Millions in Delaware opioid relief dollars at risk of ‘fraud, waste, abuse’

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This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Delaware prosecutors are investigating how nonprofit Code Purple Kent County spent $290,000 from the state’s opioid settlement windfall, spurring Attorney General Kathy Jennings to call for an immediate halt to grants from the multimillion dollar fund aimed at reducing overdose deaths from prescription painkillers, heroin and fentanyl.

Jennings is co-chair with Lt. Gov. Bethany Hall-Long of the 15-member committee that since last year has allocated $14.4 million to dozens of agencies that presented plans to help remediate  Delaware’s opioid epidemic. 

But Jennings told WHYY News she has long been frustrated by “inadequate guardrails’’ around how the money is awarded, often with little scrutiny, and said no more grants should get approved until at least this fall. That’s when a state consultant is expected to present a strategic plan to guide spending in a process Jennings says “is rife with potential for fraud, waste and abuse.”

The money is monumental and the stakes exceedingly high in Delaware, which has one of the nation’s highest overdose death rates. 

The state plans to spend about $250 million over the next 20 years to help keep people alive and guide them into treatment and recovery. The money comes from legal settlements with prescription drug makers, distributors and pharmacies accused of fueling the national crisis.

Jennings said her longstanding concerns, detailed in a letter to Hall-Long and other panel members on June 28, have only intensified since she received a scathing letter and preliminary report last month from state Auditor Lydia York about Code Purple Kent County’s use of grant money. 

York’s letter to Jennings, and a similar one to Hall-Long informed them that the auditor’s office “encountered significant challenges in establishing trust regarding the accuracy and authenticity of the documents’’ that Code Purple provided her office. “Our preliminary analysis suggests potential waste, fraud, and abuse of state resources, including indications of fraudulent grant submissions.” 

After receiving York’s letter on June 12, Jennings told WHYY News she referred the matter to her office’s white collar crime unit, and directed her civil division to see if the state could “claw back”’ the $290,000 Code Purple Kent County has received. An additional $280,000 approved for the agency has been frozen since December.

Officials at Code Purple Kent County did not respond to numerous requests from WHYY News for comment on the pending investigation and the auditor’s letter.

Code Purple leader gave max $1,200 donation to Hall-Long campaign

The question of how Code Purple has spent money has also become an issue in the 2024 governor’s race.

That’s because Lt. Gov. Hall-Long, who is in a three-way Democratic primary for the state’s top political post, accepted the maximum donation of $1,200 from Code Purple leader Ennio Emmanuel Zaragoza just days after the agency received the $290,000 whose use is now being investigated.

Hall-Long did not respond to questions from WHYY News about the contribution from Zaragoza, who identified himself as Code Purple’s director of development in one grant application.

But Hall-Long’s two foes in the Sept. 10 primary — New Castle County Executive Matt Meyer and former state environmental protection chief Collin O’Mara — said she should return the $1,200 contribution.

Meyer said it’s yet another example of Hall’s poor stewardship of money.

“What we have here is Bethany Hall-Long once again at the helm of an organization that mismanaged funds,’’ Meyer said. “It’s all of our leaders’ responsibility to take care of taxpayer dollars. That’s the very least we can expect of and once again Bethany has shown that she cannot be trusted with that responsibility.”

WHYY News has reported extensively on financial controversies that have plagued Hall-Long’s campaign.

Last fall, shortly after she announced her candidacy, former staffers told WHYY News she had failed to disclose more than $200,000 in checks from her campaign fund to her husband Dana Long. The lieutenant governor later said the money paid to her husband and former treasurer were repayments for loans she made to her campaigns, and she revised seven years of campaign finance reports.

Last month, a WHYY News review of Hall-Long’s campaign finance reports 2021 found that she accepted more than $25,000 in donations from political action committees and supporters that exceed the $1,200 limit for a contributor to a statewide primary.

Meyer said that despite two phases of public meetings and votes before money is awarded from the opioid settlement fund, Hall-Long essentially controls the grant process.

The Prescription Opioid Settlement Committee that Jennings and Hall-Long co-chair operates within the Delaware Behavioral Health Consortium that is part of the lieutenant governor’s office. The consortium, which Hall-Long alone chairs, must give final approval to all recommendations for funding.

Hall-Long created the consortium shortly after taking office in 2017 to address addiction and mental illness in Delaware.

O’Mara said campaign contributions from grant applicants should not be permitted, but bemoaned that they are allowed under what he called Delaware’s permissive campaign finance laws and policies and a “pay to play” culture that pervades the state’s political system.

“We have like the wild wild west of campaign finance,” O’Mara said. “So was it legal under the current system? Yes. But does it give people less confidence in government? Absolutely. And this is why across the state folks have no confidence in the integrity of our government right now.”

Distribution panel co-chair Hall-Long says adequate controls in place

Beyond not commenting on Zaragoza’s contribution, Hall-Long would not agree to an interview about Code Purple or the grant process itself.

Instead, Hall-Long issued a written statement that said she believes adequate controls are in place to protect the opioid settlement dollars from abuse, but doesn’t have an issue with a temporary halt in funding.

“We’ve worked hard to ensure every dollar is well spent in support of those impacted by the horrific disease of addiction,’’ Hall-Long’s statement said.

She noted that no new date has been set to award more grants, “which means there is a pause in new funding. I want to reiterate that means no new grant funding will be awarded at this time.”

Hall-Long added that she shares Jennings’ “concerns about ensuring our processes are sound; we have been partners leading this commission since the beginning, bringing our expertise to the table … to further strengthen our protections while ensuring these dollars reach our families and communities.”

Code Purple awarded $570,000 for day center, wraparound services

In 2021, when Delaware began receiving the first wave of opioid settlement money, lawmakers unanimously approved a bill that created the fund and the distribution committee and made them part of the Behavioral Health Consortium.

The overarching goal, a synopsis of the bill said, was “to ensure that settlement money is used to remediate and abate the opioid crisis and is not diverted to other purposes.”

Code Purple Kent County applied for two grants from the fund.

The agency first sought and received $70,000 to provide a mobile van and wraparound services for people struggling with opioid addiction. Services included transportation to treatment, housing, job training, medical assistance and child care, as well as support groups, social events, computer access and a pantry with free items and furniture, according to Hall-Long’s government website.

The agency later was awarded $500,000 out of $980,000 it requested to operate a day center for people struggling with addiction, mental health issues, and lack of housing. Hall-Long’s website said the money would go toward “short-term term respite care, case management, individual and group therapy, job training and placement, COVID-19 testing, and other services that address the social determinants of health, such as food, transportation, clothing, and financial support” over a three-year period.

In August 2023, the agency received $290,000 of its allocation. Days later, Zaragoza contributed $1,200 to Hall-Long’s gubernatorial campaign.

Jennings and Susan Holloway, director of the distribution committee, said they received complaints in late 2023 and referred them to York. The auditor would not agree to an interview about the ongoing investigation.

Holloway also did not agree to an interview, but said in a written statement issued by Hall-Long’s office that the dozens of opioid settlement grant recipients are monitored by a staff member who “regularly communicates with grantees, conducts site visits, and assesses compliance. Funding is frozen if discrepancies are flagged and validated.”

Holloway’s statement said that in the case of Code Purple, her staff “noticed data inconsistencies, which triggered a manual review of the numbers. Unsatisfied with the review, funding was immediately frozen while staff conducted two site visits to gain more insight’’ from the agency.

“They were unsatisfied with their additional review and as a result, funding was then permanently frozen in December 2023, and the organization has not received money since.”

Holloway said her office notified Jennings’ office in December that funds to Code Purple were frozen.

Her statement emphasized that it was her office’s “monthly reviews that uncovered the potential issues at Code Purple, investigated further, and took immediate action to freeze funds and notify the proper state agencies for further investigation.”

Hall-Long’s statement piggybacked on what Holloway said.

“The commission employs a rigorous process in evaluating and ensuring compliance with all grantees, with grant awards being considered during public meetings first at the commission with final approval from the Behavioral Health Consortium,’’ she said.

“The disbursement of funds occurs in phases after thorough data reviews and site assessments. Non-compliance with these standards results in an immediate cessation of funding for the recipient. In addition to having funds halted, an awardee would be referred to the proper state agencies for investigation, ensuring that violators are subject to the appropriate consequences. This process worked recently when issues were raised.”

Jennings cites ‘inadequate, incomplete, unmerited applications’

Jennings, however, provided a different account of the workings of the commission and her efforts to safeguard what she referred to as “lifesaving dollars” for people at risk of drug overdoses.

The attorney general wrote that, for the last 16 months, she’s been vocal at the public meetings and “repeatedly expressed serious concerns” about how money is allocated and monitored.

She said that “with the opioid epidemic raging as violently as ever, it is critically important not to squander this opportunity on ineffective, wasteful spending. … I have repeatedly asked the commission to develop a thoughtful plan of action — including a plan for auditing and accountability — before awarding more dollars.”

The second-term Democratic attorney general, who had been viewed by Delaware political insiders as a possible 2024 gubernatorial candidate before she decided not to run, cited several examples.

Jennings wrote that in February 2023, she sought to postpone the next month’s meeting “to give the commission time to review applications more thoroughly” and that previously, her own staff “had to advocate for commission staff to remove clearly inadequate, incomplete, or unmerited applications from its grant recommendations.”

She also expressed concern about inaction on “adopting a strategic plan that would help ensure we base grants on impact, rather than rubber-stamping spending on a first-come, first-served basis.”

And now, 20 months after grants were first awarded, Jennings contended in her letter that “we still do not know where these funds will be most useful, how we will measure their impact, or even whether our grantees are compliant. This project is rife with potential for fraud, waste and abuse.”

While Meyer is critical of his political foe Hall-Long, he praised the efforts of Jennings, who was his chief administrative officer at the county in 2017 and 2018. Jennings was elected attorney general in 2018 and re-elected in 2022.

“Kathy blew the whistle on this,” Meyer said. “From everything I’ve seen, Kathy has done an outstanding job, first of all, getting all these resources to Delaware and second, overseeing this process in a way that is fair and putting a halt to it when she’s seeing it getting off the rails.”