DHS official claims she was punished for reporting wrongdoing with state contracts

A compliance officer at the Minnesota Department of Human Services (DHS) said she was the victim of retaliation after she raised alarms about the legality of contracts at the social services agency.

Faye K. Bernstein, a lead contract specialist at DHS, said she was verbally reprimanded and sidelined from her duties after she pointed out "serious non-compliance issues" with a group of contracts approved by leaders in the agency's behavioral health division, which awards millions of dollars each year in contracts for mental health and substance use treatment and services.

"I am aware of substandard and noncompliant contracts approved by management to go out the door, putting DHS funds at risk and impeding client services," Bernstein wrote in a July 10 e-mail to all the employees in her division and obtained by the Star Tribune. "On a good day I am met with dismissiveness, on a bad day it feels to me to be intentionally punitive."

Within an hour after sending the message, Bernstein was escorted out of the DHS central office at 540 Cedar Street in downtown St. Paul. Bernstein, who declined to comment for this article, remains employed at the agency but has not been allowed to return to the building while the matter is investigated.

The pointed message and the agency's abrupt reaction have raised fresh concerns about oversight at DHS, coming amid a leadership crisis at the mammoth state agency. Commissioner Tony Lourey resigned abruptly last Monday, following the resignations of his top two deputies. The agency's chief of staff also resigned. Gov. Tim Walz has appointed Pam Wheelock — who has an extensive résumé in the private, nonprofit and government sectors — to serve as acting commissioner. No definitive reasons have been given for the spate of resignations.

DHS Deputy Commissioner Claire Wilson said in a written statement that the agency's internal audit unit is conducting a review of the issues raised in Bernstein's e-mail. "DHS takes seriously all concerns raised about fraud, waste, abuse or compliance," Wilson wrote. She added, "By looking into questions and concerns, we have the opportunity to help DHS improve in compliance, operations and the work environment."

Bernstein's complaints about being ignored by DHS managers echo earlier concerns raised by staff in the department. In a report released in March, the Office of the Legislative Auditor found distrust between investigators and the DHS Inspector General, Carolyn Ham, whose office is in charge of investigating fraud in the state's health and welfare programs. Most of the 14 investigators told the auditor's office that they had never met Ham, and several described her as unwilling to speak to them as they passed in the hallway, according to the report. Ham was placed on paid administrative leave in March.

The reports of disarray at DHS have renewed concerns that the agency has become too large and too complex to manage effectively. The sprawling agency has more than 6,000 employees, spends $17.5 billion every two years, and oversees programs that serve 1.2 million Minnesotans, including Medical Assistance, mental health care and child protection. In recent years, lawmakers on both sides of the aisle have called for splitting up the agency; those calls intensified following last week's leadership exodus.

"People have been saying for a decade that this agency is simply too big and needs to be broken up," said Sen. Jim Abeler, R-Anoka, chairman of Human Services Reform Finance and Policy Committee. "The recent [leadership] turmoil has made it painfully evident why we need to make this agency smaller and more manageable."

In her message to employees, Bernstein did not explain why the contracts she reviewed are noncompliant. Nor did she identify any state official by name.

The behavioral health division, where she works, has awarded more than $20 million in contracts to private and public entities over the past two years, and has been at the forefront of efforts to combat the statewide epidemic of opioid addiction and overdose deaths. Through its grants, for instance, a number of organizations have expanded the distribution of naloxone, a drug that can revive people who have overdosed. Grants from the division also have funded treatment for people with serious mental illnesses and programs that help people who are homeless.

Bernstein, whose job is to identify legal deficiencies in contracts, said her concerns were disregarded. At one point, she said, a manager scolded her and said she was "too focused on compliance" when she pointed out problems with contracts. She said the atmosphere in the division "changed dramatically and negatively" approximately six months ago. "It's my experience that any information or recommendation I make that does not validate what leadership has already decided to do is characterized as disrespectful and is met with accusations or insinuations that I'm failing to do my job correctly," she wrote.

Bernstein added that she had spent "many hours" providing information to the agency's internal audit and ethics offices. She encouraged others in the behavioral health division to speak out about problems at the agency by replying to her e-mail with the hashtag "#CallItOut" in the subject line. It is not clear if other employees responded.

Staff at DHS said Bernstein was escorted out of the building soon after sending the message. Later that day, interim assistant commissioner Stacy Twite, who oversees the behavioral health division, responded with an e-mail of her own to staff, encouraging employees to review workplace policy on reporting concerns.

"It has come to my attention an e-mail was sent out to the division which contained numerous allegations," Twite wrote. "I want to remind all staff of the appropriate venues to report concerns ..."

In her written statement, Wilson said employees have multiple ways to bring issues forward, including calling or e-mailing a hotline or submitting an anonymous report through a new web form. On July 9 and 10, the agency's compliance staff passed out fliers to DHS central office employees to raise awareness of the recently launched web form.

In addition to her work reviewing contracts, Bernstein heads a union committee that meets with DHS management over labor issues. The union, the Minnesota Association of Professional Employees (MAPE), is representing Bernstein and expressed general concern over the agency's handling of her complaints.

"We support state agencies' processes of reporting compliance concerns through proper internal channels and encourage all our members to utilize such processes when discrepancies of integrity occur at work," said Ashley Erickson, a spokeswoman for MAPE, which represents about 1,800 DHS staff. "Our first priority is to protect our members and we will not stand for retaliation of any kind in the workplace, including retaliation for reporting such discrepancies in state agencies."