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After Losing Millions to Nonprofits, Miss. Lawmakers to Unleash Nonprofits on Medicaid

A recent vote sends a bill to expand Medicaid to the Senate. Credit: Rep. Zakiya Summers

(This article has been updated with new information from the state auditor's office.)

State auditor Shad White and civil suit plaintiffs have long accused state politicians and administrators of using nonprofits and shadowy bookkeeping to siphon away millions of dollars that should have gone to impoverished Mississippi children and families. Now the legislature wants to give nonprofits access to Medicaid healthcare money.


After years of stalling, a bipartisan group of Democrats and Republicans unveiled House Bill 1725, which would expand Medicaid to more than 200,000 Mississippians falling through the state’s massive insurance hole. Since the passage of the Affordable Care Act more than 10 years ago, Mississippi leadership has ignored residents who make too much money to qualify for Medicaid while making too little to afford insurance. A family of four can generate no more than $600 a month (24% of the federal poverty level) to be eligible for Medicaid in Mississippi. Former state governor Phil Bryant refused to expand Medicaid during his term and the current governor, Tate Reeves, also opposes expansion. For years Reeves worked in tandem with former House speaker Phillip Gunn to kill Democrat bills attempting to expand the program. Hospitals shuttered departments and sometimes closed entirely while Bryant and Reeves dithered, undermined by expensive uninsured patients they are obligated to treat.


Speaker Gunn stepped down from his position this year and allowed the ascendancy of “expansionist” House Speaker Jason White (R-West), who is the prime author of HB 1725. That bill now heads to the Senate, where Lt. Gov. Delbert Hosemann has already signaled a willingness to expand coverage.


The bill increases Medicaid eligibility up to 138% of the federal poverty level (about $20,000 a year) for individuals. It also contains a controversial work requirement that has fared poorly in U.S. courts. A federal judge struck down a similar requirement in 2019, and the Supreme Court shot down a requirement in 2020, agreeing with a lower court that it did not meet the goals of Medicaid, which is to provide coverage to low-income Americans. In 2022, the Supreme Court again rejected an appeal to reconsider their decision.



More Nonprofits, More Secrets

However, Mississippi critics are most wary of language pulling nonprofits into the business of Medicaid disbursement. House Bill HB 1725 stipulates certain medically specialized managed care organizations conduct workforce placement, despite state colleges and other state agencies already managing workforce development and placement.


“ …MCOs [Managed care organizations], CCOs [coordinated care organizations], PSHPs [provider-sponsored health plans] and other such organizations (providing) services to the Medicaid population […] shall provide […] workforce training and skills-building to assist the individual with finding a job or advancing their career (and) […] financial literacy materials to promote wise financial decision-making […],” the bill states.

“That language there tells me they’ve already got somebody.”

Rep. Omeria Scott (D-Laurel) told BGX to expect politically connected companies and allies to begin cashing in on training contracts if the bill survives the legislature in its current form.


“That language there tells me they’ve already got somebody,” Scott told BGX. “The (managed care organization) will have to increase what they would normally bid for the project just to provide services, because now they’ll have to provide something in addition to medical services, and that’s less money for (medical) services.”



Former Jackson Representative and retired CPA and Financial Advisor Cecil Brown said he could not immediately name other states using medical organizations to provide job training. “There are other states that have workforce training requirements and that’s where legislators may have gotten that language,” Brown told BGX.


So far Georgia is the only state with an ongoing work requirement. It uses five Medicaid-funded Care Management Organizations to manage the program. Late last year, Care Management Group CareSource of Georgia announced it would be conducting training assistance with First Step Staffing Services for Medicaid beneficiaries.


But Mississippi has a glaring history of nefariously using nonprofits to drain public coffers and hiding the crime. Nancy New, founder of New Summit Charter School and darling of the conservative radio circuit, pleaded guilty in Hinds County Circuit Court to a list of charges including wire fraud, racketeering, money laundering, bribing a public official, and fraud against the government. New was close to Gov. Phil Bryant as well as a campaign donor to Gov. Tate Reeves. Her Jackson charter school even hosted Reeves in a campaign ad. Civil suits filed by the Mississippi Department of Human Services against News’ nonprofit, Mississippi Community Education Center uncovered court documents and text messages suggesting retired NFL millionaire Brett Favre and former Mississippi Gov. Phil Bryant conspired with New to spend TANF money on an $8 million volleyball stadium.


Former U.S. Attorney Brad Pigott, an investigator involved in the initial probe, says New had no reason to worry about curious public eyes thanks to Mississippi’s intrinsic lack of oversight and its nonexistent paper trails. Additionally, the state of Mississippi discourages Freedom of Information Act (FOIA) Requests with punitive charges, and it frequently delivers endless pages of blank space and one or two-paragraph non-answers.



“There was very little expectation of accountability and reporting on results,” Pigott told BGX. “It’s a problem when you defer so much to a private entity […] and you require that private entity to do so little to communicate reports and results back to the state agency. The state agency is subject to the Open Records Act, but the private entity is not. If the grantee is handing out all the money and has all the information about what’s happening with that money and is not subject to the sunshine effect of the Open Records Act because it’s a private entity, you have a profound problem. When the state agency doesn’t have the information about how the money is being used it doesn’t have an obligation to give out that information.”


Mississippi leaders gleefully run interference for their contractor friends, even in the face of auditors. The state contracted Pigott to oversee the Mississippi Department of Human Services’ civil suit against 38 individuals and companies caught up in the TANF scandal. Pigott was working to recover a $5 million payment to the University of Southern Mississippi Athletic Foundation for the illegal purchase and construction of Favre’s volleyball stadium, which New and her allies were allegedly trying to disguise as a lease. But the USM board contains friends of Gov. Reeves, as well as campaign donors, and Reeves’ staff pressed Pigott to remove the USM athletic foundation from the suit and later tossed Pigott from the case.

Bad Actors Still Work for the State

Two years ago, State Auditor Shad White served a $3.6 million civil demand on former Mississippi Department Human Services (DHS) Deputy Director Jacob Black for his role in helping nonprofits like Nancy New’s Mississippi Community Education Center circumvent federal TANF rules and finagle lucrative applications.


“Email communication […] indicates that Jacob Black directed (employees) to award the TANF grant to Autism Center with the knowledge that the scope of work did not align with a TANF purpose,” investigators wrote in a 2022 report to the Mississippi Department of Human Services Executive Director Robert. G. Anderson. His additional transgressions included “excessive travel costs” for “first-class flights” that accountants uncovered for Black and incriminated DHS Executive Director John Davis and other individuals. One first-class flight for Black in 2016 cost nearly $7,000. Accountants discovered TANF funds intended to feed children instead financing visa card purchases for flights.


When John Davis resigned amid allegations that he helped New and others steal TANF money, Black became acting director of the agency and allegedly set about firing an employee for being African American. Black fired Deputy Administrator Dana Kidd, an “excellent employee, [who] consistently performed at a high level, and had an unblemished record,” according to United States District Court for the Southern District of Mississippi.

Rather than try to prove Black fired her for non-racist reasons, the state chose to settle with Kidd for an undisclosed amount early last year. Our most recent account of Black’s work as DHS Deputy Administrator involves him recommending a $1.7 million contract with Gainwell Technologies LLC for a buggy Interoperability Platform (IOP) System that persistently fails to reimburse Medicaid providers. Last September, the Mississippi Division of Medicaid was working with Gainwell Technologies “to create a one-time job to identify all fee-for-service (FFS) claims” the system has erroneously denied since Oct. 1, 2022. As recently as January, the Mississippi Division of Medicaid was still working with Gainwell to tweak “a system update that will address denials impacting FQHCs (Federally Qualified Health Centers) and RHCs (Rural Health Clinics).”

Investigators say Jacob Black, “the son and product of a Baptist preacher,” helped corrupt nonprofits cook their applications and steal millions of TANF dollars, but he was not marched from state government offices. Neither was he removed for forcing taxpayers to settle with an ex-employee who accused him of racism. Instead, he remains employed at the Mississippi Division of Medicaid as a Manager III of Business Operations and Solutions, according to information requests from government watchdog (Please donate. These information requests don't come cheap!)

The state auditor's office reports that as of Fiscal Year 2023, Black has paid nothing of his $3.6 million fine.

Still employed, plus raises. Black has enjoyed a $25,000 pay increase since getting accused of helping wrongdoers finagle state contracts.

Mississippi Attorney General Lynn Fitch, who has been largely silent on the massive fraud, recently ordered auditor Shad White to cease his attempt to recoup millions in stolen TANF funds from Farve, arguing “the law gives prosecution and management of these cases solely to the Attorney General,” not the auditor. Fitch has announced no investigation updates or charges in the four years since the charges first made news, however. She claims her attorneys were “hamstrung from the beginning by a slow drip of information from the Auditor’s investigation,” and possibly by White’s claims of an upcoming book on the TANF scandal.


While their own AG settles down for another four-year nap, state leaders have no qualms about blatantly using TANF money to pay lawyers to recover TANF money that leaders themselves stole or misspent. New Orleans-based Jones Walker LLP (vendor No. 3100022674) is slated to earn more than $2.5 million from the state, primarily financed by needy families. Possibly weary of Mississippi's bad behavior, the Biden administration is now considering TANF rule changes that insist states spend more welfare money on family welfare, as opposed to college scholarships, child protective services investigations, foster care, horse ranches, pharmaceutical company investments, and volleyball stadiums.


But Black remains a state employee, and legislators have made no significant changes to address the biggest welfare fraud scandal in the state’s history. Lawmakers have submitted bills requesting additional oversight of TANF-related contracts (along with bills imposing new restrictions on TANF beneficiaries, of course), but they leave the brunt of work discouraging the next Nancy New to the same government that still employs Black. And because of the informational brick wall department leaders have erected between themselves and reporters, there is little assurance TANF money will remain anything but a slush fund for anti-abortion centers, two-parent marriage campaigns, and politically-connected scammers.


With no conviction or investigation of its biggest suspects and no meaningful evidence of an improved, more responsible system for monitoring nonprofits, Mississippi lawmakers now want to invite more nonprofit malfeasance into even more federal money.


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