State senators demand answers after weeks of problems at Department of Human Services

Minnesota state senators leveled a blistering critique of the state Department of Human Services during a wide-ranging hearing Tuesday.

The sprawling $17.5 billion social service agency has been beset in recent months with a leadership shuffle, a whistleblower action over contract compliance and an acknowledgment that the agency overpaid two Indian bands approximately $25 million for substance-abuse treatment in recent years.

"Somehow the Legislature never gets direct answers," said state Sen. Michelle Benson, R-Ham Lake, who chairs one of the two committees that met jointly Tuesday. "It's our expectation that given a new governor and new commissioner, there will be direct answers to questions we pose."

Republican senators, who hold a narrow 35-32 majority heading into a challenging election year, were especially pointed in their remarks and questioning as they sought to expose what they see as mismanagement in the massive agency, which serves more than 1 million Minnesotans with the help of roughly 7,300 workers.

The nearly four-hour meeting often illustrated the Legislature's challenge conducting meaningful oversight when lawmakers are not in session and lack the ability to write laws.

Still, Benson said it was an important exercise: "We're not going to stop asking these questions. There will be more hearings. There will be more [public information] requests," she said. Benson said she is not ruling out using subpoena power to compel testimony, especially after a number of top Department of Human Services (DHS) managers did not appear at Tuesday's hearing.

Legislative Auditor Jim Nobles, who was asked by the administration of DFL Gov. Tim Walz to look into the Medical Assistance overbilling, said that his office has a significant team of investigators parked at DHS. "Because of its size, complexity and importance, DHS consumes more of our resources than any other agency," he said.

More change is already coming to DHS. Walz, a first-term governor who took office in January, appointed Lutheran Social Service CEO Jodi Harpstead as the new commissioner on Monday. She starts Sept. 3 and did not appear at the Senate committee hearing. DHS was represented by interim Commissioner Pam Wheelock, a veteran public administrator who was brought in after the July resignation of Tony Lourey. The former DFL state legislator left only six months after his appointment by Walz.

The Senate hearing included concerns raised by former DHS medical director Dr. Jeffrey Schiff, who was fired in June. Too many decisions were being made at DHS by "a small faction that has an inordinate amount of control," he said. Schiff said that the agency is making health policy decisions without the proper input of medical professionals.

Responding to Schiff, Sen. Chris Eaton, DFL-Brooklyn Center, said she found it "difficult to understand why a medical professional is not making medical decisions in a department that is focused on health."

Faye K. Bernstein, a lead contract specialist at the DHS, told the committee she was verbally reprimanded and sidelined from her duties after she pointed out "serious noncompliance issues" with a group of contracts approved by leaders in the agency's behavioral health division, which awards millions of dollars each year in contracts for mental health and substance-use treatment and services.

Bernstein said she was also warned against testifying before the committee.

In her testimony, Wheelock said she directed someone to talk with Bernstein ahead of the hearing, making sure she understood her rights and interests before testifying. The commissioner specifically used the example of an employee who may choose to testify and then accidentally share private information. That employee, the commissioner said, could be fired for sharing the information.

Bernstein said she took the guidance as advice rather than a threat, but lawmakers still expressed dismay.

"That really bothers me," said Sen. Jim Abeler, R-Anoka, who chairs a key human services committee.

Republican legislators wanted more information about the investigation of Carolyn Ham, the DHS inspector general in charge of investigating fraud in the state's health and welfare programs. She was placed on leave and then reassigned pending an investigation after a legislative audit found significant fraud in the state's child-care assistance program and found a rift between Ham and her own investigators. Republican legislators have accused the administration of stalling the Ham investigation.

Wheelock's testimony will likely give fuel to advocates in both parties for breaking up the agency. She encouraged lawmakers to take a hard look at creating a separate agency for the direct care and treatment of mental illnesses, developmental disabilities and substance-use problems.

J. Patrick Coolican • 651-925-5042