Wayne County contracts: E-mail obtained by Free Press show ex-official wired $400,000 just ahead of subpoenas [Detroit Free Press]

Feb. 26--Hours before FBI agents delivered subpoenas last fall seeking records from Wayne County headquarters, the director of a county health care program for needy people wired $400,000 of the program's money to a fledgling IT company that apparently did no work for the payment, according to records the Free Press obtained.

HealthChoice Executive Director Michael Grundy authorized the payment to Medtrix on Oct. 19, more than seven months after giving the company a no-bid contract to implement an electronic medical-records system. In an e-mail to Grundy, which the Free Press obtained through Michigan's Freedom of Information Act, a HealthChoice accountant tells him that she sent the money to Medtrix "as requested."

Though the company was paid in full before the work was completed, there is no evidence in records the Free Press obtained from HealthChoice that Medtrix, founded by Grundy's childhood friend Keith Griffin, did any work for the money. HealthChoice board member and Wayne County Commissioner Tim Killeen, a Detroit Democrat, said he also has seen no evidence.

"This just appears to me that people are using this organization for other than the public good," Killeen said Friday.

Neither Grundy nor his lawyer returned messages seeking comment. Griffin's lawyer, Leon Weiss of the Fieger law firm, said Saturday that Griffin's work was halted by the turmoil caused by the federal investigation of Wayne County.

"He was just about done," Weiss said. "Once that hit the fan, everything stopped ... so he never got a chance to close the deal.

"If we're ever called to prove that he worked ... we have that proof."

Records the newspaper obtained show that HealthChoice -- which the county created to provide health care coverage to low-income residents -- wired the money to Medtrix at 10:44 a.m.Oct. 19. About three hours later, FBI agents arrived at Wayne County's Guardian Building headquarters and served subpoenas seeking records related to three top county officials, documents related to the county's dealings with 14 companies and records related to Metro Airport.

On Dec. 2, the FBI sent subpoenas to HealthChoice for records related to Grundy, Griffin and Griffin's companies.

By then, Grundy, a top aide to Wayne County Executive Robert Ficano, already had been fired for failing to cooperate with an internal county investigation of his dealings.

Grundy and Griffin are also the subject of a federal investigation into HealthChoice, including allegations that Grundy pressured a health insurer to make regular payments to Griffin's companies for work they did not perform.

Weiss said federal investigators have seized documents and assets from Griffin.

"My client went into this thing with no criminal intent whatsoever," he said.

A convenient debut

The documents the Free Press obtained show that HealthChoice also gave a no-bid deal to Advertise Me, another Griffin company. He incorporated Advertise Me just a month before it began buying airtime for HealthChoice commercials.

Unlike Medtrix, Advertise Me did not have a contract with HealthChoice, but it did provide services -- for which it charged HealthChoice more than $1 million.

A review by Wayne County officials estimated that Advertise Me marked up the cost of its advertising buys as much as 164% -- more than 10 times the 15% markup that local ad experts say is typical for media buyers.

Weiss questioned the accuracy of the county's findings. He also said there is no standard charge.

"There are people who charge more, there are people who charge less," he said. "If we could charge people with crimes for too much markup, there'd be a lot of jewelers in prison."

The Medtrix deal raises questions that include whether the company was qualified to do the job for which it was paid and why payment was made before work was completed.

State records show that Griffin incorporated Medtrix less than a year before landing the HealthChoice deal. The Free Press could find only two websites using the name Medtrix. One is registered to an individual in Delhi, India, and advertises "healthcare services at its best" with a webpage marked "Under Construction" that contains no working links. The other is for a company in India that says it has been in business since 1999. Both domain names appear to have been registered years before Griffin incorporated Medtrix.

HealthChoice, in its response to the Free Press' request for any documents showing evaluations of Medtrix or the company's qualifications, wrote: "After a diligent search, we have determined and certify that these records do not exist."

Weiss said Griffin received a college degree in computer science. He said Griffin had been selling real estate in Indianapolis, but when the market began to sag, he decided to rely on his computer skills. Weiss said he didn't know whether Griffin had any experience in electronic medical records but added, "there's no doubt in my mind he was 100% capable."

Asked how Oakland County handles such matters, Deputy Oakland County Executive Robert Daddow said the county pre-qualifies vendors to ensure that they will be able to do the work before entering into a contract.

Attorney John Minock, whom HealthChoice hired last year to help figure out what had happened during Grundy's tenure, declined to discuss Medtrix. He said only, "We believe these matters are currently under investigation by a federal grand jury."

Not standard procedure

Brooke Blackwell, spokeswoman for Ficano, said Friday that the Medtrix payment would be out of line with county procedures.

"County vendors submit invoices and are paid as services are rendered," she said in an e-mail. "Occasionally we do wire transfers, but for the most part, we cut checks."

Killeen, the HealthChoice board member, said the health care program does not have a policy regarding wire transfers.

HealthChoice is a county program that operates independently from Wayne County government. Its budget of about $20 million comes from a nonprofit, businesses that use it to provide health care for low-income workers and people who use it for health insurance. It provides health insurance and dental care for seniors, young people and needy people.

Both Daddow and Macomb County Finance Director Peter Provenzano described payment policies similar to Wayne County's.

They said they typically pay contractors incrementally, as work is performed, and almost never all at once.

"We don't pay in advance, particularly if we're buying software that needs modification, and the vendor is expected to do that," Daddow said.

Provenzano said "there would have to be a real good circumstance for us to consider" paying for something all at once. He added that he could not think of a situation that would justify such a payment.

Policies circumvented

Killeen said there was another problem with both the Medtrix and Advertise Me deals: They were not brought to the HealthChoice board for approval.

He said it appeared Grundy intentionally circumvented the program's policies.

"HealthChoice was being used kind of as a personal bank account," Killeen said. "It was his own private pool to play in."

Killeen said until HealthChoice's review of what happened is complete, it is too soon to say what should be done about some of the program's questionable deals.

Contact M. L. Elrick: 313-222-6582 or mlelrick@freepress.com

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