Chicago Health Center to Pay $715,000 to Settle Claims of Misusing Grants

Howard Brown to pay $715,000 to settle claims of misusing grants

By: Kristen Schorsch April 02, 2012

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Howard Brown Health Center has agreed to pay $715,000 to several federal agencies to settle allegations that the North Side organization mismanaged grant money.

The agreement resolves an investigation by the inspector general of the U.S. Department of Health and Human Services into the clinic’s handling of more than $3 million between 2005 and 2010.

Howard Brown revealed in April 2010 that it was cooperating with federal authorities on an investigation into the use of federal grant money for a major HIV/AIDS study. Later that year, Howard Brown turned over results of an internal audit showing that grants likely had been used to cover operating expenses during cash shortfalls.

Separately, Howard Brown also plans to repay $1.7 million to Northwestern University, said Jamal Edwards, who assumed the CEO post at Howard Brown after the possible financial mismanagement was detected. Northwestern became the lead agent for the HIV/AIDS study after Howard Brown became the subject of investigation.

The settlement, which covers grants tied to three studies or programs, is a key step in a turnaround of the North Side health clinic network, which was founded in 1974.

“It’s really the first day of the rest of our lives at Howard Brown,” Mr. Edwards said.

The settlement will also place added urgency on fundraising, which Mr. Edwards already has made a priority.

“We certainly do need people to continue to support us,” he said. “Obviously this is going to cause us to redirect a lot of our funds to debt repayment and not services as we would like.”

A pioneer in the treatment of people with HIV and AIDS, Howard Brown is also a research center.

Under the terms of the agreement finalized Friday, Howard Brown is making an immediate payment of $140,000 to the Centers for Disease Control and Prevention and to an agency of Health and Human Services, Mr. Edwards said.

The remaining amount, $575,000, will be paid over three years to the National Institutes of Health, he said.

Details for repaying Northwestern haven’t been finalized, and the repayment likely will take place over the next few years, Mr. Edwards said.

The Office of the Inspector General of Health and Human Services declined to comment.

The federal agencies were seeking $1.1 million, an amount that could have been tripled, Mr. Edwards said.

That Howard Brown turned over its internal audit and cooperated with federal authorities was a key factor in reaching the settlement, he said.

Since becoming chief executive, Mr. Edwards says he has overhauled the clinic’s board and administration and put in place new internal controls and auditing processes.

The organization must still boost revenue, which fell 10 percent, to $16.2 million during the fiscal year ended June 30, from $18.0 million in the prior fiscal year. Mr. Edwards has tried to offset falling revenue by putting renewed emphasis on fundraising and by cutting spending. Expenses were reduced by 26 percent, to $15.0 million in 2011, from $20.2 million in 2010.