MOORLACH UPDATE — Maximus COIN — June 17, 2014

The Voice of OC had two articles that alerted readers to Board agenda items for today’s meeting directly below. The first topic, COIN, didn’t happen. Supervisor Nguyen stated that the absent Supervisor Bates had requested that the item be continued. It is unfortunate that the speakers for this item had to sit through the meeting when I would have agreed to continue the item had I known that Supervisor Bates wanted to be present. But I hope that we will address the matter at next week’s meeting. Also see MOORLACH UPDATE — Streetcar Warning — June 16, 2014 and MOORLACH UPDATE — Debating/Delaying — May 21, 2014.

The second piece is on the Maximus contract. The contract extension was approved with a 4-to-0 vote, with Supervisor Bates absent. A correction should be noted. It was not a new three-year contract, but the first of two one-year extensions to an existing contract. Therefore, a new request for proposals was not necessitated. It is also nice that the piece referred to yesterday’s UPDATE (see MOORLACH UPDATE — Streetcar Warning — June 16, 2014).

The third piece is from the Orange County Breeze. If you are looking for a fun community dinner event for tomorrow night, consider yourself invited. Cypress is a very special city and I would love for you to join us (see MOORLACH UPDATE — Man of the Year — April 11, 2014).

County Decides on Opening Labor Talks


County supervisors are slated to vote Tuesday on opening up labor talks to the public.

Under the Civic Openness in Negotiations ordinance, also known as COIN, county supervisors would be required to publicly report any offers and counteroffers discussed in closed session. Supervisors and their staff would also have to report any communication with employee representatives.

When a labor contract is proposed, the county Auditor-Controller would estimate the financial impact of its terms as well as the current contract’s terms, which would then be open to comment from labor groups and the public.

And a proposed labor contract, known as memorandums of understanding, would be posted to the county website at least seven days before it appears on the supervisors’ agenda.

The effort, led by County Supervisor John Moorlach, has drawn intense protests from union leaders who argue transparency in negotiations shouldn’t just be reserved for labor talks but should apply to all government contracting — including multi-million dollar computer contracts, development deals and land purchases.

The supervisors meeting starts Tuesday at 9:30 a.m.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

Social Service Agency Reacts to Welfare Contractor’s Controversy


Orange County social service officials updated county supervisors Monday over an impending decision to increase a welfare management contract to a firm at the center of an alleged Medicaid fraud scheme.

The company, Virginia-based Maximus, Inc., was sued by federal prosecutors for allegedly defrauding Medicaid out of millions of dollars intended for foster children services by making false reports, Voice of OC reported early Monday.

The firm – which is a campaign contributor to all county supervisors – ultimately settled the case for $30 million.

Additionally, a 2010 state audit found that Maximus, which was put in charge of a California program for medical professionals with substance abuse issues, failed to report when doctors and nurses tested positive for drugs and alcohol.

Orange County supervisors are slated to vote today on a new three-year contract with the firm to operate most of the county’s welfare-to-work program.

The critical state audit and alleged involvement in Medicaid fraud was not disclosed in the staff report to supervisors.

In reaction to a Voice of OC story, Social Services Director Michael Ryan sent a memo to supervisors Monday emphasizing that the firm’s past controversies are not connected to its work for Orange County.

“The Social Services Agency has had no contractual issues with Maximus and the company has performed well. Additionally, neither of the programs that were subject to controversy in 2007 and 2010 relate to any work being done in Orange County,” Ryan wrote in his Monday evening memo.

“Maximus’ performance typically meets or exceeds the County’s performance measures,” he added, pointing to its rate of participants who are reported to be in the workforce.

(Click here to read Ryan’s memo to county supervisors).

County Supervisor John Moorlach, meanwhile, said Ryan did a good job of addressing the concerns.

“I let managers manage, so certainly they’re going to try and sift through all the noise and news and the issues concerning Maximus,” said Moorlach.

“Their performance measurements are great, so unless some new news comes up, I’m looking forward to the item tomorrow.”

Four county supervisors – Pat Bates, Todd Spitzer, Janet Nguyen and Chairman Shawn Nelson – didn’t return messages seeking comment.

Despite questions about the accuracy of Maximus’ reporting, Ryan didn’t explain in his memo how the county verifies that the firm is providing truthful information about its performance.

According to Maximus’ current contract, a county administrator is supposed to regularly inspect the firm’s work, including reviews of random case files every month. It’s unclear how often those inspections have taken place, and what the results have been.

Social Services Agency spokeswoman Terry Lynn Fisher said Monday afternoon that she had no information about Maximus or its work for the county.

In their lawsuit, federal prosecutors alleged that a Maximus vice president helped facilitate a scheme to bill Medicaid for foster children services in Washington, D.C. that company officials knew were never provided.

“After obtaining confirmation that such services were not performed through a [social services agency] computer search, and in the majority of instances after contacting the social workers who confirmed the services were not performed, Maximus nevertheless created files that indicated services were performed, and used such information to demand Medicaid pay for services not rendered,” the suit states.

Under the Maximus’ contract with Washington, D.C., the firm was given 10 percent of the Medicaid funds it helped the the city obtain.

Maximus ended up settling the suit for $30 million, which postponed any criminal prosecution of its employees.

It’s unclear what steps, if any, Maximus has taken to prevent fraud in the wake of its settlement. Company spokesman Blake Travis didn’t return messages seeking comment.

Orange County has contracted with Maximus for welfare-to-work case management since the state’s CalWORKs program started in 1998.

The program is supposed to help welfare recipients prepare for and obtain jobs, in light of a 1996 federal law intended to foster employment among low-income Americans.

In Orange County, Maximus currently manages about 3,000 welfare-to-work cases of the roughly 5,000 total participants.

The firm’s current contract expires June 30, and social services executives are recommending that supervisors approve a new three-year contract today without opening the work to competitive bidding.

If approved, Maximus would receive an increase from $4.9 million per year to $6.3 million annually.

County staff suggest that the rise in cost is due to a new requirement that Maximus oversee case management “from the very initial stages of the client’s [welfare-to-work] process and maintain the case through the [welfare-to-work] event sequences.”

The staff report doesn’t explain how that differs from the firm’s current workload.

Additionally, it’s unclear why the contract wasn’t opened up to competitive bidding.

Moorlach also responded Monday to the revelation that Maximus gave maximum contributions to the campaign accounts of all five county supervisors.

In his “Moorlach Update” newsletter, Moorlach said that of the priorities he uses to vote for contractors, “how much they contributed to my campaign is not one of them.”

In an interview, Moorlach said he tells vendors that “just because you contribute to me doesn’t guarantee that I vote for you. I rely on the fact that the bid that you’re making is the lowest, most responsible bid in the pack. And I don’t really memorize who contributes to me.”

Campaign contributions, he added, shouldn’t automatically cast a bad light on contractors.

“Just because someone participates in the system, it doesn’t necessarily impugn them as bad vendors,” said Moorlach.

According to campaign records, Maximus gave a maxed-out $1,700 contribution to Supervisor Janet Nguyen in August 2009, as well as $1,700 to Supervisor Pat Bates’ campaign in 2010.

Supervisor Todd Spitzer’s campaign received $1,800 from the firm in 2011, while Supervisor John Moorlach received a $1,000 contribution in 2011 and another $800 the following year.

For supervisors’ Chairman Shawn Nelson, records show a $1,700 contribution in April 2010, another $1,700 in September 2010 and $1,800 in late June 2011.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

Orange County Breeze editor to be recognized at Cypress Chamber event

Orange County Breeze editor Shelley Henderson. Photo by George Fenton.

Linda and Tim Keenan, long-time Cypress business owners who have been active in several organizations over the years, will be honored with the Lifetime Achievement Award by the Cypress Chamber of Commerce at its annual Business Awards and Installation Dinner on Wednesday, June 18, at Old Ranch Country Club at 6 p.m.

The Keenans will be joined by Orange County Supervisor John Moorlach as Man of the Year, Orange County Breeze editor Shelley Henderson as Woman of the Year and Union Bank as Business of the Year.

The awards will be preceded by the installation of the Cypress Board of Directors for the 2014-2015 Fiscal Year, which begins on July 1.

“Our Business Awards have come to symbolize the greatness and support the City of Cypress has from business leaders and the community as a whole,” said Cypress Chamber Board Chairman David Macdonald. “These people and businesses have helped build and maintain the City of Cypress and this year’s honorees reflect the efforts of many. This is an opportunity for not only our members, but for the community at large, to join us as we salute these people and businesses. We are looking forward to a great time on June 18.”

CARE Ambulance Service, Forest Lawn Memorial-Parks, Republic Services and The Gas Company are this year’s Presenting Sponsors.

Tickets for the business attire event are $55, with tables of eight for $440. Call the Chamber for additional details at 714-827-2430.

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