National Mentor Holdings, a giant company in the lucrative but little-known field of privatized foster care, is shutting its foster care operations in Illinois in the wake of a scathing state government investigation that found a "culture of incompetence" at the firm and recommended that the state stop dealing with the company.
Investigators from the inspector general of the Illinois child welfare agency found that Mentor, the subject of a recent BuzzFeed News investigation, put two girls in the troubled home of a foster mother it oversaw even though she had previously committed fraud and had abandoned a 9-year-old special-needs foster son by leaving him at Mentor's own office "without notice or explanation." The girls, 11 and 12 years old, "frequently appeared dirty and unkempt," the report said, and the older one regressed in school.
Mentor acknowledged past problems. "Clearly the house where the two sisters were initially placed did not meet our standards and should not have been a foster home," spokesperson Sarah Magazine wrote in response to questions from BuzzFeed News. But she said the company had made improvements and that the report by the Illinois child welfare agency's inspector general "had absolutely no bearing on our decision to exit the state of Illinois as a provider of foster care services. When we communicated our decision to the Department, they indicated to us their preference that we stay."
Magazine said that the company is leaving the state because "we have, regrettably, come to the conclusion that we can not provide a service in a manner that meets our standards."
She also said the firm disagreed that its team had a "culture of incompetence."
In February, BuzzFeed News examined problems at the company, including violent child deaths and sex abuse. In Maryland, a National Mentor foster father sexually molested foster son after foster son over an 11-year stretch. In Texas, in 2013, a 2-year-old named Alexandria Hill was murdered by her National Mentor foster mother, Sherill Small. Mentor's problems in Texas were widespread: Mentor ranked dead last among large foster care providers, based on the rate of severe violations found by state inspectors. Over the last two years, Mentor racked up more "high" deficiencies — the worst kind — per home than any other provider with at least 200 homes.
Former workers told BuzzFeed News that the search of high profit margins meant child safety suffered — a charge the company denies.
The business of foster care works like this: State and local governments outsource the job of finding, training, and screening foster parents and even social workers to companies such as Mentor, which get a daily rate per child. The more children they place, the more money they make. Much of the money comes from the federal government, which has little to no oversight authority over the firm because the money is pass-through funding that goes to state and local governments.
In Illinois, investigators also faulted Mentor for a key part of its business model. In several states, including Illinois, Mentor itself does not contract with the state. Instead, it works with a nonprofit, Alliance Human Services Inc., which wins the contract and pays much of the money to Mentor. In a filing with the Securities and Exchange Commission, the company explained that it uses this strategy "for states and local governments that prefer or choose not to enter into contracts with for-profit corporations" to provide foster care or other services. A Mentor executive, Dwight Robson, also told BuzzFeed News that "more eyes, more people at the table, looking at children and adolescents...provides more oversight."
But the Illinois investigators blasted the setup. "This convoluted system," they wrote, "acted to further muddle the chain of command and add unnecessary complications to the delivery of services to clients." They recommended the state stop dealing with Mentor and Alliance.
Alliance was initially founded by Edward Murphy, a former state official in Massachusetts who later went on to run Mentor. In Illinois, the two entities have offices on the same floor of the same building. Mary McCarthy, the president of Alliance, issued a statement to BuzzFeed News, in which she said that while Mentor and Alliance "work together in some places, it would be wholly inaccurate to infer that there is anything other than an appropriate working relationship between a prime contractor and a subcontractor."
Mentor trades on the New York Stock Exchange as Civitas Solutions and markets itself as The Mentor Network. It reported $1.2 billion in revenue last year, and almost $200 million of that came from foster care, adoptions, and other services for children. The firm, which also provides care for adults and veterans, was one of the first for-profit corporations to forge its way as a provider of foster care.
Nationwide, the company says it has 3,800 children in its foster homes. The Illinois Department of Children and Family Services says the Alliance/Mentor operation has about 485 children in the state and received $17 million in contracts there last year.
Now, the state of Illinois is scrambling to accommodate those 485 children. After a planning meeting on Thursday, one participant told BuzzFeed News, "The scary thing to me right now is that the department has not figured out where these cases are going, and the clock is ticking."
"That's not true," a spokesperson for DCFS said. "We have a plan."
The inspector general's full investigation has not been released and is not subject to an open records request, but it is summarized in a January 2015 annual report. That summary does not name Mentor or Alliance, but a state official told BuzzFeed News that those organizations were the targets of the investigation. The investigation focused on the company's treatment of two young sisters who had been placed in foster care. (The summary report does not say why they were not with their parents.)
The 12-year-old was believed to have been abused, and the 11-year-old "struggled to express her emotions," according to the summary. But Mentor placed them with a foster mother who ran a licensed day care business out of her home, and the investigators said she "prioritized the needs of her business over the care of the girls."
Indeed, the summary report says the foster mother, whom it does not name, had a devastating history. She and her husband "had engaged in fraud, adopting two daughters and sending them to live with other relatives while affirming the children still lived with them in order to receive payments for their care."
Not only that, but the woman had "previously abandoned a nine-year-old boy with special needs placed in her home, dropping the boy off at the private agency's office without notice or explanation." In a statement, Mentor's spokesperson said that "it would be inaccurate to imply that the child was 'abandoned,'" since the the boy was taken to the office, a safe environment where it was clear someone would take care of him.
Although a caseworker had pushed to terminate that the woman's foster license, the summary report said "there was no indication" that Mentor and Alliance "took any action." Mentor's spokesperson said it was "deeply concerning and unacceptable that the recommendation of the case worker to discontinue our partnership with this foster parent was not followed."
The summary said that according to caseworkers, the foster mother paid little attention to the girls, who "essentially followed their own rules in the home." They "frequently appeared dirty and unkempt, and the 12-year-old told a worker at one point she could not remember the last time she had brushed her teeth."
That same girl "regressed academically" while at the home, and soon a judge requested that Mentor put the girls in a new home, preferably that of a relative.
Here, things got even more muddled bureaucratically, investigators found, because Mentor sent the girls to live with their godparents in an "unauthorized placement," while submitting paperwork to the state government "that made it appear that the girls were in an authorized placement."
The report does say there was a happy ending. Eventually, the girls "were allowed to remain with their godparents, who were committed to their care."
"We all acknowledge that there has been a recent period in which the services we delivered did not meet our own standards," Alliance President McCarthy wrote to BuzzFeed News, adding that its work in the case of the two girls was "unacceptable and very disappointing." Still, she and Mentor spokesperson Magazine said that over the past nine months the two organizations had improved their performance — a point the Illinois Department of Children and Family Services confirmed.
Like its partner Mentor, Alliance decided that it had to stop doing business in Illinois. The inspector general's report "did not cause us to reach this conclusion, but it did provide an important and meaningful assessment and identification of issues that needed to be addressed," McCarthy wrote.
The case of the two girls was not the only serious problem Mentor and Alliance had in Illinois. Last year, in filings with the SEC, Mentor revealed that it settled a lawsuit in Illinois stemming from a case where an 8-year-old autistic girl suffered a devastating brain injury while in a National Mentor foster home in Illinois in 2009. Court records show that Mentor's foster mother was married to a man with a criminal record, including arrests for violence, and the lawsuit charged that he lived in the home. The lawsuit alleges that he beat the child, causing the brain damage, a charge he denied. The lawsuit also alleged that Mentor committed negligence by placing the girl in the home, and court filings say that the company should have known the husband lived there because his name was on the lease. Mentor argued that it couldn't have known that the husband lived in the home, and that the foster mother deceived the company.