Lawmakers Want Federal Probe Of Gruber Contract

Feb 24, 2015

A report from the state auditor has raised questions about a state contract with MIT health care economist Jonathan Gruber. And some legislators now want a federal investigation into Gruber’s billing practices.

Last summer, the Shumlin administration hired the noted health care economist to get a better sense of how a publicly funded health system might affect the state’s economy.

It wasn’t a terribly controversial hire at the time. Gruber had a solid track record in his field, and was credited as one of the architects of the federal Affordable Care Act.

But Gruber rose to sudden notoriety last November, when footage surfaced of his now famous comments about “the stupidity of the American voter.” And it was at that point that his contract with Vermont suddenly came under a microscope.

Addison Sen. Chris Bray, a Democrat, says the contract raised some troubling questions. But Bray says that, at the time, he was reluctant to feed the media frenzy.

“It was turning more into a political firestorm and controversy than anything productive in my mind,” Bray says.

So Bray late last year quietly asked Auditor Doug Hoffer to examine Gruber’s billing documents. And he says yesterday’s report from Hoffer confirms some of his initial concerns.

“I don’t know for a fact this is improper invoicing … But when I saw how scant the information was, it did strike me as a lot of money being spent with very little information to allow the state to know it was getting full value for the dollars spent." - Sen. Chris Bray

“I don’t know for a fact this is improper invoicing … But when I saw how scant the information was, it did strike me as a lot of money being spent with very little information to allow the state to know it was getting full value for the dollars spent,” Bray says.

Bray isn’t alone in his concern.

The two bare bones invoices offer almost no accounting of what work Gruber did to earn the $200,000 he billed the state. And Hoffer says there’s good reason to be dubious of the hours for which Gruber sought payment.

Half the amount – $100,000 – is for 1,000 hours of work allegedly performed by a single research assistant over a 10-week period. But Hoffer says that means the person worked more than 14 hours a day, every day, for 70 straight days.

Jamaica Rep. Oliver Olsen, an Independent, also asked Hoffer to look into the contract last year.

“I’ve been in the consulting industry for more than a decade. I have never seen an invoice this vague and this incomplete in my professional experience.” - Rep. Oliver Olsen

“I’ve been in the consulting industry for more than a decade,” Olsen says. “I have never seen an invoice this vague and this incomplete in my professional experience.”

Olsen says there are other troubling discrepancies. While Gruber charged the state $100,000 for work done by his research assistant over ten weeks, Gruber paid the man only $32,000 for the entirety of 2014, according to a W-2 obtained by Hoffer. And those wages included work on other projects unrelated to the Vermont contract.

Senate Minority Leader Joe Benning says more troubling than the Gruber’s bills are the fact that the Shumlin administration decided to pay him.

“With respect to this specific contract, I have deep concerns that the people who are in charge of it have not been properly minding the store,” Benning says.

Benning has asked the federal Inspector General to open an investigation into to the Vermont contract.

Hoffer forwarded his findings to Attorney General Bill Sorrell, who yesterday called the auditor’s report “troubling.” Sorrell says his office will begin its own probe into the numbers, to determine whether Gruber or members of the Shumlin administration violated any civil or criminal statutes.

Administration Secretary Justin Johnson did not respond to a request for comment. The administration has previously said that it worked closely enough with Gruber during the contract to vouch for the legitimacy of the hours submitted in his invoices.

While Hoffer says the Shumlin administration should have done more to hold Gruber to account, he says the questionable invoices cover only a portion of the contract term. And he says that all in all, taxpayers look to have gotten a good value for money spent on the contract.

“Both parties did not meet their obligations, but in terms of the money it looks like we’re going to end up okay,” Hoffer says. “We got what [administration officials] call a good product. And it’s going to be for very much less than what we contracted for.”

“Both parties did not meet their obligations, but in terms of the money it looks like we’re going to end up okay. We got what [administration officials] call a good product. And it’s going to be for very much less than what we contracted for.” - Doug Hoffer, auditor

The contract initially called for maximum payouts of $400,000 to Gruber and his team. The sum was revised downward, to $280,000, shortly after Gruber became enmeshed in national controversy.

The administration paid the first two invoices, minus a standard 20-percent “hold back,” meaning the state has paid Gruber only about $160,000 this far. 

Hoffer says there’s nothing to indicate the state won’t get what it paid for. He says administration officials – namely Director of Health Care Reform Robin Lunge and her deputy, Michael Costa – worked closely with Gruber and his research assistant during the period the contract was in effect, and that they gave every indication that Gruber was putting the in the time that his invoices claimed.

“It’s not as if this is someone who had had no contact and just popped up with an invoice for a lot of money,” Gruber says. “[Administration officials] knew what was going on, and they knew the product that had been provided to them.”

Hoffer says the administration by all accounts was also satisfied with the “quality and quantity” of the work.

In a letter to Hoffer, Administration Secretary Justin Johnson says the state was satisfied with Gruber’s first two invoices precisely because Lunge and Costa had been working closely enough with the MIT economist to be certain he was performing the work he claimed he was.

In a letter to Hoffer, Administration Secretary Justin Johnson says the state was satisfied with Gruber’s first two invoices precisely because Lunge and Costa had been working closely enough with the MIT economist to be certain he was performing the work he claimed he was.

But Johnson says the state will withhold any future payments to Gruber – the maximum remaining payout on the contract is $120,000 – until Gruber provides “more detailed invoices.”

Johnson also told Hoffer that he has sent notice throughout his agency to “remind all relevant staff of the controls surrounding all contracts” to ensure “proper levels of accountability … going forward.”

Hoffer says he’ll leave questions of civil infractions to the attorney general’s office. But he says that for him, the case above all calls for sounder contracting procedures in the future.

“It’s not the kind of thing that to me should lead to sanctions,” Hoffer says. “It’s the kind of thing that leads to a conversation about, hey, we can do better. And the administration should be a model of best practices.”

Bray says he thinks the Legislature ought to play a role in tightening those contract protocols.

“I want to, on the basis of this report … to look again at … not only how we award contracts, but how we assess if we’re getting what we pay for,” Bray says.