The Fall of the Englewood Community Health Center

Since 1996, state officials have been tracking problems at the Englewood Community Health Center. Below are two chronologies of events at ECHO obtained from the Illinois Department of Human Services' Office of Mental Health under the Illinois Freedom of Information Act. The Reporter edited the documents for spelling and typographical errors.

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Chronology 1

September 1996 Anonymous letters received at central office and Metro-West Network of the Department of Mental Health alleging mismanagement of state funds.

October 1996 State receives anonymous letter alleging patient abuse. Unsubstantiated after investigation.

November 1996 Metro-West Network receives anonymous letter alleging misuse of state funds. Network notifies ECHO chief executive officer of receipt of anonymous letters. Network manager requests chief auditor to complete audit investigation.

December 1996 Contract manager for the state and assigned audit staff conduct several visits to ECHO to investigate allegations.

January 1997 Report of the chief auditor's review indicates questionable use of funds.

ECHO paid to selected administrative staff $26,7500 in year-end bonuses, which were at best arbitrary and upon appearance a manipulation to avoid repayment of lapsed funds.
The ECHO chief executive officer paid himself in addition to his salary a consultation fee of $31,500 representing a conflict of interest.
ECHO paid $73,795 to the ECHO Behavioral Care Development Corp. Several ECHO board members are also board members of Behavioral Care Development Corp. and the accounts were controlled by the president of the ECHO board. There were no books to account for the expenditure of this money at the time of the audit.
February 1997 Informal hearing to discuss the audit findings attended by ECHO chief executive officer, board chair, and key staff; as well as staff from Department of Mental Health's legal, chief auditor's office, network manager, contact manager and bureau chief.

March 1997 ECHO sends written response to audit findings to network manager.

May 1997 After review with the Department of Mental Health Central Office, network manager requests the repayment of funds totaling $132,045. ECHO employees receive partial pay checks.

July 1997 ECHO chief executive officer sends written notice that their board agrees to repay $132,045 and proposes withholding installments of $7,335 over a period of 18 months. ECHO employees miss regular pay checks or get partial pay, therefore withholding is not implemented to avoid compounding their precarious financial situation.

August 1997 Network defers repayment temporarily as ECHO is unable to meet payroll.

November 1997 ECHO's board president informs Network Manager that their current chief executive officer will be resigning and the Contract Manager will be included in the search committee.

December 1997 Contact Manager meets with ECHO's board to impress upon them the urgency to regain fiscal and programmatic stability.

January 1998 ECHO's chief executive officer resigns. ECHO's board chairman takes over day-to-day operation of the agency.

March 30, 1998 Informal hearing attended by Acting chief executive officer and three ECHO board members concerning fiscal year 1996 lapsed funds. Also in attendance: contact manager and network manager. ECHO put on notice that the network cannot recommended continued funding beyond the current fiscal year without clear evidence of improvement.

April 14, 1998 Written notification sent to ECHO's board chairman summarizing network's disposition from informal hearing and establishing survey date on April 24, 1998.

April 24, 1998 Survey observation and update. This agency is currently in crisis with an estimated 27 percent staff vacancy rate, which is climbing weekly. All administrative staff, approximately 25, have work schedule reduced to four days a week and received 80 percent of their normal paychecks. The ACT and crisis programs are in breech of contract due to inability to perform necessary services. The current ECHO board and acting chief executive officer have demonstrated no ability or competence in rebuilding or managing an agency with the number of programs and budget currently provided to ECHO. During the course of interviews with line and supervisory staff, a repeated concern was the lack of leadership or faith in ECHO's board to turn matters around. It is doubtful that ECHO will maintain necessary services with its present rate of decline and full collapse appears imminent.

May 1, 1998 Network manager informs in writing the board chairman that the findings from the site visit surveys indicate that lack of staff and programmatic instability confirm the necessity to intervene and ensure reliable, safe and effective service delivery for the seriously mentally ill clients in Englewood. Urgent action is required to ensure continuity of the programs at greatest risk: Triage, ACT Case Management and Residential.

Contact manager begins weekly monitoring site visits. ECHO's crisis house reveals that Connect 97 grant for crisis beds is not operational due to deterioration of the crisis house (no heat or hot water, extensive paint and plaster chipping, rendering the designated rooms unusable). ECHO transitional care facility reveals similar problems in one section of the building but less extensive damage than the crisis house. Program has attained projected client services, but life safety standards remain unacceptable.

Visit to ECHO's ACT residential site. This program was closed due to inadequate staff on April 24 and was not reopened for approximately two weeks. Review of the ACT house after operations resumed reveled a house in somewhat better repair than the other residential programs, even though it was very dirty and odorous, and in need of thorough cleaning.

Meeting with the consumer advocate on complaints of ECHO's consumers.

June 1998 ECHO grant negotiation meeting at which time the network presents its concerns and reiterates the network's positions regarding the continuation of funding. ECHO is given two weeks to submit a specific plan of corrections addressing all identified issues.

Contract manager continues to receive calls from ECHO staff complaining about withheld payroll checks. Contract manager meets with ECHO's consumer group to discuss their concerns and issues.

June 15, 1998 ECHO submits a written plan of correction.

June 24, 1998 Madden Mental Health Center Intake Department reports that Chicago Police and St. Bernard Hospital have been unable to contact anyone at ECHO's Triage. No answer to calls placed by Madden intake.

July 2, 1998 Network receives petition signed by 25 ECHO staff threatening to withhold services to consumers if Office of Mental Health doesn't intervene to correct staff non-payment issues at ECHO.

July 2, 1998 Network manager contacts Mr. Crosby (ECHO's board chair and acting chief executive officer) to appraise him of petition and to discuss his explanation of the crisis. Mr. Crosby informs network manager that no correction of the situation can be implemented until after the 4th of July weekend and continues to blame problems on previous administration.

Network manager requests that Mr. Crosby convene a meeting with all ECHO staff, to be addressed by himself and selected Office of Mental Health staff. Meeting set for July 8 at ECHO.

July 8, 1998 All staff meeting convenes at ECHO.

The firm of Nelson, Gilbert and Manual has positioned consulting staff into key operating departments at ECHO including finance, accountant, personnel and clinical services. Nelson, Gilbert and Manual chief executive officer Michael Nelson announces that the firm has applied for a $600,000 line of credit that will be available to ECHO within 30 days.

August 1998 Meeting with the ECHO board attended by Dr. Formigoni, Brenda Hampton and Greg DeSadier. Presentation by Dr. Formigoni outlining current issues and mandating the following:

DHS will convene a full scale audit both fiscal and programmatic.
DHS will receive a copy of ECHO consultant's final report. (As of December 1998 no final report was received.)
ECHO's board will begin an extensive search via search committee to fill the chief executive officer and clinical director positions. (As of December 1998 no viable search committee was convened.)
ECHO will retain an interim consultant approved by Office of Mental Health to be responsible for redeveloping the agency's infrastructure, including organizational, programmatic and administrative operations. (The consultant effort totally collapsed in October 1998 due to the arrest of several consultant staff.)
ECHO's board must obtain consultation with respect to board functions and responsibilities. (Not implemented due to turnover of board members and leadership.)
Further evidence of decomposition of service delivery or fiscal irregularities will warrant action to terminate our contractual agreement.
Contract manager continues to make weekly monitoring visits to ECHO.

September 1998 Office of Contract Administration begins their fiscal 1998 audit. Programmatic audit begins by contract manager. Preliminary report of ECHO's fiscal status by Nelson, Gilbert and Manual, concluding that $821,543 was mismanaged by ECHO over the past five years. Nelson, Gilbert and Manual promises to complete final report within 120 days. ECHO fails to submit a plan of action in 30 days as requested. (After several requests a plan is submitted almost two months late.)

October 1998 Draft audit reports submitted from the Office of Contract Compliance and contract manager. Michael Nelson, chief executive officer of Nelson, Gilbert and Manual, and several ranking members of the firm arrested by the Secret Service for money laundering and other charges. A rash of resignations follows, including the acting ECHO clinical director and other ECHO consultants. ECHO's total disbursement to Nelson, Gilbert and Manual in excess of $316,000. Acting chief executive officer Thomas Crosby steps down as chief executive officer and appoints James Williams acting chief executive officer. Also appoints new clinical director and chief financial officer. Several ECHO board members resign.

November 1998 Meeting at Madden on ECHO audit findings, attended by DHS staff: U. Formigoni, B. Hampton, G. DeSadier, P. Nierman and B. Schulman. ECHO staff present: T. Crosby, Chairman; J. Fulbright, Personnel Director; James Williams, Chief Executive Officer; Kennieth Nave, M.D., Clinical Director; Rev. Burrows, H. Topps and C. Wetherspoon, ECHO board members.

Summary of major audit findings:

Bank statement reconciliations did not reconcile with the general ledger.
Unauthorized transfer of client funds into ECHO's regular checking account not reimbursed for 10 months.
No authorization from DHS to redirect grant dollars from the agency's vacancy factor.
Over $6,000,000 in agency debt, which includes an approximately $4.5 million bond and $550,000 in accounts payable.
Considerable vacancy rates, which by conservative estimate should yield a substantial fiscal year 1998 recovery well beyond $100,000.
Substantial programmatic deficits in key programs including a full breach of the Connect 97 award for additional crisis beds.
ECHO submits its report and rebuttal to the audit findings as presented on November 10, 1998. ECHO board chair Thomas Crosby resigns and board appoints Rev. Felix Burrows as new chair.

December, 1998 Status meeting at Madden attended by new ECHO board chair, acting chief executive officer, personnel and clinical directors and other ECHO board members. Attending for DHS: U. Formigoni, B. Hampton, and G. DeSadier. ECHO staff report improvement in vacancy ratio and program performance. Financial status remains precarious.


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Chronology 2

For several years the board and the administration failed to provide the necessary leadership to sustain the agency's capacity to deliver the needed and funded services.

The situation deteriorated in the fall of 1996 when the impact of the new building's cost and the administrative priorities severely damaged the operation of the programs. Payrolls were missed repeatedly, the stability and performance of staff declined markedly and an audit review indicated "questionable use of funds."

January 1998 The chief executive officer resigned and the board chairman assumed the responsibility of directing the agency, a task exceeding his competence and availability. The staff petitioned the state to intervene, threatening to withhold services otherwise.

August 1998 The board was informed of the necessity to take the following corrective action, if they wanted to ensure the continuation of state funding:

A state audit of financial operation

A report from an independent, experienced consultant by October.

A search committee for a chief executive officer and clinical director, approved by the department by December.

The board restructured with technical assistance by October.

Evidence of significant programmatic improvement by December.

The board agreed, but unfortunately the consultants selected by the president were arrested in Florida in October 1998. A new board president and leadership team were appointed without input. They were the first, however, to acknowledge the severity of the situation and tried to address the major problems reflected in the state audit and programmatic review.

December 15, 1998 They submitted a report indicating improvements, but ten days later the clinical director was terminated and not replaced until May. Subsequent site visits indicated that problems persisted, especially in the crisis services, leading to excessive utilization of the Madden state hospital.

The persistent instability of leadership, the precarious fiscal condition, the programmatic findings below acceptable standards in some areas and the significant increase in hospitalization indicated the necessity to take serious actions. Therefore, a plan to terminate the contract for crisis services, which had proven beyond the capability of ECHO to manage, and to put these services up for bid from a competent service provider with demonstrated experience was submitted to DHS Secretary Peters for approval. This represents 25 percent of their funding, but should permit the agency to refocus their energy and resources on the remaining major services.

May 28, 1999 Metro West Network notified ECHO of the termination of crisis services effective September 30, 1999, due to lower than acceptable service performance and ECHO's inability to impact on the excessive rate of hospitalization, persisting for more than two years.

June 1, 1999 An announcement was issued requesting service plan proposals to 22 community mental health centers. Eight agencies expressed interest and four submitted full proposals: ProCare, Human Resources Development Institute, Thresholds and the Community Mental Health Council.

End of August 1999 The board abruptly terminated the chief executive officer for insubordination. However, a transition process has been implemented to facilitate a responsible continuity of care for the patients and employment options for the staff.

September 2, 1999 Meeting with the board, administrative and clinical leadership to discuss the sudden dismissal of the acting chief executive officer, ECHO's organizational structure and the lack of recognition of the impact on delivery of services.

October 6, 1999 Received notification that the board president, the program director, who was appointed acting chief executive officer after the recent termination, and the humans resource director have also been suddenly removed.

October 12, 1999 Metro-West contract manager and staff conducted a site visit, were provided no information about the turn-over and had fiscal and programmatic concerns.

October 19, 1999 Ms. Robin Henry, new chief executive officer, informed the Office of Mental Health that the board of directors were filing bankruptcy under Chapter 11, #99B32493. Office of Mental Health sought legal counsel input from Tom McMahon regarding implications, risks and options.

November 22, 1999 Ms. Robin Henry responded to Metro-West inquiry about the allocation of lapsed funds provided the agency in August 1999 to correct safety code compliance issues in the residential program. The project was not implemented we were informed. The $26,000 is in a bank account and the court might assign them to pay creditors. The Office of Mental Health network manager informed her that we are expecting utilization based on the approved objectives and expressing concerns over the agency's lack of compliance.