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Tom Watkins to resign as CEO of Detroit Wayne Mental Health Authority

Apr 15, 2017 by

By Jay Greene –

Detroit Wayne Mental Health Authority CEO Tom Watkins has resigned from his job, effective Aug. 31, after a tenure marked by the transformation of the agency and a series of disputes with the organization’s board of directors.

Most recently, the board went against recommendations from Watkins and his staff that the authority attempt to claw back add-on fees that had been collected by Integrated Care Alliance, according to three sources close to the matter who requested anonymity.

Watkins told Crain’s he didn’t want to discuss the March 15 board meeting, where his administrative staff presented a report and recommendations to the board that the authority attempt to collect from ICA about $1.4 million in unauthorized payments over the past two years, according to DWMHA documents.

The DWMHA board instead voted 6-5 to forgive ICA and not request repayment, the sources said.

Authority staff found out that ICA had tacked on a 1 percent to 2 percent additional administrative fee over the last decade for quality assurance and utilization management activities, according to an authority report. Moreover, the authority had not approved the add-on payments, which amounted to 35 percent over the contracted fees, and it was disguised as medical costs, the report said.

Watkins has often butted heads with the authority’s board on provider contract issues, primarily Watkins’ decision in December 2015 to terminate a contract with Integrated Care Alliance, a provider agency in Detroit that shortly before had been acquired by Long Beach, Calif.-based Molina Healthcare Inc.

In early 2016, the DWMHA board, in a 7-2 vote, reversed Watkin’s ICA decision and then changed the authority’s bylaws to strip Watkins from termination decisions and instituted a new policy to require board approval for contract changes.

On Thursday, Watkins, a former state school superintendent 2001-05, submitted his resignation when his current three-year contract expires. In his resignation letter to DWMHA Chairman Herbert Smitherman Jr., M.D., board members and employees, Watkins didn’t specify a reason he turned down a new contract from the authority.

“While I originally accepted a three-year contract that was extended an additional year and I appreciate the board’s confidence expressed in offering me yet another contract extension while we explore a new contract, I have decided to resign when my present contract expires August 31,” Watkins wrote. “Be assured, I will work with the board and our great staff to facilitate a smooth transition.”

Contacted by Crain’s on Friday morning, Smitherman said he was in meetings and would comment later in the afternoon on the circumstances surrounding Watkins’ resignation and the future of DWMHA.

In a statement to the public later Friday, Smitherman and the DWMHA board accepted Watkins’ resignation, noted it will begin a search for a new CEO and said the following:

“Mr. Watkins has agreed to work with the board and staff and has committed to be an advocate for the people we have a commitment to serve through the end of his contract. The board of directors wishes to thank Mr. Watkins for his service and wishes him well on his future endeavors.”

Watkins, in a short interview Friday, declined to elaborate on his reasons to leave the authority. He said he plans to work through Aug. 31 and then will assess his future plans.

Molina has offered to cover the $1.4 million payments in question, two sources told Crain’s. But Molina officials said later Friday that ICA disputed the repayment request by DWMHA management. Molina, however, did not address its offer to repay, which sources said was contained in a letter to DWMHA.

When the two other MCPNs under contract with the authority — Consumer Link Network and Community Living Services — learned about the 1 percent to 2 percent add-on reimbursements, they also requested the payments, the sources said.

But the DWMHA board said it could not act on the request immediately because Watkins and staff had not requested the add-on payments for them, sources said. If approved, the authority report said, it would cost DWMHA $9.5 million.

Detroit Wayne growth under Watkins

In 2013, Watkins oversaw the transition of the Wayne County Mental Health Authority from a county agency to an independent authority.

As one of the nation’s largest county mental health organizations, with more than 100 employees and a budget of $730 million, the Detroit Wayne County Mental Health Authority funds five managed care provider networks that serve more than 80,000 people with mental health and other developmental disabilities.

Before taking his current job, Watkins was founding CEO of TDW and Associates, a Detroit-based global consulting and education business. He has since closed the company.

In his resignation letter, Watkins cited many accomplishments during his four years with the authority. They include retiring $30 million in legacy debt, generating more than $30 million in new revenue, increasing direct care staff wages by more than $2 per hour, reducing administrative costs and standardizing provider rates, according to the authority’s 2016 annual report.

On the clinical side, Watkins said DWMHA helped to establish 23 crisis mobilization teams, trained thousands of first responders and others in mental health first aid training, which saved more than 30 lives with Naloxone First Responder training.

Dispute with ICA, DWMNA board

In December 2015, Watkins moved to terminate a contract with Integrated Care Alliance, which provides developmental disability services, over breach of contract issues.

In terminating the $48 million contract, Watkins had contended ICA was in violation of four contractual terms, including failing to notify the authority of an ownership change to Molina.

Watkins cited terms of his employment contract as CEO as the basis to sever the ICA pact, according to documents obtained by Crain’s. But the board disagreed.

A 2016 report by Allen Brothers PLLC, which the board had hired to render a legal opinion on Watkins’s right to terminate ICA, concluded that ICA did not breach its contract. The board also voted that all future proposed contract terminations must be presented to the board for approval.

In investigating ICA, Watkins cited a report that found that Detroit Wayne board had authorized $17.5 million in additional funds to ICA in addition to contracted payments from 2010 to 2015, according to documents on the authority’s website.

ICA was the lowest-ranked of the three developmental disability service providers under contract with the authority. The other two contracted providers are Consumer Link Network and Community Living Services.

Because of ICA budget issues and low ranking, Watkins and management did not want to offer a contract with ICA for 2015. However, the authority board voted last year to offer ICA another contract.

Despite the board’s legal opinion, it is unclear why it took action on Watkins’ ICA decision. Watkins previously had terminated several contracts, including ones with Wayne State University, Western Michigan University and Wayne County Retirement System, without board objections, according to authority records.

Source: Tom Watkins to resign as CEO of Detroit Wayne Mental Health Authority – Crain’s Detroit Business

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