D.C. Lobbyist Milks Medicaid

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The Washington Post reports on the curious case of David W. Wilmot, a D.C. lobbyist who also earns $300,000 a year as the head of a troubled nonprofit group that’s funded by Medicaid. D.C. officials have asked a judge to put two of the nonprofit’s group homes in receivership and halt all referrals to its eleven facilities because of “systemic” problems.

According the Post

The nonprofit group is a $12 million-a-year operation, funded solely through Medicaid, that serves about 75 adult residents. Wilmot has been paid as much as $300,000 in a year by the nonprofit group, according to IRS records, and D.C. records show he was receiving six figures lobbying for Anheuser-Busch, Wal-Mart and others. His daughter is on the IDI payroll. He has borrowed $300,000 from the nonprofit group, and board member A. Scott Bolden, another well-connected lawyer who sits on IDI’s board of directors, took a $55,000 loan, according to IRS records. 
It seems that nonprofit groups can actually be very profitable to the less scrupulous, particularly when federal subsidies are involved. A Cato essay on HUD community development programs provides examples of grantees misusing federal dollars, including a D.C. nonprofit that spent money on cigarettes, movie tickets, and bingo games.
 
Unfortunately, these abuses are not uncommon. That is because it is virtually impossible for the federal government to provide sufficient oversight of the hundreds of billions of dollars it doles out to state and local governments. There governments take the federal money and dole it out to thousands of for-profit and nonprofit businesses, and then it often seems to disappear down a black hole.
 
Medicaid, the program being abused in this story, is a prime example. The Government Accountability Office puts the cost of improper Medicaid payments at $33 billion, or about 10.5 percent of the program’s total spending. Malcolm Sparrow of Harvard University, a top specialist in health care fraud, believes that as much as 20 percent of federal health program budgets are consumed by fraud and abuse, which would be about $63 billion a year for Medicare.
 
For more on fraud and abuse in federal programs, see this Cato essay.