The Young Adult Institute in New York is a 501(c)(3) non-profit organization, formed in 1957 to provide services to adults with developmental disabilities (YAI Overview). Today, the YAI Network, as it is called, comprises seven related agencies that serve over 20,000 people of all ages who have developmental disabilities, employing over 5,600 staff persons to do so (YAI History). Beyond direct programming to individuals, the YAI also has an extensive outreach and education services, including everything from publications and conferences, to educate the general public about issues related to developmental disabilities.
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However, beginning as early as 1995 and continuing to the present time, there have been questions about how YAI manages its money. In 1995, the Commission on Quality of Care for the Mentally Disabled (an agency created to oversee programs that offer services for people with developmental disabilities) identified YAI as one of several non-profit organizations that had appealed to the Office for People with Developmental Disabilities (OPWDD; formerly, the Office of Mental Retardation and Developmental Disabilities, or OMRDD) for more money to cover administrative costs. Although that particular investigation resulted in a rather congenial and friendly letter to Joel Levy (then-co-CEO of YAI, along with his brother), that was just the beginning of a series of money-related issues that continue today.
This essay will investigate the specific issues that have been raised in relationship to the Young Adult Institute. The essay will begin with a thorough background of the organization, continue through to a discussion of the issues themselves, the outcomes, and the legal and ethical concerns of the case, and will end with recommendations.
History of Young Adult Institute
The Young Adult Institute (YAI) is based in New York, NY (although it currently serves clients through the state, in New Jersey, in Puerto Rico, and in the U.S. Virgin Islands). It began in 1957 to provide alternatives to the "warehousing" of people with developmental disabilities; in fact, it was one of the first to create and offer group home placements to adults with developmental disabilities (YAI History). From that point, YAI continued to break new ground for the support of, and advocacy for, persons with developmental disabilities, including the provision of day services, employment programs, programming for families health care, and so forth. From the beginning, a community-oriented perspective on services was in place, in itself an innovative stance, especially for the 1950s.
The mission is worded in simple language: "The mission of the YAI Network is to create hope and opportunity for people with developmental and learning disabilities and their families." (YAI Mission and Culture). This network, at this point in time, is one of the most comprehensive in the United States, offering everything from learning opportunities to health care, employment assistance to vacations. YAI's primary commitment is to help persons with developmental disabilities achieve maximum "independence, individuality, productivity and inclusion in their communities" (YAI Mission). Over 60 years into their work, YAI helps over 20,000 people every year and employs over 5,600 staff people (YAI Mission).
Its leadership structure is relatively typical. A Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Financial Officer (CFO) comprise the executive management team (YAI Leadership), and a list of senior directors and directors flows down from these three. In terms of the "front-line" staff, YAI has received numerous awards from the American Psychological Association, Crain's New York Business, and others which have designated the organization as an excellent place to work (YAI Careers). YAI's programming is extensive, including employment, housing, daily life skills training, services for family members, and a wide range of other offerings to persons with developmental disabilities and their family members. All programming is disseminated via a group of seven independent agencies that together comprise the YAI Network (YAI Agencies), including the New York League for Early Learning, Premier HealthCare, and the Rockland County Association for the Learning Disabled.
This last agency - the Rockland County Association for the Learning Disabled - is a good place to begin a discussion of YAI's on-going legal issues related to its status as a non-profit organization, as it is involved in the latest problem in which YAI has become involved. As noted above, these issues began back in 1995 when the OMRDD began a review of spending practices at several non-profit groups (Sundram, et al). The review was to determine whether appeals to the state for more money were reasonable. This first investigation, however, did end without repercussions for YAI, in part because it found that overall, the agencies had to ask for more money largely because rates for workers in group homes had not been adjusted upward since the mid-1980s (Sundram, et al, p. 7); because the rate setting procedure was identified as the problem in this case, it made sense that the agencies were experiencing shortfalls and were appealing to the state for more money.
However, this was not the end of the legal issues for YAI. In 2010, an anonymous complaint was filed against YAI, alleging "financial fraud" and "unethical things" (Rybaltowski, p. 1). Specifically, issues related to the compensation of the top executives at YAI - the Levy brothers - were brought forth to the Commission on Quality of Care and Advocacy for Persons with Disabilities, as were concerns that Medicaid had been billed for services that YAI had not provided, fake employees created and placed on payroll, and other similar charges of financial fraud. The commission reviewed some of the allegations (stating that there were too many to investigate), and essentially found that YAI was not committing financial fraud. Upon the conclusion of the review process, YAI responded to the commission in writing that they too considered the matter closed (Green).
The problems continued. In January, a suit was filed by the US District Court against YAI alleging that fraudulent billings to Medicaid had been going on for many years. The charges were initially raised by Richard Fagan, who had been a budget director at YAI in the past (Bharara, US v YAI). The case was settled for $18 million, with YAI admitting no wrongdoing whatsoever. Unfortunately for YAI, in July, the OPWDD put YAI on notice, telling them that the measures they had undertaken to pay this money back had fallen seriously short, including the fact that executive salaries had been frozen (instead of rolled back) (Ruggiero).
In August, YAI was placed on Early Alert by the OPWDD because it still had not provided an adequate plan to pay back the state the $18 million (Moran). Then, in September, the Rockland County Association for the Learning Disabled (RCALD) was placed on Early Alert by the OPWDD because it showed no sign of being truly independent from YAI (as was claimed), and since YAI was on Early Alert, so, too, would the RCALD. This is the latest information available on this situation; clearly, it has not yet been resolved.
The Outcome
As noted above, there have been several outcomes along the way regarding YAI's continual difficulties with the law concerning its financial operations. There was one lawsuit which resulted in an $18 million settlement, there were strong recommendations made to YAI to "shape up" financially, and the agency was placed on Early Alert most recently. However, there was no threat of a loss of tax-exempt status, nor was anyone imprisoned, most likely because for the most part, charges were either unsubstantiated or were quickly "brushed under the rug" by settlement agreements.
Legal Issues Related to the Problem
The Medicaid fraud charge is definitely the most pressing legal concern that the YAI faced during this period of over 15 years. While settling a case does not mean that any wrongdoing is admitted, the fact that the YAI settled, and for such a large amount, does indicate that some problems did indeed exist along these lines. That this is a serious problem was outlined in a press release from the Office of the Attorney General in NY stating that YAI had basically defrauded Medicaid since 1999, had been caught, and was paying the price, as would other agencies who attempted to do the same thing (Schneiderman).
Given that no admission was forthcoming from YAI regarding these charges, it is impossible to determine what caused them. However, YAI also has a long-standing history of paying huge sums of money to its top officers. For example,
Philip and Joel Levy, each received close to $1 million a year at the peak of their earnings. As part of their compensation, the brothers and other executives were allowed to bill the institute for the costs of their children's college educations. Philip Levy charged the organization $50,400 for his daughter's living expenses one year, money that went toward her purchase of a co-op apartment in Greenwich Village. Both brothers retired abruptly in June. (Buettner)
It therefore seems likely that a desire to "rake in" as much as possible from YAI might well have led the top executives to bill for services that were not provided, and otherwise wring as much money from the organization as possible. This, then, would not just be laid at their feet, but also at the feet of the Board of Directors, for they are supposed to oversee the chief officers.
Ethical Issues Related to the Problem
The ethical dilemma is clear in this case. Given that people with developmental disabilities are among the most vulnerable in our society, taking money from them in order to fund lavish lifestyles is abominable. How can anyone feel good about taking almost one million dollars a year to live in Manhattan when they know that many of the clients their agency serves live in close to poverty conditions? How can they feel good about it, as well, when the "front-line" workers surely make nothing near to this amount of money? Think of all the services that might have been provided, all of the advocacy that could have been done, for all that money over the years. That is the ethical problem - the loss of money that could have made a real difference to people in need - money given to people who were already quite wealthy.
Recommendation
The first recommendation I would make has already been done: get rid of the Levy brothers. Beyond that, I would charge the CFO to come up with a plan, and do it in one month, that would satisfy all of the OPWDD's concerns regarding the payback to the government. I would mandate that this plan was set in motion as soon as it was approved by the state, and would set an independent "watchdog" in place to oversee the implementation of the plan. I would then order a thorough review of all executives at YAI, to determine whether or not they had any knowledge or involvement in fraudulent activities, and, if so, would terminate them immediately. Basically, what I would do first is clean financial house.
Next, I would begin a public relations campaign to revive YAI's reputation, beginning with a new program (approved by the state, of course) that would grant money to local, community-based agencies working with persons with developmental disabilities. I would "spin" this new program in such a fashion as to show that YAI was completely committed to putting its money where its mouth is and doing good works with all possible funds, to the point that it was trusting local community-based leaders with funding to implement innovative programming. The ultimate goal would be the ability for YAI itself to innovate and grow - the more that stagnation sets in, the greater the risk that future problems will occur.
In short, I would first ensure that all legal issues had been cleared away, and then I would recommit the organization to its original ethical mandate. The YAI is not completely flawed, nor should it dissolve, if only because it serves so many people. Therefore, it simply needs a thorough house-cleaning for it to become a leader in its field - with a fully admirable reputation - once more.
References
Agencies.. Young Adult Institute. Retrieved from Bharara, P. (January). United States of America v. Young Adult Institute.
Buettner, R. State seeks data on pay of leaders at nonprofits. The New York Times.
Career.. Young Adult Institute.
Leadership.. Young Adult Institute.
Mission and Culture.. Young Adult Institute.
Moran, J.F. (July 6). Letter to Jeffrey R. Ruggiero.
Overview.. Young Adult Institute.
Rybaltowski, J. (April 22). Letter to Eliot P. Green.
Sundram, C.J., Stack, E.W., & Benjamin, W.P. (January). Safeguarding public funds: A review of spending practices in OMRDD rate appeals.
This essay will investigate the specific issues that have been raised in relationship to the Young Adult Institute. The essay will begin with a thorough background of the organization, continue through to a discussion of the issues themselves, the outcomes, and the legal and ethical concerns of the case, and will end with recommendations.
History of Young Adult Institute
The Young Adult Institute (YAI) is based in New York, NY (although it currently serves clients through the state, in New Jersey, in Puerto Rico, and in the U.S. Virgin Islands). It began in 1957 to provide alternatives to the "warehousing" of people with developmental disabilities; in fact, it was one of the first to create and offer group home placements to adults with developmental disabilities (YAI History). From that point, YAI continued to break new ground for the support of, and advocacy for, persons with developmental disabilities, including the provision of day services, employment programs, programming for families health care, and so forth. From the beginning, a community-oriented perspective on services was in place, in itself an innovative stance, especially for the 1950s.
Its leadership structure is relatively typical. A Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Financial Officer (CFO) comprise the executive management team (YAI Leadership), and a list of senior directors and directors flows down from these three. In terms of the "front-line" staff, YAI has received numerous awards from the American Psychological Association, Crain's New York Business, and others which have designated the organization as an excellent place to work (YAI Careers). YAI's programming is extensive, including employment, housing, daily life skills training, services for family members, and a wide range of other offerings to persons with developmental disabilities and their family members. All programming is disseminated via a group of seven independent agencies that together comprise the YAI Network (YAI Agencies), including the New York League for Early Learning, Premier HealthCare, and the Rockland County Association for the Learning Disabled.
This last agency - the Rockland County Association for the Learning Disabled - is a good place to begin a discussion of YAI's on-going legal issues related to its status as a non-profit organization, as it is involved in the latest problem in which YAI has become involved. As noted above, these issues began back in 1995 when the OMRDD began a review of spending practices at several non-profit groups (Sundram, et al). The review was to determine whether appeals to the state for more money were reasonable. This first investigation, however, did end without repercussions for YAI, in part because it found that overall, the agencies had to ask for more money largely because rates for workers in group homes had not been adjusted upward since the mid-1980s (Sundram, et al, p. 7); because the rate setting procedure was identified as the problem in this case, it made sense that the agencies were experiencing shortfalls and were appealing to the state for more money.
However, this was not the end of the legal issues for YAI. In 2010, an anonymous complaint was filed against YAI, alleging "financial fraud" and "unethical things" (Rybaltowski, p. 1). Specifically, issues related to the compensation of the top executives at YAI - the Levy brothers - were brought forth to the Commission on Quality of Care and Advocacy for Persons with Disabilities, as were concerns that Medicaid had been billed for services that YAI had not provided, fake employees created and placed on payroll, and other similar charges of financial fraud. The commission reviewed some of the allegations (stating that there were too many to investigate), and essentially found that YAI was not committing financial fraud. Upon the conclusion of the review process, YAI responded to the commission in writing that they too considered the matter closed (Green).
The problems continued. In January, a suit was filed by the US District Court against YAI alleging that fraudulent billings to Medicaid had been going on for many years. The charges were initially raised by Richard Fagan, who had been a budget director at YAI in the past (Bharara, US v YAI). The case was settled for $18 million, with YAI admitting no wrongdoing whatsoever. Unfortunately for YAI, in July, the OPWDD put YAI on notice, telling them that the measures they had undertaken to pay this money back had fallen seriously short, including the fact that executive salaries had been frozen (instead of rolled back) (Ruggiero).
In August, YAI was placed on Early Alert by the OPWDD because it still had not provided an adequate plan to pay back the state the $18 million (Moran). Then, in September, the Rockland County Association for the Learning Disabled (RCALD) was placed on Early Alert by the OPWDD because it showed no sign of being truly independent from YAI (as was claimed), and since YAI was on Early Alert, so, too, would the RCALD. This is the latest information available on this situation; clearly, it has not yet been resolved.
The Outcome
As noted above, there have been several outcomes along the way regarding YAI's continual difficulties with the law concerning its financial operations. There was one lawsuit which resulted in an $18 million settlement, there were strong recommendations made to YAI to "shape up" financially, and the agency was placed on Early Alert most recently. However, there was no threat of a loss of tax-exempt status, nor was anyone imprisoned, most likely because for the most part, charges were either unsubstantiated or were quickly "brushed under the rug" by settlement agreements.
Legal Issues Related to the Problem
The Medicaid fraud charge is definitely the most pressing legal concern that the YAI faced during this period of over 15 years. While settling a case does not mean that any wrongdoing is admitted, the fact that the YAI settled, and for such a large amount, does indicate that some problems did indeed exist along these lines. That this is a serious problem was outlined in a press release from the Office of the Attorney General in NY stating that YAI had basically defrauded Medicaid since 1999, had been caught, and was paying the price, as would other agencies who attempted to do the same thing (Schneiderman).
Given that no admission was forthcoming from YAI regarding these charges, it is impossible to determine what caused them. However, YAI also has a long-standing history of paying huge sums of money to its top officers. For example,
Philip and Joel Levy, each received close to $1 million a year at the peak of their earnings. As part of their compensation, the brothers and other executives were allowed to bill the institute for the costs of their children's college educations. Philip Levy charged the organization $50,400 for his daughter's living expenses one year, money that went toward her purchase of a co-op apartment in Greenwich Village. Both brothers retired abruptly in June. (Buettner)
It therefore seems likely that a desire to "rake in" as much as possible from YAI might well have led the top executives to bill for services that were not provided, and otherwise wring as much money from the organization as possible. This, then, would not just be laid at their feet, but also at the feet of the Board of Directors, for they are supposed to oversee the chief officers.
Ethical Issues Related to the Problem
The ethical dilemma is clear in this case. Given that people with developmental disabilities are among the most vulnerable in our society, taking money from them in order to fund lavish lifestyles is abominable. How can anyone feel good about taking almost one million dollars a year to live in Manhattan when they know that many of the clients their agency serves live in close to poverty conditions? How can they feel good about it, as well, when the "front-line" workers surely make nothing near to this amount of money? Think of all the services that might have been provided, all of the advocacy that could have been done, for all that money over the years. That is the ethical problem - the loss of money that could have made a real difference to people in need - money given to people who were already quite wealthy.
Recommendation
The first recommendation I would make has already been done: get rid of the Levy brothers. Beyond that, I would charge the CFO to come up with a plan, and do it in one month, that would satisfy all of the OPWDD's concerns regarding the payback to the government. I would mandate that this plan was set in motion as soon as it was approved by the state, and would set an independent "watchdog" in place to oversee the implementation of the plan. I would then order a thorough review of all executives at YAI, to determine whether or not they had any knowledge or involvement in fraudulent activities, and, if so, would terminate them immediately. Basically, what I would do first is clean financial house.
Next, I would begin a public relations campaign to revive YAI's reputation, beginning with a new program (approved by the state, of course) that would grant money to local, community-based agencies working with persons with developmental disabilities. I would "spin" this new program in such a fashion as to show that YAI was completely committed to putting its money where its mouth is and doing good works with all possible funds, to the point that it was trusting local community-based leaders with funding to implement innovative programming. The ultimate goal would be the ability for YAI itself to innovate and grow - the more that stagnation sets in, the greater the risk that future problems will occur.
In short, I would first ensure that all legal issues had been cleared away, and then I would recommit the organization to its original ethical mandate. The YAI is not completely flawed, nor should it dissolve, if only because it serves so many people. Therefore, it simply needs a thorough house-cleaning for it to become a leader in its field - with a fully admirable reputation - once more.
References
Agencies.. Young Adult Institute. Retrieved from Bharara, P. (January). United States of America v. Young Adult Institute.
Buettner, R. State seeks data on pay of leaders at nonprofits. The New York Times.
Career.. Young Adult Institute.
Leadership.. Young Adult Institute.
Mission and Culture.. Young Adult Institute.
Moran, J.F. (July 6). Letter to Jeffrey R. Ruggiero.
Overview.. Young Adult Institute.
Rybaltowski, J. (April 22). Letter to Eliot P. Green.
Sundram, C.J., Stack, E.W., & Benjamin, W.P. (January). Safeguarding public funds: A review of spending practices in OMRDD rate appeals.
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