In a 54-page memo, Vermont State Auditor Doug Hoffer confirms that embattled Obamacare architect Jonathan Gruber overbilled the state in invoices he submitted for work Gruber claims was performed by research assistants.
“The evidence suggests that Dr. Gruber overstated the hours worked by the RA, but we have insufficient documentation to say any more about his inconsistencies and questionable billing practices. I have referred the matter to the Attorney General for his consideration, which is standard procedure in such circumstances,” Hoffer said in the conclusion of his memo, released Monday.
Hoffer opened the memo by explaining the reason for his inquiries:
The State of Vermont entered into a personal services contract with Dr. Jonathan Gruber in July 2014 for the purpose of “research and economic modeling related to the implementation of Green Mountain Care as passed into law as Act 48 of 2011” (contract #272771). Following news reports of certain remarks made by Dr. Gruber, the administration renegotiated the contract with Dr. Gruber in November 2014. Subsequent public records requests yielded invoices and other documents that raised questions about Dr. Gruber’s billing practices and the State’s monitoring and enforcement of particular contract provisions.
The original contract was for $450,000, but the terms were amended on November 24, shortly after Gruber’s controversial comments about the “stupidity of the American voter” were made public. Under the amendment, the contract was reduced to the $200,000 already billed by Gruber plus any additional expenses for work by his research assistants.
At the time of the amendment, Gruber had billed the State of Vermont $200,000 for his services. $100,000 for 200 hours of his time, billed at $500 per hour, and $100,000 for the time of research assistants, who Gruber claimed worked 1,000 hours, billed at $100 per hour.
The state had paid $160,000 against those invoices at that time, retaining $40,000 until the final completion and acceptance of his report.
On December 17, Governor Shumlin announced that, at least for 2015, he was abandoning plans to introduce a single-payer health care system to Vermont.
Later that month, the Shumlin administration released the report which relied on Gruber’s projections.
Despite the November 24 amendment to the contract, which, according to Vermont Secretary of Administration Justin Johnson “limited the total payments to Dr. Gruber for his specific work activities to no more than $80,000,” Gruber submitted two additional invoices, one of which was for his specific work.
On December 30, Gruber submitted a bill for $65,000 to the State of Vermont: $40,000 for 80 hours of work he conducted between October 15 and November 15, billed at $500 per hour, and $25,000 for 250 hours of work performed by research assistants (plural) billed at $100 per hour.
Gruber submitted a second invoice on December 30, in the amount of $25,000 for work performed by research assistants (plural) for 250 hours of work, billed at $100 per hour, performed from November 15 to December 19.
All told, Gruber has billed the State of Vermont $290,000 for work performed on his contract. $150,000 of this billing is for work he says was performed by research assistants, $140,000 is for work he performed himself.
To date, the State of Vermont has paid Gruber $160,000–$80,000 for work he performed, and $80,000 for work he says research assistants performed.
But in his memo released today, Vermont State Auditor Hoffer says Gruber had only a single research assistant, not several. In addition, that research assistant was an employee of Gruber’s who was paid $32,000 for work perfomed in 2014, according to a W-2 Gruber provided to Hoffer.
Gruber also admitted to Hoffer that his research assistant was paid for work conducted other projects in addition to the Vermont project.
As Hoffer reports in his memo:
[W]hen asked for documentation, Dr. Gruber provided a W-2 for his sole RA for the Vermont contract, which means he was an employee. Dr. Gruber stated that he relies upon a payroll service to handle these issues because they are “outside [his] area of expertise.” . . .
The first two invoices billed a total of $100,000 for the RA’s time, and the State paid $80,000 (withholding 20 percent as permitted by contract until the final deliverables are received). The W-2 provided by Dr. Gruber indicated that the RA was paid just over $32,000 in wages for 2014. The $32,000 was not solely for work the RA performed on the Vermont contract, as Dr. Gruber said the figure “reflects some work on other projects as well.
If all the payments made by Gruber to his research assistant were totally dedicated to work on the Vermont contract, Gruber himself apparently pocketed at least $48,000 of the $80,000 the state of Vermont has already paid him for work he says was performed by his research assistants.
To make matters worse for Gruber, he has submitted outstanding bills requesting an additional $50,000 of payment for work performed by his sole research assistant on the Vermont contract. Adding that to the $20,000 previously billed but not yet paid, Gruber is asking to be paid an additional $70,000 for work he says was performed by his research assistants.
The findings reported in Hoffer’s memo appear to support comments made in January by Darcie Johnston, head of Vermonters for Health Care Freedom, who noted that Gruber’s failure to “provide any evidence that the $80,000 he’s been paid by the State of Vermont for 800 hours of work performed by unidentified research assistants” may have been “phantom billing.”
Vermont State Auditor Hoffer is not the only official of the State of Vermont who has called in the Attorney General to review Gruber’s billing practices.
In his response to Hoffer’s findings, Secretary of Administration Justin Johnson wrote in an attachment to Hoffer’s memo on Monday:
With respect to going forward, the contract amendment effective November 24, 2014, limited the total payments to Dr. Gruber for his specific work activities to no more than $80,000. As you pointed out, my Office is currently holding $40,000 in retainage associated with this contract which will serve as leverage as we continue to work closely with the Attorney General’s Office to bring this matter to a close.
While we found payment of the first two invoices acceptable at the time in light of our detailed familiarity with the work performed, we are witholding further payments for Dr. Gruber’s assistant until we receive more detailed invoices, given the concerns regarding contract compliance. . .
To the extent any issues remain unresolved under this contract, we look forward to continuing work with the Attorney General’s Office, as well as your Office, to address them.
Breitbart News has asked the Vermont Attorney General’s Office to comment, but has not received a reply.
Hoffer’s memo also hit the Shumlin administration hard for its lack of oversight on the Gruber contract.
“[I]t’s clear that the Agency of Administration failed to exercise due diligence and enforce important provisions of the contract,” Hoffer wrote in his conclusion. “The Agency of Administration should be a model of best practices in contract administration. Hopefully, it will work to improve its oversight and control functions to
ensure greater accountability.”
As Breitbart News reported earlier, Gruber also faces unanswered questions about his billing practices for work performed for the State of Minnesota.
Breitbart News asked Professor Gruber to comment, but has not received a response.