A Harrisburg nonprofit that gets state money to oversee a statewide network of abortion-alternative programs is suing the Pennsylvania Auditor General's office — a move the fiscal watchdog calls a “legal cover up attempt” to head off a complete audit of the organization.
In its request for declaratory judgment filed Wednesday in Commonwealth Court, Real Alternatives maintains the AG’s office and the Department of Human Services, also named in the suit, lack the authority to audit a particular set of expenses each has sought to review.
Noting it’s the first time he has been sued for conducting an audit, Auditor General Eugene DePasquale called the legal action a “financial gimmick to prevent auditors from tracking nearly $1 million” in taxpayer money.
“The idea that any organization receiving public funds would hide behind the courts to keep taxpayers in the dark makes my blood boil,” he said in a news release, telling reporters later that Real Alternatives is likewise “suing the nearly 13 million Pennsylvanians that help pay for their contract.”
Mr. DePasquale's office began an audit of the state's contract with Real Alternatives in September, nearly a year after the Pittsburgh Post-Gazette reported that the nonprofit has a five-year, $30.2 million agreement with DHS and manages service providers, who must pledge to provide free services and “maintain a pro-life mission.” The contract expires June 30.
DHS did a separate audit in 2016 and had asked for the auditor general's help in accessing a set of expenses that Real Alternatives has so far declined to provide — the first time a state agency has asked Mr. DePasquale to assist in one of its audits, he said.
In its review, DHS found that Real Alternatives collects a 3 percent fee from its roughly 30 service providers by reducing the providers' claim reimbursements. (For instance, $97 of a $100 claim would be paid to the provider, with Real Alternatives retaining $3.) The nonprofit then invoices the full amount to DHS as direct services.
In September, a Real Alternatives representative said that the nonprofit’s service providers have agreed to hire it in a second agreement. Its “primary purpose ... is to provide funding for the development and advancement of Real Alternatives’ life-affirming programs and missions, both locally and nationally,” the lawsuit says.
The representative continued: “As is usual in the business world, the two different agreements have offset provisions for payment terms. For example, if I owe you $10 and you owe me $5, it would be awfully silly for me to give you $10 and you then hand me $5 back. It makes much more sense and is more efficient for me to just give you $5.”
The 3 percent payments received by Real Alternatives thus become “private corporate records” not subject to DHS or AG’s office oversight, the lawsuit argues.
Mr. DePasquale said that has so far amounted to “$906,000 of taxpayer money for which there is zero accountability.” State leaders, he continued, “should not give Real Alternatives another dime” until taxpayers “know what they’re doing with this 3 percent fee.”
Real Alternatives has said an outside accounting firm audits the expenses.
A Real Alternatives representative directed a reporter to a statement on its website:
“Real Alternatives is amazed that this matter is even an issue since it was legally researched as well as discussed and approved by the then Department of Public Welfare prior to implementation. In addition, the same private contracts were in place during four different audits over the last 20 years, conducted by four different audit teams, and yet they had no issue whatsoever with those contracts.”
Molly Born: firstname.lastname@example.org or 412-263-1944.