Audit Shows SEIU 'Dues Skim' Likely Bolstered By Extra $3.7 Million; Union-Run Registry Ineffective

An audit of the state's Medicaid Home Help Program found that the state of Michigan improperly paid providers $146.4 million from Oct. 1, 2010 to February 28, 2013, the last 17 months of the home health care "dues skim."

The audit also indicates strongly that various forms of fraud played a significant role in the overpayment.

Because the time period covered by the audit took place before the April 2013 official end of the "dues skim,” the SEIU would have been enriched by the errors the audit brought to light. Based on a 2.5 percent take for dues and fees, the union would have garnered an additional $3.66 million if the auditors' estimate of $146.4 million in overpayments is correct.

State officials do not agree that the overpayment amount was as high as $146.4 million, but acknowledge the problems the auditors reported.

The Home Help Program was the program subjected to forced unionization by the Service Employees International Union in the mid-2000s. In 2005, with the aid of the administration of Gov. Jennifer Granholm, the SEIU carried out the forced unionization from which it ultimately took more than $34 million in dues from the Medicaid checks of the elderly and disabled in Michigan.

Key elements of the forced unionization included a dummy employer, a stealth mail-in election, and cooperation from state officials, including some Republican Legislators who did not act on legislation that would have ended the scheme.

The entity used as the dummy employer was the Michigan Quality Community Care Council (MQC3), which was given the task of managing a registry of workers. This registry was supposed to provide those in the Home Help Program with a list of potential caregivers who had undergone criminal background checks. But after six-plus years of existence, only 933 names appeared on the MQC3 registry, which was based on voluntary participation.

Based on the audit findings, the Home Help Program attracted plenty of people with criminal backgrounds, but who, for obvious reasons, ignored the MQC3 registry.

To conduct the audit, nine counties were selected, which accounted for 69.1 percent (57,227) of the total (82,781) Home Help Program clients served statewide and 68.8 percent ($431.6 million) of the total ($627.6 million) provider payments statewide.

In the selected counties, auditors identified 3,786 providers as having had felony convictions before Jan 1. 2013. Of those, 572 had convictions for violent crimes ranging from assault to homicide; 285 convictions for sex-related crimes; 1,148 convictions for crimes such as fraud, identity theft and embezzlement; and 2,020 convictions for drug-related offenses.

The audit did not say how many felons were in the program for the entirety of years when the home-based caregivers were unionized by the SEIU. And it acknowledged that family and friends likely were aware of felony convictions involving relatives or friends.

"...the clients' ability to hire relatives poses a unique circumstance in that clients may be fully aware and accepting of their relatives' criminal history," the audit said.

To discover the felons the auditors did far more criminal history checks than were represented by the 933 names that the MQC3 registry accumulated during its six-year existence.

The auditors are recommending that the state consider conducting criminal history checks for individual providers and requiring agency providers to conduct criminal history checks for their employees and/or subcontractors. Other states require such criminal history checks. Connecticut, for example, has required them for years and that requirement was in place prior to, and separate from, the attempt to unionize that state's home-based caregivers.

In 2012, when the SEIU attempted to lock the forced unionization of Michigan's Home Help Program home-based caregivers into the state constitution with Proposal 4, the registry became its centerpiece. But first the Proposal 4 campaign tried to claim the proposal would create a program that would allow the elderly and disabled to be cared for at home instead of being institutionalized. However, that was precisely what the Home Help Program, which was created in the 1980s, already did.

After the falsity of that claim had been exposed, proponents of Proposal 4 acted as though the registry, which under the proposal would have been enshrined in the constitution, was something new. Yet it would have simply been a different version of the failed registry that the MQC3 had been operating for six years.

"Deception and misrepresentation were the key elements upon which the forced unionization of Michigan's home-based caregivers relied," said Patrick Wright, vice president of legal affairs at the Mackinac Center for Public Policy. "For those who supported the dues skim, the targeted audience was always an uninformed public."

Conducting criminal history checks was only one of the recommendations made by the auditors. Other suggestions included establishing effective controls to prevent or recover Medicaid payments made for Home Help Program services for hospitalized clients and for those who had been placed in nursing homes. According to the audit, some of the $146.4 million that was overpaid might have to be paid back to the federal government.

Angela Minicuci, spokesperson for the Michigan Department of Community Health, said the department agrees with the auditors about the problems the audit revealed, but not necessarily with the dollar figures.

"Overall, MDCH agrees that the Home Help Program audit addressed areas of concern and we've already begun working with the Michigan Department of Human Services to address the issues identified for improvement through strengthened system controls," she said. "In addition, we are already in the process of recouping payments from providers where we can. That said, the large dollar amounts in the performance audit are extrapolations from limited sample sizes and actual questioned costs are much less than the extrapolated error amounts. MDCH takes audits such as these, the integrity of this program, and the fiduciary responsibility of public funds used in the program very seriously. Going forward and as we work to address the findings in this audit, we will continue to support home care for Medicaid beneficiaries by the most effective and efficient means."

Dohn Hoyle, treasurer and co-chairman of "Keep Home Care Safe" and the head of "Home Care First," the campaign committee and the cover group for the SEIU that funded Proposal 4, did not respond to a request for comment.