Cause Of Death: Misprocessing of Medicaid Benefits

Nine year Zumante Lucero, pictured above, had asthma that he could treat with a drug called Advair that he has a prescription for and was entitled to as part of the Medicaid benefits for which he was eligible.

The Denver County Department of Human Services was in charge of handling his application and despite strenuous efforts by his mother to get the county to tell Walgreens that he was eligible to have the medicine, they instead incorrectly told Walgreens that he wasn't even though they had told Zumate's mother (correctly) that Zumante was eligible to have Medicaid pay for his medicines. Zumante couldn't afford the drugs over the several months that Denver's computer system told Walgreens that Zumante didn't have coverage when he actually did, despite Zumante's mother's efforts, and as a result, Zumante's asthma killed him in July of 2009.

"The city fixed Zumante's eligibility status to pay for his funeral." Swell job guys.

The State of Colorado has faced litigation for years over this computer system which it requires counties to use (if I recall correctly, this problem dates back to Governor Owens and neither Governor Ritter nor Governor Hickenlooper have yet been able to solve it), but the Medicaid benefits processing system that was purchased for millions of dollars by the State from a big name private contractor didn't work and never has worked. Judges have ordered the State to take action, but it didn't fix the problem, either by fixing the computer or by finding a work around that worked. This was something that was entirely foreseeable and had been predicted for years before it happened.

Zumante died as much because certain named bureaucrats (and no doubt other unnamed bureaucrats and government computer contractors) screwed up and denied him a few hundred bucks worth of medicine that the law said he was entitled to have and that the Denver County Department of Human Services knew he was entitled to have but didn't extent themselves to clear up despite the life threatening nature of this boy's conditions in the absence of his medicine.

I'm not even going to begin to think about the legal issues involved. Suffice it to say that the when some judge writes an opinion resolving this case a long time from now, if the case is not settled, that the statement of facts will less than a page long and the analysis of the procedural history and the law will be lengthy. Governmental liability in tort is an arcane subject at the best of times in the simplest of cases.

But there is no good reason that kids should be dying in Denver, Colorado when we have the drugs to treat it, the means to pay for the treatment, the legislative will to provide coverage, and an involved parent trying to obtain care by contacting the government officials and pharmacists in charge of making it happen. Moreover, any department whose bureaucratic screw ups can be a matter of life and death that serves people who are, by definition, poor and in practice, almost always not the most sophisticated in cutting through red tape, rarely politically connected and rarely able to afford lawyers, needs to have someone out there with the power and ability to fix problems promptly who is looking out for the program's beneficiaries.

This is not a program where it is reasonable to assume that the beneficiaries or those acting on their behalf will be able to navigate the system and correct governmental screw ups on their own.

Accounting For The Dark Knight

I pause a moment to note that the latest Batman movie, The Dark Knight, features not one, but two accountants in important supporting roles. One is the mob's shared CFO, the other has a consultancy that serves Bruce Wayne. Both ultimately fit the bill of bad accountants (in the evil sense, not the unqualified sense).

Bad Accountants

Daniel and Kathleen Warren, both CPAs, tried and failed to defraud the bankruptcy court, a filing made to get out of a civil suit alleging that they have embezzeled $1.3 million from a business they represented. The 10th Circuit Court of Appeals affirmed a ruling denying their discharge of indebtedness.

Their efforts to claim exemptions under the bankruptcy code were particularly aggravated by the fact that they claimed stupidity (on issues like the definition of asset) that was implausible given their education. "Mr. and Mrs. Warren are both certified public accountants. He was licenced in 1985 and has 11 years’ experience with Big Five accounting firms. She was licensed in 1989." As the trial court explained:

The Debtors testified that Mr. Warren met numerous times with their attorney and that Mrs. Warren made multiple calls to discuss the Schedules with their attorney, so they cannot argue they did not understand what information to include in the [Schedule of Assets] and the Schedules. The Warrens have technical training as accountants and as such, admit that they understand that prepaid insurance is an asset. . . . Unlike a debtor who is inexperienced with financial affairs or one who relies on incorrect advice or information in preparing his statements and schedules, the Warrens are sophisticated debtors—each with degrees in accounting and significant finance experience.

The Warrens keep meticulous records including detailed paper and computer records of their financial affairs that should have provided the answers necessary to accurately complete their bankruptcy documents. . . . The evidence indicates the information was available to assist the Warrens in compiling their papers. They prepared a list of creditors which amounts to four and a quarter inches thick stack of paper so that all possible contingent debt would be included in their discharge. The Debtors knew how to be inclusive and were quite accurate when it suited them.

The Court also noted some outrageous valuations of personal property. Among them:

Warrens claimed as exempt 14 computers, which they valued at $200 in total despite having paid $31,000 for the used computers seven months earlier. Section 78-23-8(1)(d) provides a $500 exemption for “heirlooms or other items of particular sentimental value.” Under this exemption they claimed “wedding rings” valued at $10, a pearl necklace valued at $2.00, a gold ring valued at $3.00, a chair from Spain valued at $0.00, and five paintings valued at a total of $10.00. Section 78-23-8(1)(a) provides a $500 exemption for “sofas, chairs, and related furnishings reasonably necessary for one household.” Under this exemption the Warrens claimed over 30 items, including 6 TVs valued at $50 total, china valued at $1.00, crystal valued at $1.00, a stereo valued at $5.00, and a treadmill and stairmaster valued at $20.00 total.

Shady transactions selling a coin collection at a massive loss to an undisclosed buyer sealed the deal.

The opinion was gentle towards bankruptcy counsel, who fortunately were involved prior to 2005 bankrutcy code reforms that give counsel greater responsibility to determine the accuracy of client filings, but accepting the client valuations in this case on forms they no doubt prepared was, at least, aggressive advice that didn't pay off in the end.