their way not to blame state agencies for LifeLine's problems. But several took issue with the distinction Sharfstein and Dallas made between effective monitoring of care and ineffective monitoring of the company's financial problems.
"It is my feeling that when you have administrative violations and you have fiscal problems that this is definitely going to impact the quality of care," said Sen. Joan Carter Conway, the Baltimore Democrat who called for the briefing. She said a company facing substantial tax debt — LifeLine had an IRS lien of more than $1 million — would start "cutting corners" and use its funds to pay down that debt.
Sen. Edward Reilly, a Republican from Anne Arundel County, agreed: "If an organization is under financial pressure, the quality of care will suffer."
The Sun's investigation found that state officials were not aware LifeLine had broken its lease on its Laurel headquarters office early this year. The company failed to tell state officials that it filed for bankruptcy protection in August 2012 — listing its founder, Randall Martin Jr., as the sole shareholder. Martin was sentenced to 50 years in prison in February 2013 after being convicted of setting fire to his former mistress' rowhouse.
Despite a state audit that found LifeLine was insolvent, the state extended the company's contract in March 2013. Six months later, the state awarded LifeLine a nearly three-year contract worth $4.9 million.
Dallas told lawmakers Thursday that the six-month extension gave the company time to provide a plan to fix its financial problems and allowed his agency to start planning to remove LifeLine's children if necessary. "Doing that in less than a month was not something we thought was safe and prudent, and we wanted to give ourselves more time on both fronts," he said.
That's not what his agency told the Board of Public Works, according to state records. Its remarks in the agenda said the extension was being requested "due to the limited competition received" for the contract to provide group home care to foster children who are severely disabled.
Several lawmakers at Thursday's briefing questioned the 2011 decision by state officials to close LifeLine's facility for disabled adults while allowing the company to care for medically fragile children.
In March 2011, the state suspended the company's license to care for disabled adults after finding poor care — including the care given to three residents who died. Sharfstein said the same inspectors who recommended closing the adult facility said LifeLine's care of disabled children was fine. Just a week after the suspension by Sharfstein's agency, Dallas' agency approved a $15 million contract for LifeLine to care for more disabled children.
"I'm a little confused why when you see such a big red flag there you would continue with the same company with more vulnerable patients," said Sen. Bryan Simonaire, a Republican from Anne Arundel County. "You had such a problem with the adult side — it wasn't a minor infraction, you shut them down. And they were managing the same facility with children. And the decision-making process says, 'I don't have a problem with that.'
"What I'm saying is that the decision-making process needs to be re-evaluated. Hindsight now says, 'Yeah, that was a mistake.' "
Sharfstein and Dallas asked the lawmakers to consider measures giving their agencies clear authority to act when financial and administrative problems are uncovered. Dallas' agency "will be requiring providers seeking state contracts to demonstrate financial stability," according to a statement he and Sharfstein submitted Thursday. Dallas' agency soon will require providers to report financial problems to ensure they are in compliance with all licensing regulations. The draft policy "has several triggers, including bankruptcy filings, tax and payroll issues, and failure to pay rent."
They made several other recommendations, such as requiring surety bonds from providers and increasing financial reviews by the inspectors general for each department.
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The joint committee, made up of senators and delegates involved in oversight of health agencies, said it will make recommendations this fall.
Nancy Pineles, managing attorney for the Maryland Disability Law Center, praised The Sun for highlighting the issues related to LifeLine. "The sequence of events that led to the closure of LifeLine Inc. is so unusual that citizens should be concerned about whether the state has adequate knowledge about the quality of care by other agencies that do not have such public and sensational problems," she said in a letter to the committee.
She and other advocates said regulators should maintain a database of employees and contractors that have been disciplined for allegations of abuse and neglect, even if criminal charges have not been pursued. They also complained that caregivers for disabled children and adults are rarely charged with crimes because residents may not be able to testify or are afraid to do so.
"Those who can speak are often immobile and entirely reliant on staff for all of their daily needs," said Amy Petkovsek, director of advocacy for Maryland Legal Aid. "When reporting conditions to an advocate, these children are asked to make the choice between keeping silent about concerns, or vocalizing a problem against the same people who hold control over their day-to-day well-being, such as eating and toileting."
The Maryland Association of Resources for Families and Youth submitted a letter urging lawmakers to avoid imposing more regulations on group homes. "Children's group care programs are already more than adequately regulated," said the letter signed by Shelley Tinney, executive director of the group.
The letter added, "We believe this was a situation in which all of the red flags were there and the two state agencies responsible for oversight of the program failed to take decisive action to ensure that a financially insolvent organization did not put children at risk of harm."