A former employee of Flinthills Services, Inc. has filed a lawsuit in U.S. District Court in Wichita against the agency alleging she was fired and prevented from seeking work elsewhere because she was planning to report Medicaid fraud and other abuses to authorities. The employee, Gloria Canady, of El Dorado, worked for Flinthills from 1994 until March 2, 2012, when she was fired. Click here to view a copy of Canady’s complaint.
The chief allegation in Canady’s lawsuit is violation of the federal False Claims Act. This type of case is typically referred to as a whistleblower lawsuit. The False Claims Act allows individuals who believe they have faced retaliation for complaining about fraud against a federal program to sue the perpetrators on behalf of the U.S. government. One of the more well-known whistleblower cases in the recent past resulted in pharmaceutical giant Pfizer paying a $2.3 billion settlement. One of the attorneys representing Canady in her lawsuit, Robert K. Collins, of Topeka, took time off from law school to help his brother pursue a whistleblower case against Pfizer, according to this story in the Topeka Capital-Journal.
Also named as defendants in the case — filed under seal (secretly) in 2014 but since made public — are the Community Developmental Disability Organization of Butler County, Inc. (CDDO), an intake agency for those seeking services that is technically separate from Flinthills but shares the same board of directors; Jonathan Henak, Flinthills’ former chief financial officer and interim director; and Sandstone Homes I, LLC, an Omaha, Neb.-based corporation that owns group housing facilities for Flinthills’ clients.
As of May 12, Sandstone was listed as “delinquent” with the Kansas Secretary of State for failing to file an annual report on April 15. Henak is still listed as registered agent at Flinthills’ office location, although his Linked-In profile indicates he left the agency in February 2015.
Although not named as defendants in the lawsuit, some of the biggest names in Butler County politics were or are involved with Flinthills and two have direct involvement in the case. They include:
- State Rep. Will Carpenter, R-El Dorado. Prior to serving in the Kansas Legislature, Carpenter was a Butler County Commissioner from 2001 to 2009. In 2004, Carpenter sold a piece of property at 917 Oak Street, El Dorado, to Tres Amigos Development, LLC, a now-defunct corporation best known for the Constant Creek development on El Dorado’s west side. Tres Amigos sold the property to Sandstone in 2007 and a group home for Flinthills clients was built there in 2008. Defense attorney Mark A. Kanaga last November subpoenaed Carpenter’s sale-related records. Click here to view the subpoena.
- Mary Martha Good, R-El Dorado, Carpenter’s 2016 primary election opponent. Good is a former Flinthills board member. Canady accuses Good of telling Neil Benson, of El Dorado, that Canady’s firing was related to some sort of criminal activity, but when Canady questioned Good, Good did not say what the activity was, only that Flinthills was not pursuing charges. Benson is the widow of longtime Butler County District Court Judge Page Benson. The Bensons were instrumental in starting Flinthills in the mid-1990s as part of their decades of advocacy for the developmentally disabled.
- Sheriff Kelly Herzet, who has not been subpoenaed to testify or provide documents, but who serves as president of Flinthills’ board of directors. County commissioners, who approve all appointments, originally named Herzet to the board on January 3, 2012, about two months before Canady’s firing, to replace Carpenter’s wife, Ann. Ann Carpenter is Juvenile Justice Authority coordinator for the Thirteenth Judicial District, which includes Butler County.
Although this case could play a role in the 2016 Butler County election cycle, it likely won’t be decided anytime soon. Whistleblower lawsuits are notoriously complex, costly, and time-consuming and this one is no different. Trial in this case is scheduled for 9:30 a.m. May 8, 2017, before U.S. District Court Judge Kathryn H. Vratil in Wichita.
In the complaint, Canady’s attorney writes that, although she witnessed many instances of abuse, neglect, or exploitation of clients during her employment, most of her concerns arose beginning in 2006. That was the year Canady discussed potential Medicaid fraud with co-worker Pat Hicks, who performed billing for Flinthills.
“Then-Director Dana Korkki had overheard the conversation between Hicks and (Canady) and, within six hours, discharged Hicks (forced to take early retirement) with a stipulation that she could only receive her severance and retirement if she no longer communicated with (Canady),” the complaint states. “Korkki had Hicks’ office emptied within 24 hours of that conversation, and Flinthills didn’t have a Medicaid biller for six months thereafter.”
Among the alleged Medicaid fraud Canady witnessed:
- Ineligible individuals receiving Home & Community Based Services (HCBS) funds,
- Flinthills continuing to bill Medicaid when clients left group homes to spend time with friends or family,
- Assessment scores that inaccurately portrayed the severity of clients’ conditions so as to increase Medicaid and other public funding reimbursement, and
- Failure to maintain required documentation of client assessments.
“In 2006, Flinthills Services, Inc. Board of Directors voted to separate the service side from the CDDO side of Flinthills Services in order to create an unbiased single-point of entry connecting individuals of all ages with developmental disabilities to the network of service providers in Butler County,” reads a statement from Flinthills’ website that is included in the complaint. Yet Canady claims she felt pressured to require less eligibility documentation from Flinthills than from other agencies while working for the CDDO and was chastised for requiring Flinthills caseworkers to take potential clients and their families on tours of competing service providers.
The 917 Oak Street Group Home
Flinthills Services opened a group home at 917 Oak Street, El Dorado, in 2008. In her complaint, Canady contends that the home, which has nine beds and at times has housed as many as 10 individuals, serves more clients than Medicaid regulations allow.
“Kansas’ Handbook for Home and Community Based Services, which governs the billing rules for all CDDOS and Service Providers for the Developmentally Disabled who contract with Medicaid in Kansas expressly states, ‘Residential Supports for adults are provided for individuals 18 years of age or older and must occur in a setting, without regard to siblings, where the person does not live with someone who meets the definition of family, and are provided by entities licensed by Community Supports and Services. HCBS MR/DD Residential Supports will NOT be offered in a setting nine beds or larger in size,'” according to the complaint.
Canady alleges she was met with resistance when she questioned the legality of billing Medicaid for services provided in a too-large group home. Korkki, who was Flinthills director during the home’s construction, said the rule didn’t apply because the building was a duplex, the complaint states, but the building permit was not for a duplex and the facility was not identified in county documents as a duplex. Canady raised the issue multiple times with Henak, who insisted the state had granted a waiver allowing nine beds but would never produce documentation to back up his assertion.
Marion County Deed
The complaint identifies several clients by initials to protect their privacy. One such client is D.S., one of three Canady was planning to mention in a report to authorities concerning “financial wrongdoing.” D.S., according to the complaint, was at times housed at 917 Oak Street, including while floors in the house where he lived were being repaired.
Butler County Watchdog has identified the client through public records and other sources as Dwayne Suffield, who lives in Burns. These photographs obtained from the Flinthills website in 2012 show “several of those who helped to re-do Dewayne’s (sic) home in Burns gathered for a cookout provided by FSI.” Those photos of the house appear to match these pictures obtained from the Marion County website.
Jon and Tina Nelson sold the house where Suffield lives to Northview Developmental Services, Inc., of Newton in 1994. Northview sold the house to Flinthills via a quitclaim deed dated April 4, 2011. On April 26, 2011, Suffield signed a quitclaim deed gifting his property rights to Flinthills. Both deeds were recorded on April 29, 2011. Click here to view the deeds.
UPDATED: Click here for an explanation of why Suffield signed the quitclaim deed and the rights he gave up by doing so.
There is also the question of whether Suffield had sufficient mental capacity to sign the deed — did he understand what he was signing and the consequences of doing so? These issues may be addressed further if the case makes it to trial. A quitclaim deed simply conveys whatever interest one has in property to another with no guarantee that any interest actually exists. Click here for a definition from The Law Dictionary.
Crashes, Shredding & Smears
In what would be her final days as a Flinthills employee, Canady alleges she experienced strange occurrences with her and her co-workers’ computers.
“One early morning shortly before (Canady’s) March 2, 2012 termination, while (Canady) and (Dale) Tower were in the CDDO office, (Canady) was startled to see each of their computers turn on by themselves, and then the cursor begin to move around on the screen,” the complaint states. “Tower explained to (Canady) that that was ‘just Jonathan [Defendant Henak],’ and that Henak often accessed the computers in the office from home.”
The day before CDDO Director Tower was fired on March 1, 2012, his, Canady’s, and Assistant CDDO Director Angela Fullerton’s computers all crashed, according to the complaint. Canady suspected Henak of accessing materials she was about to turn over to authorities and of deliberately crashing the computers. Fullerton was fired the same day as Canady.
Canady alleges that Henak shredded multiple documents Flinthills was required by law to keep, including some that were related to her allegations.
“And when (Canady) went in to the CDDO office, on or about March 6, 2012, for her allocated fifteen minutes to gather her personal belongings, the Flinthills shredding bins were inside the CDDO office at 226 South Main Street and Henak was throwing everything into the shredding bins right in front of (Canady),” the complaint alleges.
In its answer, Flinthills states that its clients operate shredders as part of the work they do; however, Canady’s complaint indicates the shredding she witnessed occurred at the CDDO office downtown, not at Flinthills’ main office at 505 S. Walnut Valley Road, El Dorado, where the shredding business is located. Click here to view the defendants’ answer in which they mostly deny outright or deny knowledge of Canady’s allegations.
After she was fired, Canady alleges that Henak and others connected with Flinthills made it difficult for her not only to find work in the social services arena but to find work at all by making false statements about her including allegations of theft. One report came from the quality assurance manager at Creative Community Living, another provider of services to the developmentally disabled.
“Della Moore informed (Canady) that, at the next board meeting after (Canady), Fullerton and Tower were terminated, Henak stated publicly that they had been stealing money,” the complaint alleges. “And the letter from Fullerton to the County Commissioners stated that Fullerton had learned that people in the community were being told falsely by Henak and others at Flinthills that (Canady), Fullerton and Tower lacked college degrees.”
State and federal law enforcement agencies have been made aware of the lawsuit. A source says he gave the FBI office in Wichita a copy of Canady’s complaint. He said agents told him they were referring the matter to the white collar crime unit. I also sent a letter to the FBI to make agents aware of the situation concerning the quitclaim deed discussed above and this later development described in another blog post. Law enforcement agencies typically do not confirm or deny the existence of a criminal investigation.
In addition to three times the amount of false Medicaid claims plus $11,000 for each false claim on the count of violating the False Claims Act), Canady is seeking in excess of the statutory minimum of $75,000 on each of five other counts. She is also seeking reinstatement to her job with pay and benefits and legal fees.