Service group mired in debt Care Development owes Maine $1.5M

BANGOR – A Bangor-based nonprofit corporation that oversees social service organizations in Maine, Massachusetts and Florida is being accused of mismanagement that has left the organization $4 million in debt in Florida and $1.5 million in debt to the Maine Department of Human Services.

Maine officials are working with Care Development Corp. to try to ensure that the corporation’s Maine debt gets paid off and that it continues to provide quality treatment to the 215 state foster care children it serves in the state.

“We are aware of the corporation’s problems in Florida,” said DHS spokesman Newall Auger. “We are working with them to try to ensure that similar problems don’t develop here.”

But some problems have developed here, Auger acknowledged on Thursday.

Founded in Bangor in 1995, Care Development develops and provides community-based treatment for about 215 state-custody special needs foster children and also operates two group homes in Oakland and Brewer. It employs approximately 200 people at nine offices around the state.

Payments are made to Care Development through Maine Care reimbursement which is paid through a cost-base reimbursement plan with DHS. The department also reimburses the agency for room and board costs. Cost-base reimbursement involves the provider (Care Development) providing the state with a projection of the number of children it will serve and the cost of serving those children. Based on those estimations, the department pays Care Development – or any of its other service providers in the state – in installments.

At the end of the fiscal year DHS and the provider “settle up” by either reimbursing overpayments or making up for underpayments.

“This is very, very common. This is how cost-base reimbursement works. It’s just that in this case, the provider did not have the cash available to repay us,” Auger said.

Kevin Behre, financial director for Care Development, said Thursday evening that a substantial investment in computer technology had set the corporation back more than expected.

“We find that workers are mired in paperwork and we are trying to eliminate that in order to make our organization more efficient. We really haven’t seen the return on that investment yet, but we are hoping that we do,” he said.

Overpayments by DHS to Care Development occurred in 2000, 2001 and 2002. Over those three years DHS reimbursed the corporation a total of $27.5 million for the Maine care portion of the charges, when the actual costs were only $25 million. Care Development therefore owed the state $2.5 million in overpayment, yet has paid back only $1 million, Auger said.

“We set up a payment plan for them in July 2003 and for the most part they have adhered to that,” Auger said. “Also, the state is trying hard to work with the agency so that the payment plan can result in the payment to the state, while not forcing the corporation to be unable to continue operating because we are very satisfied with the services they provide.”

In 1998 Care Development merged with Family Continuity Program in Massachusetts and Florida, resulting in “increased financial stability of FCP,” according to the Web site of Family Continuity Programs Inc.

Care Development remains based in Bangor and is the parent company of the Maine, Florida and Massachusetts organizations. It is also the parent company of two for-profit companies.

The for-profit subsidiaries include Care Systems, the parent company of 1CarePlace.com, which is focused on providing Application Service Provider information solutions to social services and other industries. That arm of the organization is located in northern Virginia, according to the Care Development Web site.

Newspaper stories surfaced in Florida in February that Care Development’s subsidiary, Family Continuity, was having serious financial problems.

In Florida, FCP oversees child welfare services in two counties. Unlike in Maine, where Care Development provides only limited service, the Florida organization basically runs the foster care program in those two counties through a contract with the Department of Children and Family Services in that state.

The assistant director for DCF told a Tampa newspaper that FCP had management problems and “did not have a good spending plan.”

Now FCP is laying off about 80 workers as it tries to head off an estimated $4 million deficit there.

The agency was given a provisional license last December when DCF learned that the agency’s foster homes had too many children, according to press reports.

FCP officials have blamed its financial woes on an unexpected influx of children into the Florida system.

Behre acknowledged some mismanagement issues in Florida saying the organization made an incorrect decision by hiring additional workers without the promise from the state of Florida for more funding.

DCF does have a risk pool that could be used to help make up some of FCP’s losses, if it is determined that those losses are because of an increase in children in the system or other unforeseen circumstances. Behre said that the Maine management team has now intervened and is working with DCF to try to use that risk pool money to try to minimize Care Development’s financial losses.

“We could have a big problem or we could have a manageable one, but we are certainly trying to take care of this without it severely effecting the bottom line of the rest of the organization,” he said.