Epitomizing Futility

This is ridiculous. One million dollars for zero hours? If this were an incident, the employees would be fired and the mistake forgotten. However, this is not isolated. This symbolizes Fletcher’s administration.

From the Louisville Courier-Journal:

The Department for Medicaid Services paid the full $1 million amount of a contract to review Medicaid claims in 2005 before the contractor had done any work for it, a state audit has found. The payment, to Artemetrx LLC of Lexington, violated terms of the contract, federal rules and the Kentucky Constitution's ban on paying state funds before services are rendered, according to the audit released by state Auditor Crit Luallen yesterday.

The audit says the violations may mean that the state will have to repay the federal share of the $1 million in Medicaid funds. But Glenn Jennings, commissioner of the Department of Medicaid Services, said he did not believe the federal government will try to recover any of the money because Artemetrx performed the work required under the contract. "In this case we agree a payment was made out of sequence," Jennings said. "But the commonwealth did get the product it contracted for. And the people here were generally satisfied with the performance."

Matt Wiley, chief financial officer for Artemetrx, said the company contacted the department in early 2005 and asked how it was to be paid and was told it could be in a lump sum or monthly. "Absolutely we provided the services," Wiley said. "In fact our recommendations generated savings to the state -- annual hard-dollar savings -- of over $35 million."

The finding is one of 69 in Luallen's annual audit of state government for the fiscal year that ended June 30, 2006. Artemetrx was awarded the no-bid contract in January 2005 to review Medicaid pharmacy claims as part of the cabinet's effort to reduce fraudulent or erroneous billings. The audit says Artemetrx was paid the entire $1 million on Feb. 1, 2005, even though the contract called for it to be paid "upon successful completion and acceptance of the described work."

The cabinet, in its response included in the audit, does not dispute the finding. It says the department has made changes in its contracting processes, including "controls to ensure that contract payments are not made until a documented (service) has been received, reviewed and approved."

Daniel Groves, a former chief of staff and senior adviser to Gov. Ernie Fletcher who resigned from state government in September 2005, later had a brief association with Artemetrx. Groves registered on Aug. 3, 2006, to lobby the governor's office and other executive branch agencies for Artemetrx. However, after The Courier-Journal reported the relationship, Groves withdrew as the company's lobbyist on Aug. 23, according to records of the Executive Branch Ethics Commission.

In an interview yesterday, Groves said he had no involvement in the Artemetrx contract while he was with state government. He added that he continues to do work for the company under a contract, though it does not involve dealings with Kentucky state government. Wiley said that Artemetrx had no dealings with Groves at the time it was seeking the Medicaid review contract and that Groves had no involvement with the contract.

In another finding, the audit concluded the Finance and Administration Cabinet failed to document services that Pepsi-Cola North America had agreed to provide to promote Kentucky's "Unbridled Spirit" marketing campaign. The services were part of a contract under which the state agreed to buy only Pepsi products for sale at state parks and other facilities.

Auditors found "no verification or documentation" that Pepsi fulfilled a requirement that it provide at least $725,000 worth of promotion -- mostly by including the "Unbridled Spirit" logo on cans and bottles sold in the state.

Cabinet officials responded in the audit by saying that Pepsi provided a "spread sheet" last year showing it had provided such services with a value of more than $924,000. But auditors said the sheet did not verify that the services were provided and that Pepsi did not provide required reports.