Audit claims fraud by contractor for city health department

In a report released Thursday, the Office of the City Auditor detailed its investigation into allegations that a nonprofit contractor for Austin Public Health “committed fraud by misrepresenting over $1.1 million in financial transactions across three contracts” with the health department between December 2020 and September 2021.

The Central Texas Allied Health Institute (CTAHI) had one contract for Covid-19 testing, one for workforce development and one for administering Covid-19 vaccines.

Auditors found that the health department paid CTAHI about $417,000 related to fraudulent contract claims. In addition, auditors said the group “appears to have overstated its total vaccination numbers and fabricated patient information under its contract to provide Covid-19 vaccines.”

The group had a fourth contract with the Economic Development Department. Auditors did not find any problems with that contract.

The contractor denied all allegations of wrongdoing. Its lengthy and convoluted defense is included in the report.

However, the group promised to repay Austin Public Health $375,000 after the department’s internal audit found CTAHI had submitted “inaccurate and falsified payment requests” related to two contracts. According to the audit, the group has paid back about $12,500 but has failed to pay more than $68,000 in scheduled monthly payments as set forth in its payment plan. According to Brian Molloy, chief of investigations for the auditor’s office, the group claimed to have mailed a check to the city in February, but it has yet to arrive.

According to its website, CTAHI is a nonprofit college that seeks “to get underrepresented communities into careers in stable, fulfilling healthcare roles that they haven’t had access to before.”

In October 2021, Austin Public Health informed the auditor’s office that CTAHI may have provided falsified financial records to the city. Specifically, APH was concerned that the group had submitted altered or fabricated invoices, receipts and bank statements to support its claimed expenses, according to the audit report.

The audit report states that CTAHI submitted falsified records to support expenses for both of those reimbursement contracts – the workforce development contract and the Covid-19 vaccine contract.

“Notably, CTAHI falsified records for roughly $362,000 in medical-supply purchases from a Houston company that, according to its website, offered ‘PPE supplies to government, medical hospitals or professional first responders and nonprofit organizations.’”

Specifically, the audit states that CTAHI “created fake transactions in its bank statements and ledgers to match the invoice amounts. Of this $362,000, Austin Public Health reimbursed over $263,000 in falsified purchases from this company. While other CTAHI suppliers shared original records to compare against documents CTAHI produced, this (supplier) did not provide records of CTAHI’s purchases despite repeated requests from our office,” auditors wrote.

Auditors also allege that CTAHI greatly exaggerated the amount of supplies it purchased. For example, auditors said one invoice indicated that the nonprofit purchased 200,000 syringes when in fact the contract goal would likely have required only about 17,000 syringes. Also, CTAHI’s claimed vaccination performance would have likely required only about 3,500 syringes for administering Covid-19 vaccinations under its contract. Auditors provided pictures of falsified vaccine supply invoices along with their narrative.

Molloy told the Austin Monitor that “even though APH ended up paying out a significant amount of money, they eventually caught this on their own” through contract monitoring. Then, it referred the matter to the city auditor to further investigate.

Auditors said they found evidence that two of the group’s leaders, Todd Hamilton and Jereka Thomas-Hockaday, “produced or submitted falsified documents and directed CTAHI employees to falsify contract-related records. Both denied doing so,” the audit reports.

Responding to an allegation from Central Texas Allied Health of bias against a black-owned nonprofit, Molloy said, “We follow professional standards to help ensure we’re conducting complete and unbiased investigations. We think that our processes ensure that we don’t let any kind of agenda drive what we’re doing. Our goal is to learn exactly what happened and then let the evidence support whatever we’re writing about.”

Auditors said they had referred their findings to the Austin Police Department, “due to the potentially criminal nature of CTAHI’s actions.”

Mikal Williams, attorney for CTAHI, forwarded a statement to the Austin Monitor from Hamilton and Thomas-Hockaday, the principals in the organization:

CTAHI, President Todd Hamilton, and Dr. Jereka Thomas-Hockaday deny any intentional or unintentional fraudulent activity regarding community service grants received through APH or the City of Austin. CTAHI was approved for operations two weeks before the pandemic shutdown and had to retool to begin classes by August 2020. CTAHI received the APH grant for healthcare worker training September 2021. CTAHI complied with all standards provided to them from APH forms and all requests of information by APH grant managers. APH grant managers verified and approved all student training placements. APH informed CTAHI that APH had improperly approved several students already enrolled, graduated, and/or working in the required healthcare fields of the contract and asked to perform an audit of all the documentation of the grant.

When some questions were raised about some of the documents provided to APH a meeting was held and CTAHI agreed to reimburse any overpayments of the grant paid to CTAHI per the four corners of the contract, provided on the spot access to all documentation regarding the contract, and began an internal investigation. CTAHI discovered that a disgruntled employee in President Hamilton’s office did provide false or manipulated documentation to APH at first request and subsequently quit. The City Auditors report mischaracterizes several things and blatantly lies about others. CTAHI has other public and private grant funders that have disclosed to CTAHI that in spite of the denial, they were contacted by the City Auditors Office. CTAHI has operated under those public and private grants without incident. CTAHI recently underwent an audit of a similarly situated County grant it operates under which found no issues.

Thomas-Hockaday said in her statement, “There is a long-documented history of the City of Austin having difficulties working with small minority contractors and then blaming the failures in execution on the contractors themselves. This is why so many minority companies and nonprofits will not work with them. This is also why people of color do not trust our local government. I was told by numerous peers who had worked with the city before to not take this contract, but I naively thought I could make a difference because of the pandemic. I will never do business with the City of Austin ever again.”

In its response, Austin Public Health Director Adrienne Sturrup said she agreed with the findings of the audit and that she agrees with the auditors’ statement that the response from CTAHI “contains inaccuracies and misleading statements.” She noted that as part of the Covid-19 response, APH received more than “$109 million in general funds and grant dollars to administer with no additional staff capacity. This was almost triple the annual amount normally administered.”

Sturrup said her staff provided “extensive technical assistance to ensure that CTAHI was submitting appropriate documentation for performance reports and reimbursements since the organization had not previously received funding from the city of Austin.” She said her staff will continue to provide training and technical assistance to agencies that contract with the department.

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