News & Politics

High-Priced Consulting for a Low-Service HMO


Most of Bill Thompson’s “financial consulting” clients are not revealed on his Board of Ed disclosure forms. The most disturbing one that Thompson did list, however, was Managed Healthcare Systems Inc., where he earned a total of $65,000 in 1997 and 1998, according to his tax returns. A black-owned HMO whose principals worked at the highest levels of the Reagan administration, the company is shrouded in scandal.

Last year, New York Attorney General Eliot Spitzer forced the MHS, which specializes in recruiting Medicaid recipients for its HMO, to repay the state $2 million for Medicaid services that patients never received. Spitzer also put Jean Moise Millien, the director of an MHS clinic, in jail for up to three years after he pled guilty to stealing $275,000 from Medicaid. Spitzer’s press release revealed that MHS knew for years that Millien’s clinic, Stuyvesant Heights Medical Group, was largely run by “unsupervised physician’s assistants and nurse practitioners” and that patients “were consistently complaining that they were having difficulty getting services.”

Yet, said Spitzer, the company “failed to take corrective action or properly oversee its subcontractor.” MHS portrayed itself as “a victim” of the clinic when they settled with Spitzer.

The State Health Department also revoked Millien’s physician’s assistant license in November 2000, finding that he’d run the clinic since 1991—four years before the MHS contract began—without on-site supervision by a licensed M.D. The Department also found that the clinic corporation had been dissolved by state officials for tax delinquency reasons in 1994 and that Millien had a prior criminal record. Spitzer said a doctor from Pennsylvania came to the clinic once a week “to sign charts” for a while, but “eventually stopped coming altogether.”

An MHS affiliate left a similar trail of complaints in Pennsylvania—where it became the subject of Philadelphia Inquirer exposés in 1996 and 1997, before and during Thompson’s employment. According to one study, it was three times as likely to refuse to pay for days of hospital care as the state’s next most stingy HMO. The “focus of six special state and federal audits” and a onetime target of a Pennsylvania grand jury, according to the Inquirer, the company took a reported $119 million in profits and executive bonuses from its Pennsylvania Medicaid work alone in the early ’90s, making it the “most profitable HMO” in the state.

Anthony Welters, the principal owner of AmeriChoice, the Virginia-based parent of MHS, was a top Reagan transportation official, gave $20,000 to Pennsylvania GOP governor Tom Ridge, and has given over $56,000 in recent years to Republican candidates and committees across the country. Clarence Thomas is the godfather of one of his children. Thelma Duggin, another top executive, worked in the Reagan White House and at the Republican National Committee under Lee Atwater, the engineer of the Willie Horton campaign.

Thompson said he’d known Welters and Duggin since 1992, when they started trying to do business in Brooklyn, and that he “bumped into Tony” in 1997 and Welters offered him a consulting job that started that June. Charged with “reaching out and helping them obtain business,” Thompson said he “spoke to community organizations.” Though he says he “never visited an MHS clinic”—including the Stuyvesant Heights one near his home—he insists that MHS is “a good company.” While Thompson’s tax returns indicate that AmeriChoice paid him $35,000 in 1998, his disclosure forms report no income from the company.

Thompson is quick to point out that he wasn’t the only prominent Brooklyn Democrat to wind up on the MHS payroll. Assemblyman Al Vann was hired, as was DeCosta Headley, a Democratic district leader, Ed Miller, a campaign aide of Congressman Ed Towns, and Chris Owens, the son of Congressman Major Owens. “I don’t think Al and Chris are getting involved in anything that’s not 100 percent benefit to the community,” said Thompson, apparently oblivious to the higher standard demanded of a candidate for so powerful a citywide post as comptroller.

Related article:

The Banker Who Broke the Law
by Wayne Barrett with special reporting by Gregory Bensinger

Should the Board of Ed’s Bill Thompson Advance to the Next Grade?

Archive Highlights