Time Runs Out for Mental Health Clinic in Englewood

By: By Mick Dumke and Tracy Van SlykeMental health providers are scrambling to serve low-income patients following the state’s decision to withdraw a critical grant from the beleaguered Englewood Community Health Organization.

The decision leaves the 22-year-old nonprofit agency with little, if any, means to continue serving an estimated 1,500 patients in a South Side neighborhood already bereft of mental health services.

On Feb. 1, the Illinois Department of Human Services cancelled the remainder of ECHO’s $3.9 million grant for fiscal year 2000. In 1998, those grants provided nearly 90 percent of ECHO’s budget, said Ugo Formigoni, network manager of the Metro-West division of the department’s Office of Mental Health.

ECHO, at 845 W. 69th St., has received state funding since 1979, department officials said. The grants cover the cost of counseling, crisis intervention and other services to neighborhood residents.

Those services are already in short supply in Englewood, where adults and children live daily with violence and poverty, The Chicago Reporter found in its December 1999 article, "A Community’s Trauma." The state’s decision leaves the Englewood Mental Health Center, a Chicago Department of Public Health clinic at 641 W. 63rd St., as the only provider of state-funded mental health services based in the neighborhood.

State officials said ECHO left them no choice. In a Dec. 16 letter to the organization, then-Human Services Secretary Howard Peters III wrote that the state "no longer has confidence that ECHO can remain a reliable partner in the delivery of community services."

But mental health services may improve in the long run, state officials said. The department transferred the remaining grant funds—$1.26 million—to the Community Mental Health Council, at 8704 S. Constance Ave. in Calumet Heights. In addition, the state transferred about $400,000 for alcoholism and substance abuse treatment to Habilitative Systems Inc., a social service agency at 415 S. Kilpatrick Ave. in Austin.

Dr. Carl C. Bell, president and chief executive officer of the 25-year-old Mental Health Council, said he plans to increase the number and quality of services provided to Englewood residents. The council opened a new office, at 7133 S. Western Ave. in Chicago Lawn, more than two miles from ECHO’s main facility. And Bell said he plans to find another site closer to "the heart" of the neighborhood.


Dr. Carl C. Bell, executive director of the Community Mental Health Council, will provide mental health services from his new facility at 7133 S. Western Ave. (Photo by Richard Stromberg)


Bell said he has dispatched vans "all through the streets" to ease transportation problems for residents who can’t get to his new clinic.

Robin E. Henry, ECHO’s executive director, accused the state of leaving her patients and 91 full-time staff members "wondering what was going to happen." In October, ECHO filed for protection from its creditors in U.S. Bankruptcy Court, and in mid- January, Henry vowed her agency would not be bullied into transferring patients and records to Bell’s group.

On Feb. 2, however, ECHO agreed to provide copies of its patient records to the John J. Madden Mental Health Center, a state facility in southwest suburban Hines, according to bankruptcy court records. As ECHO patients make appointments at Bell’s clinic, Madden officials will send over the necessary records, according to the agreement.

Henry said she still hopes the state will reinstate ECHO’s funding. "The Department of Human Services will not let people go aimlessly unprotected," Henry said. "They will not shirk their responsibilities … especially to the vulnerable population."

The decision is final, Formigoni said. The department gave ECHO many chances over the past few years and must now hand the money and responsibility to another organization, he said.

State officials long have been aware of ECHO’s problems, the Reporter found. Court documents and state records show the human services department continued to fund the organization through three years of poor performance, financial mismanagement and administrative turmoil.

ECHO consistently fell short of meeting the terms of its state contract, records show. Department officials said the organization owes the state $279,426 for underperformance over the past four years, and court records show ECHO accumulated $566,475 in unpaid payroll taxes.

Still, the timing of the state’s decision to pull ECHO’s grant—six months after awarding the agency a new contract—is unusual. Since 1994, the human services department has cancelled only two other contracts at mid-year, and neither involved the Office of Mental Health, state officials said.

Watch List
ECHO’s troubles began in 1996, when its board of directors obtained about $4.5 million in state financing to build its modern three-story facility.

The organization’s board members miscalculated, believing they could cover the mortgage with money saved from consolidating services and administration, said the Rev. Felix Burrows, who served on the board in 1998 and 1999.

"Clearly, whoever put the numbers together missed the mark—they missed the side of the barn," Burrows said. "That one financial mistake opened up the floodgates."

Board members were well-intentioned but naïve, according to Burrows and other former members. He said many were asked to join the board simply because they were leaders of the Third Baptist Church, 1551 W. 95th St. The church’s former pastor, the Rev. Elmer L. Fowler, founded ECHO in 1978 when the church was in Englewood. Fowler is now retired.

In late 1996, state officials began receiving anonymous letters alleging ECHO’s misuse of its grant, state records show. A state audit in January 1997 revealed ECHO had failed to fill staff positions.

Instead of returning the surplus money to the state as required, ECHO paid its administrative staff $26,750 in bonuses at the end of the 1996 fiscal year, state records show. John E. Mosby, ECHO’s then-chief executive officer, paid himself $31,500 in consulting fees in addition to his $90,870 salary.

After the audit, the state placed ECHO on "watch status," which required the agency to submit a plan to correct its organizational and financial problems. State officials began making more frequent visits to the clinic. In July 1997, ECHO agreed to a repayment plan to return the misused funds. But the state never activated the arrangement because ECHO was having trouble meeting its payroll.

ECHO never paid back the misused funds, according to the organization’s bankruptcy records. But former board Vice President Leland White III insisted ECHO’s debt was manageable. "We may have missed one or two payrolls because of the state holding up some money," said White, now president of Star Financial, a Chicago accounting firm. "But it’s always been a little nip and tuck."

In fact, he said, ECHO remained confident of receiving state funds because the organization was making $38,248 monthly mortgage payments to the Illinois Development Finance Authority, which issued the tax-exempt bonds that financed ECHO’s building. "It was in the state’s best interest that we get our money," White said.

Chaotic Summer
But a state report issued Jan. 9, 1998 showed that ECHO was still underperforming. And by April, the agency was missing more than a quarter of its staff and had cut back many of its employees to four-day work weeks, state records show.

In a May 1, 1998, letter to ECHO, Formigoni warned that the state would be forced "to intervene and ensure reliable, safe and effective service delivery for the seriously mentally ill clients in Englewood." ECHO would no longer receive funding "without evidence of clear, emphatic and demonstrable change," Formigoni wrote.

Board President Thomas Crosby, who became chief executive officer after Mosby resigned in January 1998, hired a consulting firm, Dallas-based Nelson, Gilbert & Manuel LLP, to restructure the organization’s finances and staffing.

The firm brought on new and effective employees, said Burrows, who joined the board in April 1998. The firm also assumed tremendous power within the organization. Partner Michael A. Nelson and members of his firm took over as ECHO’s attorney, accountant and human resources director, court documents show.

Under Nelson’s leadership, ECHO submitted a reorganization plan in mid-June 1998, and the human services department awarded the agency $4.1 million in grants for the 1999 fiscal year.

But the next six months proved to be particularly chaotic. Over the summer, the agency once again struggled to make payroll, and staff threatened to withhold services. In July 1998, the state placed ECHO on probation, threatening to cut off funding by December.

And Nelson had other troubles. Federal agents arrested him on Oct. 6, 1998, court documents show. Prosecuted in Orlando, Fla., Nelson was sentenced to 60 months in prison for conspiracy and wire fraud, according to the U.S. Secret Service. ECHO terminated Nelson’s contract on Oct. 8. From April to October of that year, Nelson’s firm billed ECHO more than $398,000 in consulting fees.

James T. Williams, a certified public accountant hired by Nelson to prepare ECHO for a state audit, became interim executive director. And Burrows, just nine months after joining the board, was elected its chairman.

The two men met with state officials in December 1998. Formigoni noted that ECHO had made some progress, but he raised questions about the organization’s crisis services, which were provided through emergency psychiatric care at St. Bernard’s Hospital, 326 W. 64th St., and at a neighborhood residential center.

Throughout the winter, ECHO’s problems persisted.

Jerry Dincin, executive director of Thresholds, the state’s largest provider of mental health services, said Burrows asked him to take over ECHO’s building and operations. He declined. "The building was a load around their neck, and it would be a load around our neck," Dincin said.

Williams fired ECHO’s clinical director just days after the December meeting with state officials and then failed to fill the position for five months. Formigoni moved to transfer ECHO’s $1 million contract for crisis services to another agency. Four organizations—including Thresholds—submitted bids, and the state awarded the grant to Bell’s Mental Health Council, which provided emergency psychiatric services at Jackson Park Hospital, state records show. The council also began offering crisis services at St. Bernard’s last Oct. 1.

Bell said he expected the arrangement to be short-term. "Originally the plan was that we would get their crisis emergency money, but when [ECHO] got themselves together, we would give it back," he said. "I’m not interested in killing a black institution that’s been around since 1978."

Poor Reputation
In April 1999, Bell and Williams began discussing a potential merger between ECHO and the council. Bell said he was aware of ECHO’s problems and thought his agency could help.

Williams agreed. "I didn’t think ECHO’s identity would be compromised," he said. "In my mind, unfortunately, ECHO’s identity had a poor reputation."

That spring, Bell’s staff helped ECHO prepare to renegogiate its state contracts and vouched for the organization with state officials, Bell said. "The state said they weren’t going to renew the grants. ... We acted as a show of good faith."

The state signed a new contract with ECHO in June, providing $3.9 million in state grants for fiscal year 2000: $3.2 million for mental health services, such as case management and residential care, and about $818,000 for alcohol and drug treatment programs.

Williams and Burrows agreed to continue reforming ECHO’s staffing, programming, board and finances, Formigoni said. But by August, they were locked in a power struggle. Burrows fired Williams and ordered the board’s sergeant-at-arms, a retired Chicago police officer, to escort him from the building, Williams said. And in October, ECHO’s board turned on Burrows, ousting him while he was out of town.

In an Oct. 15 letter to ECHO’s interim leadership, Formigoni called the latest turnover "a clear manifestation of a total inability to address the serious organization, administrative and programmatic shortcomings that have plagued your agency for many years."

The board turned to Henry, who answered a classified ad for the executive director’s job and was named to the post in mid-October. Henry has a master’s degree in public health from the University of Illinois in Chicago.

But in December, Peters decided to cancel ECHO’s contract. State officials contacted Bell and Donald Dew, chief executive officer of Habilitative Services., to take over the grant. State rules allow the department to choose another provider already offering services in the affected area without requiring competitive bids, Formigoni said.

"There was no conspiracy, no plot, no deal," Bell added. "We had the edge, because we’d been working with [ECHO] for a year. We already knew stuff."

But Henry said the decision turned Bell from ECHO’s mentor to its competitor. By awarding the council ECHO’s contract "behind closed doors," the state failed to follow its own procedures, she said.

Dincin of Thresholds said he would have preferred a chance to bid on the contract. "There’s nothing wrong with Carl Bell or his organization," Dincin said. But, he added, "there was no process involved in that. We’re as ideally situated in the neighborhood as anyone."

Henry also questioned why the state decided to pull ECHO’s grant now.

"Since 1996 this agency has been audited by the various divisions since they came together, but yet the agency has continued to be funded," she said. "So how is it that all of a sudden now, you lost confidence?"

Formigoni also struggled with that question. "Being a minority agency in an economically depressed area, they pleaded for more time. But people have been saying to me, ‘Would you tolerate this from a white agency in the suburbs? If not, you’re discriminating.’

"Why were we such fools with state money? If you have faith, you take some chances. … But at a certain point, we can’t continue without being negligent."

At a Dec. 29 meeting, Henry, Bell and Dew pledged to maintain patient care, keep services in the Englewood community and provide job opportunities to current ECHO staff.

But Henry rejected the transition plan the state sent her on Jan. 7 saying she would not be forced into an agreement that was bad for ECHO’s staff or clients.

ECHO’s attorney, Clarence S. Wilson Jr., sent Bell and Dew letters advising them to "cease and desist" transition activities, which, he said, violated the due process rights of ECHO and the confidentiality of its patients.

"[The state] is saying, ‘We don’t believe you’ll improve. Off to the electric chair,’" Wilson said. "The whole process has been arbitrary and capricious."

In mid-January, Henry said she asked ECHO staff to "wait it out" until the end of the month, without promise of a paycheck. The agency will "continue to operate" even without the state’s money, she said. Henry added she will "explore all avenues" to fund the agency and will continue to lobby state officials to reverse their decision.

But if ECHO staff leave, the organization will refer patients to St. Bernard’s Hospital or the Englewood Mental Health Center, Henry said.

The city clinic won’t be able to help because they don’t have the funding, said Director William Floyd, adding that no one from ECHO has discussed those plans with him. "We are not able to meet the needs of their patients. That’s not a good or workable plan. I think they’re being very unrealistic."

On Jan. 24, Formigani sent a letter to 1,500 ECHO clients explaining that state-funded services were now available from the Mental Health Council.

"I’m sure many people who’ve depended on ECHO will go back to ECHO," Formigoni said. "If they can provide services, that’s fine. We’ve reached the decision that there’s another provider. We’ll try to inform the consumer."