SRS cleared in fraud inquest

TOPEKA — State officials bypassed their own procedures but didn't break any laws in giving extra Medicaid funds to a nonprofit group with ties to the state Democratic Party chairman, Kansas' attorney general said Tuesday.

Attorney General Steve Six also said there was no evidence that the top official at the Department of Social and Rehabilitation Services provided the group an additional $713,000 because of pressure from the governor's office.

The extra money went to Community Living Opportunities, Inc., a Lenexa group serving people with developmental disabilities whose care is covered by Medicaid. The funds were awarded by SRS Secretary Don Jordan in October 2008 for the fiscal year that ended June 30.

Jordan has said the extra funds were justified because of the severity of the disabilities of the group's clients. He had been contacted by the group about funding issues. State e-mail records show that Kansas Democratic Party Chairman Larry Gates, who serves on Community Living's board of directors, also contacted the governor's chief of staff in 2008.

Questions arose in March 2009 when then-Gov. Kathleen Sebelius was awaiting confirmation as U.S. health and human services secretary, which oversees Medicaid. Gates has said he never talked to Sebelius directly, and Sebelius has said she left the decision to Jordan.

A state report in May said Jordan had the authority to give Community Living the extra funds, but in September, three Republican legislators asked Six to investigate whether Medicaid fraud had occurred. Six, Sebelius and her successor, Gov. Mark Parkinson, are Democrats.

Six's report said that while the Department of Social and Rehabilitation Services didn't follow its own procedures, there was no evidence that Jordan or his staff filed false claims or intended to defraud anyone.

"The secretary, as head of the agency, has the authority to approve extraordinary funding," Six wrote.

State Rep. Dave Crum, R-Augusta, one of the legislators seeking the investigation, said he was pleased it didn't find fraud or false Medicaid claims.

But he says he also wants to follow up with Six to make sure there were no violations of federal rules that could result in a penalty for the state. Six's report didn't directly address that issue.

"I hope through this whole process, we can avoid future situations like this," Crum said.

Jordan and Parkinson spokeswoman Beth Martino said they weren't surprised by Six's findings.

"I would hope that with all the budget problems we have, we can move on to other issues," said Jordan, referring to five rounds of spending cuts made by the state to keep its budget balanced.

Martino said Parkinson "hopes this answers the questions that have been raised."

The additional Medicaid funds were earmarked for 43 Community Living clients. State officials are trying to determine how much of the money should be returned.

Community Living CEO Michael Strouse said he believes state officials ultimately will find in the group's favor and continue the funding for each client — achieving the same result as Jordan's decision.

Critics, including other care providers, had complained that the Department of Social and Rehabilitation Services bypassed the normal process of having one of 27 regional groups review each individual client's case. In that process, the regional group decides, and SRS handles appeals.

But some groups deciding who gets additional funds also compete with Community Living for clients. The May report said the state should consider scrapping the process so only SRS makes such decisions.

"I had very little to do with all this," he said. "This whole thing has gotten blown out of proportion."