Two Strikes for Child Support Collection Company

August 16, 2002

In March, the head of Maryland's Department of Human Resources asked lawmakers to order an audit of Maximus, Inc., the private company that administers child support enforcement in Baltimore. Teresa L. Kaiser, executive director of the Child Support Enforcement Administration, said she believed that the company had manipulated data on cases "in a manner that suggests wrongdoing."

A report from the Maryland General Assembly's Office of Legislative Audits has confirmed errors, at unbelievably high rates related to some of the allegations. The Auditor's tests were limited to five specific objectives (one of them reported in two parts) related to the complaint. They did not investigate every case file, but took samples and made statistical projections from their findings.

The investigation found that Maximus collected improper payments from "absent parents" in between 4.5% and 16.3% of all cases. They improperly closed between 10.2% and 25.5% of the cases they handled. Maximus did not disperse escrowed payments and refunds in between 89.2% and 98.7% of cases in a timely manner.

Three other allegations were not confirmed. But the Auditor's report cautioned this does not mean that there are no such errors. The size of the statistical sample made a conclusion based on no errors detected unreliable. The three allegations that are as yet unconfirmed are:

1. Multiple cases created from single court order
2. Cases reopened without justification
3. Collections diverted from other local offices

The Auditor acknowledged that multiple cases for the same individuals were found, but noted that the majority of those cases had not been initiated by the contractor. Instead they had been created prior to the contractor being hired in 1999, or had been initiated by automated referrals from the Temporary Cash Assistance Program or from the Foster Care Program.

Section 10-131 of the Maryland Family Law Code requires that wage withholdings that cannot be distributed within two months of receipt because of an unreported change in the custodial parent's address, be refunded to the absent parent. The law also requires that the child support agency not make any further wage withholding collections. The review discovered that Maximus failed to follow this law to a significant degree.

"... the contractor often did not take timely action to resolve undistributed funds from various sources (wage withholdings and tax intercepts, for example)." The review found that in 63 of 67 cases "undistributed funds were not researched and resolved for periods ranging from 3 to 49 months. Of these 63 cases, 17 remained unresolved for periods exceeding 2 years."

This is not the first time problems with the private contractor have been reported.

Connecticut awarded a $12.8 million contract to Maximus to run its child support collection program. In March 1998, Time Magazine reported that "within months Maximus found its operations in the kind of disarray it usually takes government years to achieve."

In Florida that same year Maximus was paid $2.25 million and "got 12 deadbeats to cough up $5,867."

In a letter responding to the Auditor's report, Maximus' Senior Vice President Robert L. Sarno said that he does not believe that their performance record for Baltimore is the worst in the state and that nationwide there are similar problems at higher rates than found in the Baltimore review. The response was apparently intended to suggest that Maximus has a record that is competitive if not relatively good compared to overall industry performance.

Roger F. Gay