The District failed to pay health and life insurance premiums for most city employees injured or killed on the job for nearly a decade and only recently forked over the $5.7 million it owed, officials said. It’s up to the Office of Risk Management to ensure the city pays the premiums, but according to a report by D.C. Auditor Deborah Nichols the agency stopped making most of the payments in 2001. When the error was discovered last spring, then-Mayor Adrian Fenty fired the agency’s director, who had been made aware of the problem six years earlier, according to the audit.
| Paying the price |
| Programs that took hit to fill an $8.7 million hole: |
| Special education: $3 million |
| Mayor’s office: $600,0000 |
| Unemployment compensation fund: $583,000 |
| D.C. Office of Aging: $583,000 |
| The D.C. Public Library: $350,000 |
| City Administrator’s office: $300,000 |
| Source: Office of D.C. Auditor |
“In [fiscal year] 2004 ORM’s former director was made aware of ORM’s … failure to record and remit deducted insurance premiums but made no effort to correct the problem,” Nichols’ report said. “The long term failure to correct this significant deficiency has resulted in inaccurate, false, or misleading financial information and the exposure of the District to significant unrecognized financial liability.”
Nichols’ report estimated that $8.7 million had gone unpaid, based on a review in September. Since then, however, city officials determined $5.7 million had gone unpaid, according to an ORM source who spoke to The Washington Examiner but was not cleared to publicly discuss the issue. The District has since paid the bill. The remaining $3 million is still on the city books, the source said, “a win for the city.”
Before the District knew it owed $5.7 million, the Fenty administration pulled $8.7 million from other programs to cover the expected cost of paying the premiums. About $3 million was taken from a program that sends special education students to private schools, among others.
In its response to the report, ORM said the oversight issues that allowed the non-payment to happen have been fixed.
In June, The Washington Examiner reported that whistleblowers had told the FBI that then-ORM Director Kelly Valentine gave lucrative contracts to her friends.
Nichols’ report found that Valentine paid five companies a total of $1.5 million without first executing a contract. The auditor reviewed invoices from Sept. 30, 2009, though June 24, 2010, when Valentine was put on administrative leave before being fired by Fenty. District law requires the contracts be executed before payments are made.
“The auditor found that ORM lacked any written documentation supporting the selection of these 5 vendors,” Nichols wrote. “The lack of documentation supporting the selection of these vendors gives the appearance of preferential treatment in the selection process.”
