Aide charged, more promised in Felix probe
By Jennifer Hiller
Advertiser Education Writer
A grand jury yesterday issued a 10-count indictment against a therapeutic aide for medical assistance fraud the first criminal charge brought against anyone involved in the implementation of a federal court order to improve services to Hawai'i's special-needs students.
Susan Puapuaga, formerly with Alaka'i Na Keiki, is accused of billing the state for $1,800 in services that were not provided, Attorney General Earl Anzai said.
Officials said yesterday's charges represent the "tip of the iceberg," with at least six other individuals under investigation, further indictments expected and more cases in the pipeline.
They said the probe targets such areas as falsification of records and providers not qualified to work with special-needs children.
"Our concern is not only with this case, but in the system that was in place," Anzai said.
The indictment caps months of concern among legislators about spiraling Felix costs and the potential for waste or fraud. It is another black mark in what has been a long and difficult challenge for the state to comply with the federal court order.
Officials said the indictment is not expected to affect the state's efforts to comply with the Felix consent decree.
The charges against Puapuaga, constituting a Class C felony, could result in a maximum of 50 years in prison.
Alaka'i Na Keiki has worked with the Department of Education and Department of Health to provide services, including therapeutic aides, for special-needs children. Its executive director, Linda Hufano, had not seen the indictment and said it would be inappropriate to comment. But she said Puapuaga no longer worked at the agency, which is in discussions with the Department of Health.
"We feel basically that our people are generally very honest and very trustworthy," Hufano said.
"There are a lot of mechanisms in place to make sure that services are documented. I think everyone is concerned that there is no fraud, and that's appropriate."
Puapuaga could not be reached for comment.
Hawai'i's school system has been under the federal court's oversight since the state signed the Felix consent decree in 1994, agreeing to improve special-education services, as required by law.
The state has spent more than $1 billion on Felix efforts and has not yet reached compliance, although federal court officials have indicated for months that the state is likely to be found substantially in compliance at a June 10 hearing before U.S. District Judge David Ezra.
The indictment yesterday was seen by members of the special Senate-House investigative committee as a vindication of their efforts. The joint committee was organized last spring in the wake of growing concerns about the amount of money being funneled into special education and whether it was reaching the children for whom it was intended.
"It validates the work of this committee and, as you know, this committee has taken many hits from the federal court, the court master and the plaintiff's attorneys," said Sen. Colleen Hanabusa, the panel's co-chairwoman.
"This committee and the Legislature were on the right track."
The committee issued a report in December saying the state special-education program was burdened with a host of bureaucratic and financial problems, some of which could merit criminal charges. Among the concerns were that private providers had overcharged the state for services, including one therapist who charged for 127 hours of work in one day.
The report also said providers were profiting excessively by marking up the cost of therapeutic aide services.
Ezra has denounced the committee and, at one point, said its investigation bordered on McCarthyism and approached obstruction of justice.
Anzai hinted that in Puapuaga's case, a child's parents complained about not receiving services that were billed, but he credited the legislative committee for bringing to light the concerns about financial accountability in the system. "We didn't realize the extent of this problem," Anzai said.
The governor has since approved two additional special investigators for Anzai's office to focus on fraud and administrative irregularities associated with the Felix case.
In response to the indictments, Department of Health Director Bruce Anderson said last night that it should be stressed that the vast majority of service providers are not abusing the system.
Anderson said the DOH is conducting its own audits of service providers and pledged to continue to support all audits and investigations.
Jeff Portnoy, the lawyer serving as special court master in the Felix case, said the indictment is not likely to affect the state's compliance, but he questioned the amount of time the state has spent pursuing fraud allegations.
"It has nothing to do with Felix or Felix oversight or Felix implementation," Portnoy said. "You're talking about hundreds of millions of dollars that have been spent, and they've come up with $1,800."
The indictment did come as a surprise to the court, though, Portnoy said.
"For eight years the AG's office has been asked to bring to our attention any evidence they have or concerns they have about anyone working on the Felix case," he said. "As of this afternoon, they have yet to do that."
Eric Seitz, one of the plaintiff's attorneys representing thousands of special-needs students, said he did not excuse the alleged wrongdoing but did not think the indictment indicated widespread fraud.
Seitz and other attorneys in 1993 filed a class-action lawsuit in the name of Maui student Jennifer Felix on behalf of children with mental disabilities, accusing the state of not providing adequate services.
Anyone with information about false claims or irregular billing is asked to call the Attorney General's Medicaid Investigations Division at 586-1058.