State lawmakers said they want to know what changes could be made to prevent fraud in the state's foster care program following alleged fraud by Middleton's Community Care Resources Inc.
The Senate Committee on Health and Human Services called Wisconsin Department of Children and Families officials to testify at a hearing Thursday to ask how luxury cars, boats and pricey travel were allegedly charged to accounts by CCR using taxpayer money.
Lawmakers are anxious to get to the bottom of the alleged fraud, but based on testimony from DCF, they may not have an immediate solution to prevent it from happening again.
State DCF officials said CCR's alleged fraud was caused by a lack of financial oversight. DCF officials told the Senate health committee that CCR's unusual expenses reports caught their attention in November 2011, when several counties reported missing the company's expenses reports.
The state said foster care companies used to set their own service rates and submit expenses to counties, but now the department can determine their rates and audit their expenses after legislators passed regulations in 2010.
DCF Secretary Eloise Anderson said that counties that worked with CCR detected problems with the company back to 2009.
"Our own Bureau of Milwaukee Child Welfare was concerned about not being able to get info from CCR," Anderson said. "We basically stopped doing business with them because of the inability to get information from them. So that happened before we had all this ability we have now."
Anderson said budget items passed in 2009 and 2011 allowed the state to review rates and audit companies like CCR, and after a nearly 12-month audit last year they discovered an alleged $6 million in fraudulent expenses.
"Walk me through how it was that these things could not be seen unless they were put in aggregate," asked Sen. Leah Vukmir, R-Wauwatosa, at the hearing.
"The individual tickets or receipts you're talking about, those are things that nobody would actually see in any situation," said Ron Hunt, a DCF administrator in the Division of Management Services. "Unless folks came on board in-depth and in-house, and that's what happened in this last audit. Our staff said, 'Give us your financial information so we can look at what's behind all your expenses,' and that's when these things were uncovered."
Committee members wanted to know what could be done to prevent future problems.
"Whenever this particular issue is complete, we'd like to then provide you with what we think we need," Anderson said. "Right now, we have some thoughts but that might not be true as we move further down the line."
The state said Community Care Resources has to pay back more than $6 million it allegedly overcharged by next Friday. The DCF has already revoked the company's license.
CCR's attorneys advised them not to attend the hearing Thursday, but they submitted written testimony to the committee to say that they strongly dispute the allegations and believe there should be a full review and analysis of DCF's charges.
Anderson was also asked by senators whether there is a criminal investigation under way by the attorney general. She would only say that DCF officials have been in contact and cooperating with the attorney general's office in recent days.