News Story

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.  

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Select Business Subsidies, Endorsements Are Differences In 37th District Senate GOP Primary

State Representatives Wayne Schmidt and Greg MacMaster face off

As a former radio and TV meteorologist in the region, Rep. Greg MacMaster, R-Kewadin, held the edge in name recognition when this year's 37th District State Senate GOP primary race started.

His opponent, however, Rep. Wayne Schmidt, R-Traverse City, has garnered a boatload of endorsements, including the Michigan Chamber of Commerce, Grand Traverse County GOP Executive Board, Michigan Retailers Association, Michigan Restaurant Association, Michigan Doctors PAC, Advance Michigan, and the Great Lakes Education Project.

But Rep. Schmidt insists that does not make him the "establishment" candidate.

"No, I'm the candidate that gets things done," Rep. Schmidt said. "I believe it is better to work with people to find solutions, as opposed to just tossing things out like my opponent has with his road funding plan, which would raid the Natural Resources Trust Fund. In my first two years as a representative, the Republicans were the minority party in the House. I was one of those who helped us win back the majority.

"The organizations and people in Lansing who support me do so because of the people and businesses in Northern Michigan who support me," he added. "It starts up here. When you see the support I have in Lansing it's really the people of this district who are speaking."

Rep. MacMaster doesn't see it that way.

"There's no doubt about it, this race is Lansing versus the people of Northern Michigan," Rep. MacMaster said. "My opponent is receiving strong support from Lansing because of the way he votes. I feel the support I'm receiving in the district is very positive and solid. I think that's because people know I'll represent them — not Lansing."

The 37th District is comprised of all or parts of Chippewa, Luce and Mackinac counties in the Eastern Upper Peninsula and all or parts of Antrim, Charlevoix, Cheboygan, Emmet and Grand Traverse counties in the Lower Peninsula. The Senate seat is currently held by Sen. Howard Walker, R-Traverse City, who chose not to run for re-election.

Rep MacMaster was the only House member who switched his vote on Medicaid expansion last summer. He voted "yes" in June, the first time the measure was before the House, but "no" when a second vote was taken after Labor Day. Rep Schmidt voted "yes" on Medicaid expansion both times.

Michigan Capitol Confidential posed two questions to the candidates aimed at bringing out what kind of senator each would be if elected.

Q: Both Theodore Roosevelt and Franklin Roosevelt began their legislative careers by bucking the leaders of their own caucuses. In recent years, Republican lawmakers in Michigan have virtually ceased attempting to use procedural maneuvers. For instance, offering amendments and trying to force votes to be taken on them to promote alternatives that might be preferred by a majority of their colleagues.

Presuming you win the election, would you occasionally go beyond simply voting "no" and publicly attempt to stop passage of legislation you strongly oppose?

Rep. Schmidt:

Yes and I have done that when the needs of Northern Michigan were at stake. When it came to the Detroit pension settlement I spoke out against it early on. So my answer to this question is "yes," but I think it is something that has to be used sparingly and I think it tends to happen most often on a geographical basis.

But my history has been to work with people in the Capitol on policies that are good, not only for those in my constituency, but for those across the state. I'm about solving problems. You can't usually get all that you want, but getting three-quarters of a sandwich is better than getting no sandwich at all, because it allows you to survive.

Rep. MacMaster:

Yes, and I've done that. You really can't do it procedurally because the administration won't allow it. But I spoke out against the Medicaid expansion the second time around, and on the gas tax issue I offered an alternative to it, which would include repealing the [state's] prevailing wage law. On the Detroit bailout I didn't just vote against it, I spoke out loudly and clearly against doing it.

Q: The Michigan Economic Development Corp. (MEDC), which is known as the state's corporate welfare arm, gets about $300 million in annual funding while having the reputation of lacking transparency. Even legislators have complained about not receiving information they've requested from the MEDC.

As a lawmaker would you seek information from the MEDC to test its transparency? If you thought the results were unsatisfactory, would you say so publicly? What other actions, if any, would you take?

Rep. MacMaster:

My answer is yes. Not only would I do that in the future but I have spoken out publicly about the lack of transparency at MEDC. In fact, I was quoted in a CapCon story not long ago talking about the need for more transparency from MEDC and against the high salaries at MEDC.

Rep. Schmidt:

When I was chair of the [House] Commerce Committee we worked to reform the MEDC. So I understand the problems and frustrations. We streamlined it a lot so it would be clean and more transparent. Yes, there are still problems as people adjust to the changes. But I think we've made great strides and you'll see the improvement as time goes on.

It would be easy to just throw up our hands and say we're not going to do this (have agencies like MEDC) anymore. But I'm not in favor of doing that as long as we have to compete for jobs with other states that do such as North Carolina, Texas and Ohio.

Editor's note: Michigan Capitol Confidential will be reporting and writing about key primary races leading up to the election on Aug. 5. The series of stories are designed to provide readers with some insight into candidates who have said they support free market issues. The stories are not endorsements and readers are encouraged to give every candidate a serious look before the election. 

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See also:

'He's Just Making That Up' - No Shortage of Attacks In 3rd Congressional District GOP Primary

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.