Jon Lender: Auditors slam Access Health CT for excessive severance payments, but agency is defiant

May 07-- May 7--State auditors slammed the the state's health exchange agency, Access Health CT, for making hundreds of thousands of dollars in excessive severance payments to high-ranking managers who were quietly fired without public explanation in recent years.

The quasi-public health agency failed to comply with a state statute requiring it to adopt and follow its own written procedures in hiring employees and contracting for services, the Auditors of Public Accounts said in a report released Tuesday.

But, instead of issuing a contrite or deferential response, as agencies generally do when they're criticized by the state's top financial watchdogs, the quasi-public health agency did the opposite. Access Health said in a written response that it's different from regular state departments, and it "believes that the ability to offer severance packages to some departing employees is a necessary employment tool due to the nature of [its] operations and statutory restrictions on future employment for departing employees."

The agency said it "employs individuals with industry experience to support its operations, and may require flexibility to support restructuring efforts periodically as it responds to a changing landscape. "

Latest scrape

This is only the latest scrape with state procedures or ethics laws involving the agency that was created by the legislature in 2011 to meet the requirements of the federal Affordable Care Act, commonly called "Obamacare." Access Health was created with greater autonomy than enjoyed by most Connecticut government agencies, and its everyday office operations happen outside the public view, on the 15th floor at 280 Trumbull St. in downtown Hartford.

In December of last year, its former CEO, James Wadleigh, paid a $5,000 civil fine to the Office of State Ethics for for accepting employment with a state contractor within one year of leaving his post in April 2018. The ethics office also imposed a $5,000 penalty on Softheon, Inc., the Stony Brook, New York-based business contracted in 2017 to provide Access Health CT with more than $50,000 worth of healthcare information technology services. The company paid the fine for offering Wadleigh a job as its chief operating officer last September.

The new criticism by the state auditors comes about a year and a half after a Government Watch column reported that four top Access Health managers got a total of $376,229 in severance pay when they were quietly fired from 2015 to 2017 with no public explanation.

Their severance pay came in the form of biweekly paychecks that continued for six months after the termination date for each. Their health insurance coverage continued during those months. When asked at the time what the reasons for the high-level departures, the agency's spokesperson said: "Access Health will not discuss this... It is Access Heath CT policy to not comment on personnel matters."

The severance payments were questioned as excessive in December 2017 by health-care advocate Ellen Andrews, executive director at the Connecticut Health Policy Project. "I have to say I'm stunned at those numbers," she said at the time, adding that the $376,229 "would have gone a long way toward a community outreach campaign to get people into the program" and help them make better decisions in choosing health insurance. Andrews' New Haven-based, nonprofit research and educational organization seeks to improve access to affordable health care.

The four high-level people terminated -- and their former job titles and salaries -- were Steven Sigal, chief financial officer, $211,000; Peter Van Loon, chief operating officer, 182,000; Tamim Ahmed, executive director of the All-Payer Claims Database, $182,000; and Virginia Lamb, general counsel, $176,000.

$674,954 in severance pay

The new auditors' report uncovered an additional dozen Access Health employees who were terminated involuntarily from June 30, 2014 to June 30 of last year. Adding them to the four whom the Courant reported about brought the total to 16 people with overall severance payments totaling $678,954.

"In addition, these employees continued to receive medical and dental insurance benefits for as long as 1 to 6 months after termination," said the report, signed by principal auditor Catherine L. Dunne and approved by one of the state's two chief auditors, Rob Kane. "The Exchange allowed the Chief Executive Officer to make decisions regarding severance packages without the approval of the board of directors," the report said.

Access Health's manager of government affairs and communications, Kathleen Tallarita, issued a statement in reaction to Tuesday's release of the auditors' report, saying: "As of 2018, Access Health CT is under new executive leadership helping to further guide the organization in accordance with the highest standards."

But Andrews, the Connecticut Health Policy Project director, said the health exchange doesn't seem to have learned from its mistakes. "This is terrible," Andrews said when shown the new auditors' report. "It just gets worse and worse."

She was critical of Access Health's "defensive" stance with regard to the continued severance payments and said "they're still not owning up to it.... They're doubling down.... You can't solve a problem you're in denial about."

The auditors' report continued: "Severance payments, which were not included in the adopted budget, were not approved by the [Access Health CT] board of directors," adding that from now on the board "should approve non-budgeted severance payments in excess of $5,000" in accordance with state law. "The total amount of the severance payments and ancillary benefits may not have been a prudent use of the Exchange's resources," the report said. "In addition, since these payments were not included in the adopted budget, less funds may have been available for program operations."

The auditors' report included the agency's response: "The board of directors approves all non-budgeted expenditures in excess of $5,000 in accordance with [state laws] through ... quarterly reforecast votes. Prior to the beginning of each fiscal year, the board approves the...annual operating budget. The operating budget includes total amounts for each budget category, but the board does not approve each contractual expenditure or individual salaries and benefits for employees. During the fiscal year, the staff presents a quarterly reforecast for the operating budget showing any revisions to the expense or income categories. This reforecast is presented to the finance committee and then to the full board for approval. All severance payments and any payments for benefits were included in board approved reforecasts."

Another auditors' finding was that four purchase orders "were approved after the receipt of goods or services" by Access Health, and, "in addition, we noted that services for another expenditure totaling $500,000 were provided prior to the contract being fully executed." Andrews said those aren't incidental expenses "like they needed more staples...or paper clips." She said if her agency's board of directors saw her acting like that, "I would lose my job."

Kane's fellow chief auditor, John Geragosian, refrained from participating in the Access Health CT audit "in order to avoid the possible appearance of a conflict of interest," the report said, because his wife had done some public relations work for HealthyCT, the now-defunct nonprofit health insurer.

Jon Lender is a reporter on The Courant's investigative desk, with a focus on government and politics. Contact him at jlender@courant.com, 860-241-6524, or c/o The Hartford Courant, 285 Broad St., Hartford, CT 06115 and find him on Twitter@jonlender.

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