Former Montana auditors have accused state officials of discouraging Department of Health and Human Services staffers from investigating a variety of questioned payments dating back to 2005.
Gov. Steve Bullock said through a spokeswoman he was made aware of DPHHS staffers’ concerns about what they believed to be fraudulent financial transactions while serving as attorney general. He said those questions were forwarded to the legislative auditor, who Bullock said investigated and failed to find evidence of fraud, waste or abuse.
Legislative Auditor Angus Maciver, who was appointed to the position earlier this summer, found no such reports sent to his division by the then attorney general, but said the Attorney General’s Office occasionally asks legislative auditors for help on its own investigations. Maciver declined to offer details on the “confidential criminal justice information” involved in those probes.
Emails from current and former DPHHS staffers, along with court filings and whistleblower complaints obtained by the Independent Record, identified at least seven long-tenured state employees who raised red flags before they were demoted or fired. At least three staffers who raised questions were accused of insubordination before being fired.
Two of those staffers claim high-level administrators, acting on orders from Bullock, pushed through “questionable” welfare payments to important Democratic voting blocs on Indian reservations and ignored DPHHS auditors’ questions about hefty checks cut to major welfare program contractors. Bullock, through a spokeswoman, flatly denied those claims.
Bullock and former Gov. Brian Schweitzer, both Democrats, denied ever wading into auditors’ work with state contractors.
More often than not, Maciver said, concerns about the use of federal welfare dollars are referred to departmental investigators. Former Legislative Auditor Tori Hunthausen -- who retired in June after 30 years at the helm of the state agency tasked with watchdogging other agencies’ finances -- could not be reached for comment.
Each of the legislative auditor’s last five biennial reports on DPHHS called on the agency to either bolster its fraud prevention protocols, comply with financial disclosure laws, improve oversight of potentially ineligible welfare recipients or repay the federal government for erroneous payments made on its behalf. Maciver said it is “fairly routine” for state auditors to question costs charged to federal programs.
Accusations of insubordination
Former DPHHS audit reviewer Wendie Fredrickson left her post in December 2014 after more than two decades analyzing the state’s books.
In interviews with the Independent Record and in June 2015 testimony before state lawmakers, Fredrickson said she was bullied by state officials beginning in the fall of 2014, days after she first spoke up about potentially fraudulent payments made to undocumented welfare recipients on Fort Belknap Indian Reservation -- traditionally an election stronghold for Democrats.
She said swift orders to continue making the payments, and silence those with questions about it, came from the very top of state government.
After refusing to comply, Fredrickson said she was stripped of her responsibilities, isolated from her colleagues and, eventually, forced into retirement.
“It used to be a great place to work,” she said. “It wasn’t until this administration that there was so much pressure you couldn’t do it.”
Fredrickson said state officials have accused employees of insubordination as a means of getting rid of those who speak out, and she hopes it won’t prevent others from doing just that.
“If something does come out of this, I would hope it's that people come forward and tell their stories, so they can get some relief from it,” she told the Independent Record.
A federal whistleblower complaint filed in 2015 by another former state employee alleges “ongoing” problems surrounding departmental oversight of taxpayer dollars. On one occasion, the complaint says, state workers were asked to help “clean up” a contractor’s books. Another time, it claims, they were denied access to stimulus fund reporting documents produced by the governor’s office.
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Schweitzer said if auditors asked for them, he's certain those documents would've been turned over.
Among the concerns DPHHS audit reviewers raised over the years were suspicions of fraudulent financial transactions involving Native American tribes and a select handful of contractors -- reservations they say were routinely tamped down by departmental higher-ups.
Departmental auditors reported millions of dollars in federal stimulus funds went toward a Helena vendor’s development of new, low-income housing projects, despite their intended use as a means to help families pay winter heating expenses.
They also say a Columbia Falls vendor received more than $536,000 in federal dollars meant for financial literacy and job training programs but instead used them to buy construction materials such as sheet metal, a forklift and a front-end loader. This report was forwarded to the FBI, which did not return requests for comment, as well as the state Legislative Audit Division, which recommended that DPHHS limit its payments to “those supported as valid claims and for which the department has contract liability.”
Two years later, auditors sounded the alarm over $4.1 million in federal bonus funds Montana received to help defray the cost of enrolling low income children in Medicaid. Auditors discovered the dollars the state received for that purpose in 2013 were diverted to its disability, drug addiction and senior care vendors.
Just months after that, they reported double- and triple-counted expenditures reported by the department on behalf of seven disability services contractors, some of whom stood to benefit from last year’s legislatively mandated closure of the state-run Montana Developmental Center.
In each case, auditors said they were discouraged or prevented from fully investigating the transactions, sometimes through bullying or being warned not to adopt a “gotcha attitude” toward contractors.
Some of the same findings made their way into legislative auditors’ biennial reports on DPHHS.
The latest such report advised the department to take steps to limit “extensive or unintended access” to its contract payment system.
It’s unclear what became of similar fraud and abuse claims forwarded to the Office of the Inspector General, U.S. Department of Health and Human Services and the FBI.
Officials with those agencies did not respond to questions. But audit reports show a few have voiced worries of their own about Montana’s use of federal dollars.
The Health and Human Services Inspector General’s office in March asked the Rocky Boy Health Board to refund $313,621 in overpaid salary, benefit and travel expenses it found stemmed from inadequate financial controls at the Indian reservation near Havre.
That report came two months after the same federal agency warned DPHHS about some $132,000 in “unallowable” federal Medicaid reimbursements it says the state agency may have claimed between 2011 and 2013.
Emails obtained by the Independent Record indicate a federal health services auditor arranged a conference call with auditors and other DPHHS staffers to discuss the department’s use of federal home heating subsidies in July 2015. That federal employee did not respond to questions about the outcome of the call.