Inquiry discovers
bloated Felix bills

127 hours charged by a therapist
for 1 day's work is an example
of possible criminal acts

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By Crystal Kua
ckua@starbulletin.com

A joint Senate-House Investigative Committee scrutinizing costs related to the Felix consent decree has uncovered potential criminal acts that the state Attorney General's Office should look into, state Auditor Marion Higa said yesterday.

"These would be overbillings," Higa said after testifying before the committee. "So in effect it's a false claim for payment."

As an example, Higa pointed to the case of a therapist who billed the state for 1,765 hours in a month for services he provided to students. During that month, he billed for 127 hours in one day.

"He couldn't possibly have provided that," Higa said.

Meanwhile, the committee announced yesterday that it is authorizing two deputy attorneys general to pursue legal action to overturn a decision by U.S. District Judge David Ezra that quashed a subpoena it issued to Judy Schrag.

Schrag is a member of a now-defunct, court-appointed panel that has provided the state with technical assistance in complying with the federal consent decree, which directs the state to improve educational and mental health services to special-needs children.

The Legislature's next move could include seeking to disqualify Ezra from presiding over any further court actions that the committee takes to enforce its subpoenas.

"It will be, I believe, the sentiment of the committee that Judge Ezra has made some very somewhat cruel remarks about this committee -- comparing us to McCarthyism, threatening us along the way, saying that we're an obstruction, we're obstructing justice and so forth," said Sen. Colleen Hanabusa (D, Waianae), co-chairwoman of the committee. "The issue is whether or not he can honestly make an independent, unbiased decision as to this committee's request on our subpoenas."

Sen. Sam Slom (R, Hawaii Kai) said Ezra's statements are "demeaning and outrageous. We have been broadsided by the federal court. We have been blocked in our attempts to get information. But more so instead of attacking us, I think the federal court has attacked the people of Hawaii, the taxpayers and the children."

The consent decree is the result of a 1993 lawsuit filed on behalf of special-needs student Jennifer Felix and others, alleging the state was in violation of federal law for failing to provide appropriate mental health and education services to children with disabilities.

The investigative committee, which is examining the state's spending in complying with the consent decree, yesterday wrapped up 105 hours of hearings over the past five months.

The committee, however, wants to extend its work through the next session but needs the Legislature to approve another resolution to continue. The committee -- mainly through Higa's office -- has spent $300,000 of a $500,000 budget in its investigative work.

One witness the committee did not hear from was former state schools Superintendent Paul LeMahieu, who resigned from the post last month after the committee presented testimony about a personal relationship LeMahieu had with a Hilo woman whose company obtained a subcontract to provide Felix services.

While committee members have said that they have given LeMahieu the option to testify, LeMahieu issued a statement through an attorney yesterday saying that the committee does not want to hear from him to solve one of the "greatest educational challenges" the state has ever faced.

"All of my efforts were rebuffed, literally dozens of calls to the committee chairs went unreturned, and I was told that committee members were instructed to refrain from contact," LeMahieu said.

Higa was the last witness. She will then help the committee draft a report with recommendations.

Higa said that while the cost has been reported at $328 million, she believes that the cost is actually closer to $400 million because of add-on costs.

The spiraling costs can be explained by the ramp-up of services needed to comply with the consent decree, but she said part of the reason also is that some saw a gold mine in a state being forced to comply with a court mandate.

"People have taken advantage of the state's position here. There's what, what I suspect is, a good deal of cheating going on, and that's what's driving this cost up," Higa testified.

She said tighter fiscal and other controls should be put into place to avoid waste and abuses and possibly save the state money.

She said that once the committee's report is complete, she would like the attorney general to determine whether fraud or any other criminal acts have taken place.

Rep. Scott Saiki (D, McCully) said he would like to see federal investigators explore whether federal impact aid was misappropriated.

The DOE used impact aid to pay for the controversial $2.3 million contract LeMahieu entered into that resulted in the Hilo woman's company getting its $600,000 subcontract.