Ex-official, nonprofit linked

Report cites possible conflict over Medicaid claims

A former employee of the Southeast Arkansas Education Service Cooperative in Monticello was president of a nonprofit that has received about $200,000 a year for helping the cooperative process school districts' claims for Medicaid reimbursement, records show.

Tony Boaz, who was director of the education cooperative's Medicaid in the Schools program until he resigned in December 2012, said in an email Thursday that he was never employed by the nonprofit, Innovative Solutions for Educational Partnerships.

He said he did receive compensation from the nonprofit through Little Rock-based Ntegral Applications, a software development and consulting firm that he started, but not until after he resigned from the education cooperative.

Records show Boaz filed the incorporation papers for Ntegral Applications with the Arkansas secretary of state in December 2011.

A report by the Division of Legislative Audit released Tuesday noted Boaz's association with the nonprofit but gave few details about his role with it.

The special audit report said Boaz's relationship with the nonprofit "may conflict with ethical guidelines found in" Arkansas Code 6-24-107.

The state law prohibits public educational institutions from entering into contracts with their employees except under "unusual and limited circumstances."

In those cases, the educational institution must explain the circumstances in a resolution. If the transactions with the employee total $5,000 or more, the resolution must be approved by the commissioner of education.

The Department of Education has not received such a request in connection with the agreement between the education cooperative and the nonprofit organization, spokesman Kimberly Friedman said.

According to the Legislative Audit report, Innovative Solutions collected $391,392 in fees from school districts in the fiscal year that ended June 30, 2012, and $381,061 in fiscal 2013, returning half of the fees to the education cooperative.

Rep. Kim Hammer, R-Benton and a chairman of the Legislative Joint Auditing Committee, said he plans to ask representatives of the Southeast Arkansas Education Cooperative about the issue at a hearing today.

"My concern would be that, according to legislative auditors, there may be some conflict of interest," Hammer said.

Created by the state Department of Education in 2006, the Medicaid in the Schools Program helps school districts bill the Medicaid program for services such as speech, language and occupational therapy, as well as mental-health services, health screenings and case management.

Boaz, director of the program since 2006, was listed as an incorporator and registered agent for the nonprofit, Innovative Solutions for Educational Partnerships, when the organization's incorporation papers were filed with the Arkansas secretary of state in 2008.

Records from the secretary of state's office list Boaz as the organization's president in 2009 and 2010.

In 2011, the nonprofit entered an agreement with the cooperative to handle electronic Medicaid billing for schools.

Under the agreement, the cooperative would handle claims submitted on paper, and the nonprofit would handle electronic claims.

The agreement called for the nonprofit to collect a fee equal to 8 percent of the Medicaid reimbursement received by the schools.

Half of the reimbursement would go to the cooperative, and the other half would go to the nonprofit.

In October, the administrative fee was reduced to 4 percent, with the nonprofit keeping the entire amount, according to the Legislative Audit report.

Cooperative Director Karen Eoff said Thursday that the cooperative, a public agency, had previously had an agreement with Mountain Home-based Computer Automation Systems Inc., which collected a 10 percent fee and gave half to the cooperative.

"It's all based on who's willing to process at the lowest cost," Eoff said.

She said she didn't contact any other companies at the time because she didn't know of any others that could provide the service.

The cooperative's board voted on April 13, 2011, the same day the agreement with the nonprofit was signed, to terminate its contract with Computer Automation Systems, effective June 13, 2011, and enter an agreement with Innovative Solutions for Educational Partnerships.

The board minutes do not mention Boaz's role with the nonprofit.

Eoff said she didn't know whether Boaz ever received compensation from the nonprofit. She said she was aware "that in the early days he was probably a board member, as most all of us have been on nonprofit boards."

The agreement was signed on behalf of the nonprofit by Deb Swink, who was listed as president.

Nine days later, on April 22, 2011, the nonprofit filed a form replacing Boaz as its registered agent.

Subsequent filings don't list Boaz as an agent or officer for the organization.

Contacted by phone Thursday, the Innovative Solutions' current director and president, Laura McDowell, asked a reporter to email her questions. She had not responded by Thursday evening.

The Legislative Audit report noted that Boaz was listed as a contact for Innovative Solutions for Educational Partnerships on "a nonprofit organization website" and as an administrative and technical contact for the organization's Internet Protocol address.

According to the Legislative Audit report, nonprofit and education cooperative employees told auditors that Boaz "was associated with ISEP since its inception in 2008 until he resigned from employment with SEARK in January 2013."

Asked in an email whether the education cooperative was aware of his role with the nonprofit at the time of the agreement, Boaz said, "Not that I was aware of."

"With me not on the board making decisions, I did not see it as a conflict," he said.

A Section on 06/06/2014

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