Allegations of Fraud: The Martinez Administration and a Tale of Two Scandals

If the Downs at Albuquerque were a behavioral health provider, would Governor Susana Martinez, have shut it down and replaced it with an out of state racino operator?

By now we have all heard about Martinez’s assault on New Mexico’s Medicaid funded behavioral health system. Martinez accused fifteen behavioral health care providers with fraud, cut off their funding, replaced them at massive taxpayer expense with out of state companies, and requested criminal investigations into these companies that serve a very fragile clientele. 

Already despite assurances to a federal court judge, the transition to the out of state companies, rushed is the best way to describe that process, has not been seamless. A pharmacy in Las Cruces was shuttered, leaving a vulnerable population with no place to fill prescriptions, because the company did not have a license to operate a pharmacy in New Mexico. 

With apologies to the Treasure of the Sierra Madre, “Licenses. We don’t need no licenses. We don’t have to show you no stinking licenses.”

A federal judge recently ruled that the wording of the contract between the state and the behavioral health providers allowed the state to cut off the funding to the behavioral health providers pending investigation, but at the same time the judge expressed concerns about the impact of the state’s actions on the consumers treated by those providers.  

The Martinez administration sought to keep the wrongly termed “audit” of the fifteen providers conducted by Public Consulting Group, at the cost to the taxpayers of $3,000,000, away from the Office of the State Auditor, the state agency who is responsible for actually auditing state contractors. That is not a surprise. 

Martinez also refused to give the so-called audit to the fifteen providers, who she has accused of fraud. Thus, they have no way to know what they are supposed to have done wrong. The federal judge grasped the bind that Martinez created in preventing the providers from addressing the damage to their reputations done by the accusations.

The state auditor in North Carolina found that PCG inflated estimates of similar allegations of questionable billing by PCG in that state. The North Carolina auditor questioned that PCG gets paid a percentage of the fraud they claim exists, rather than a percentage of the questionable practices they actually prove. It is highly doubtful that PCG’s claims of widespread fraud by all fifteen providers will stand up to scrutiny by the New Mexico Office of the State Auditor. In fact it is likely based upon North Carolina’s findings, that the vast majority of PCG’s claims will found to be false.

So how does Martinez’s treatment of the fifteen behavioral health providers contrast with her handling of the clear-cut fraud involved in the awarding of the racino contract worth a billion dollars to the Downs of Albuquerque? Like night and day.

Instead of shuttering its doors, Martinez and her closest associates took a hands on approach to not only ensuring the Downs got the contract, but also to suppressing efforts to investigate the obvious wrong doing.

The fraud is clear-cut. 

In order to “sweeten” the deal “on paper” offered by the Downs, which was much less beneficial to the taxpayers than was the rival bid from Laguna Development Corp. The Downs in conjunction with the Martinez administration, added to the contract that in exchange for receiving the contract, the Downs would not require the state to reimburse the Downs for $2,000,000 in repair work it claimed it was owed for having completed over a period of several years.

But, according to the lease agreement in existence when those repairs were done, the Downs was prohibited from billing the taxpayers for the majority of those repairs. Further, for any substantive repair work that could be billed to taxpayers under that lease, the Downs was required to get written authorization in advance from the state and follow the state’s procurement code in performing that work. They did not. Finally, it is highly likely that the Downs already received a benefit from those repairs by deducting the costs of those repairs from any profits they made during those years allowing it to reduce its tax burden.

Martinez also replaced qualified evaluators, with an evaluator that had a history of rigging processes, refused to allow LDC to negotiate a better deal for the taxpayers in violation of the procurement code, got Darren White a “no show” high paying job at the Downs—he might have been there physically, but had no skills or experience so others did the work while he got paid, used her non-profits to take in vast sums of money from the Downs owners at various times, when it was clear such money was given to influence the outcome—and as a quid pro quo—Martinez returned the favor, and despite prohibitions on communicating with any state employee other than the procurement manager, the Downs, through Pat Rogers, sent a variety of communications to high ranking members of her administration as well as Jay McCleskey who works as a contractor for Martinez—although his contract fees are paid through Martinez’s non-profits instead of the state.

Martinez threatened Tom Tinnin when he spoke up against the rigging, and tried to prevent Charlotte Rode and Twister Smith, commissioners she appointed, but who opposed the deal, from being confirmed in retaliation for their opposition.

So on the one hand, Martinez accuses the entire behavioral health community of being fraudsters, shuts their doors, and replaces them with out of state firms. On the other hand, Martinez and her hand picked staff are directly involved in improper conduct, and she then used her influence with the media and others to try to conceal her actions from the light of day.

Her handling of both scandals is scandalous itself.

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