US Senate Committee Probes Nation’s Largest For-Profit Foster Care Firm

The company, National Mentor Holdings, says it is pulling out of foster care in five states. Mentor was the subject of a BuzzFeed News investigation.

Posted on

The leaders of the powerful US Senate Finance Committee last week sent a six-page letter to the nation's largest for-profit foster care company, National Mentor Holdings, requesting detailed information about the firm's business practices and treatment of the thousands of children in its care.

That request to Mentor marks the latest step in the committee's sweeping inquiry into privatized foster care, which began in April when the committee, citing BuzzFeed News' reporting, asked all 50 state governors about their foster-care contracting practices. The letter to Mentor, signed by the committee chairman, Sen. Orrin Hatch, (R-Utah) and ranking member, Sen. Ron Wyden (D-Oregon) cites "deeply disturbing" news articles that focus on "what appear to be serious deficiencies" in the company's foster care operations.

BuzzFeed News has published extensive reporting about the foster-care giant, detailing problems such as deaths and abuse in foster homes run by Mentor in Maryland and Texas, Illinois, and Massachusetts.

Yesterday, a week after the Senate letter was sent, the company announced it was pulling out of foster care operations in five states. In a statement, Mentor said that the move was the result of a "comprehensive review" that began in January "to ensure we are delivering service excellence to every child in every home, while maintaining stable, sustainable financial performance." Mentor will continue to provide foster care in at least seven states.

The company trades on the New York Stock Exchange as Civitas Solutions LLC, and markets itself as The Mentor Network. It is controlled by New York-based private equity fund Vestar Capital Partners.

In outsourced foster care, states pay organizations such as Mentor to recruit, train and oversee foster parents. The organizations even get paid to provide caseworkers and clinicians to monitor the children in their care.

As BuzzFeed News has reported, the firm has turned privatized foster care operations in the US into a profitable business over the last three decades. But there have been troubles, including at least six child deaths in the company's homes since 2005, as well as cases of sex abuse. An investigation into a baby's death in Massachusetts found "serious violations of child placement regulations." Investigators in Illinois found a "culture of incompetence." A prosecutor in Texas has called for a federal investigation of the company after a two year old was murdered by her foster mother, who had been hired by Mentor.

Senate Review

The Senate committee's new focus on Mentor shows that it is looking not just at state governments but at private contractors as well. As of late last year, the company said it had 3800 children in its care in 15 states.

The Senate letter cites "tragic consequences" resulting from "serious errors in judgment by Mentor." The letter requests information on how much federal money, from the so-called Title IV-E funds, which are meant to support foster care, Mentor receives. That's something that even the federal Administration for Children and Families, which oversees the program, doesn't know, because the funds are distributed directly to states, which don't have to report which contractors they hire.

The letter also requests information about whether Mentor uses non-disclosure agreements in settling cases with children who may have been harmed in its care. "Since January 2005, has Mentor entered into any agreements concerning non-disclosure/confidentiality clauses with the legal representatives of children who were, or who are now, placed in Mentor foster care homes?"

Sources have told BuzzFeed News that former employees of Mentor sometimes have signed restrictive confidentiality clauses, and that the firm has required confidentiality when it settled lawsuits with children harmed in its homes. A Mentor spokesperson said that the firm does not have the ability to keep an incident a secret.

The letter also requests information about Alliance Human Services, a non-profit organization that frequently works with Mentor. As BuzzFeed News has reported, some states contract with Alliance, which then subcontracts the work to the for-profit company, Mentor.

And the senators asked about whether Mentor pays bonuses for placements of children at homes, or whether there are targets, or quotas. Former employees have alleged that pressure for profits drove the company to cut corners on care — a charge Mentor denies.

In its statement, Mentor said it is "engaged in an on-going dialogue with the Committee" and would continue to respond to the committee's questions.

Mentor Pulling Out of Five States

In a filing Wednesday with the SEC, Mentor announced it will be pulling out of foster care in Texas, Florida, Indiana, Louisiana and North Carolina. It says it will "transition" the 1000 children living in its foster homes in those states to other facilities.

Sarah Magazine, the company spokesperson, said there was no relationship between the Senate's questions to Mentor and the timing of the announcement that the firm was pulling out of foster care in five states. It also said that BuzzFeed News' reporting did not influence its decision.

One Texas prosecutor who has called for a federal investigation of Mentor said he was delighted to hear that the firm is getting out of the child welfare business in his state.

"That's wonderful," said Milam County District Attorney W.W. Torrey. "It's super."

Torrey prosecuted a Mentor foster mother named Sherill Small in 2014, who murdered her two year-old foster daughter, Alexandria Hill in 2013. Torrey has said Mentor should never have placed the little girl with Small.

Mentor put the girl in Small's custody despite the fact that five children had been removed from her care as "failed placements." An internal Mentor document stated that Small "reported feeling stressed out, and will express that she is unable to care for the children in the home." Mentor has expressed regret about the "poor judgment" it made in that case.

"How could they have been any more negligent?" he said. "Abject negligence!"

The firm said the move out of the five states would "strengthen financial performance" and help it improve its services. "I am confident," said CEO and President Bruce Nardella, "that these changes will make us a better provider and a stronger company."

Earlier this year, the company also stopped providing foster care in Illinois, where it had custody of 485 children. The firm said that move had nothing to do with a scathing state investigation that found a "culture of incompetence" at the company and denied that it had such a culture.

Here's the letter the Senate Finance Committee sent to Mentor.

Indiana is one of five states from which Mentor is pulling its foster care business. An earlier version of this post stated incorrectly that Georgia was one of the five states.

Aram Roston is an investigative reporter and editor for BuzzFeed News and is based in Washington, DC. His secure PGP fingerprint is D861 374F D725 4F61 39C0 08F1 4575 134B 09D9 B28D

Contact Aram Roston at aram.roston@buzzfeed.com.

Got a confidential tip? Submit it here.