Minnesota's deputy DHS commissioner resigns for a second time

In the latest jolt to hit the Minnesota Department of Human Services, Deputy Commissioner Claire Wilson has resigned for the second time in less than two months.

Wilson first submitted her resignation in early July along with Deputy Commissioner Chuck Johnson, an event that sparked a series of unprecedented changes at the top of the $18 billion agency. Both rescinded their resignations the following week, after then-commissioner Tony Lourey announced that he was stepping down.

The leadership shuffles continue as more problems come to light at the agency. Last week, the Star Tribune reported that federal health officials last May told the Department of Human Services (DHS) to "immediately cease" payments to a group of inpatient chemical dependency providers that had been paid improperly under federal guidelines and to repay money to Washington.

That repayment amount is now estimated at $48 million, DHS confirmed Monday. Officials said they continue to work to "ensure that we have the correct amount of overpayments."

The agency said it has also updated its computer systems to prevent future improper payments. In a letter to legislative leaders last Thursday, Acting Commissioner Pam Wheelock said DHS had briefed lawmakers on the issue back in 2016 and had hoped to fix the problem in the next budget cycle.

This is the second multimillion dollar payback linked to programs administered by the behavioral health division at DHS, which was part of Wilson's portfolio. Earlier this year the agency discovered that it had overpaid two Indian bands $25 million for substance abuse treatment programs.

The agency has notified the bands that they are responsible for returning the overpayments, but both tribal governments contend that DHS officials knew of and approved the billing methods.

In an e-mail to DHS staff on Monday, Wheelock said Wilson will depart this Friday. Wheelock, who was brought on to run the agency temporarily by Gov. Tim Walz, said Wilson "has made a big impact on the agency" and "has helped lead significant change in human services."

Wheelock will also depart at the end of this week. Her replacement is Jodi Harpstead, currently the chief executive at Lutheran Social Service, one of the state's largest social-service nonprofits. Harpstead will take over after Labor Day.

It is unclear if Harpstead, who did not respond to an inquiry from the Star Tribune, has chosen a new deputy commissioner.

In her own e-mail to agency colleagues, Wilson wrote:

"It is very difficult to leave DHS behind, and especially difficult to leave staff because so many of you have been like family to me. But I know this is the right decision for me, and I believe it is important for the agency to have a fresh start with Commissioner Harpstead."

Wilson joined DHS in 2016 as an assistant commissioner. She was a finalist for the top job at DHS when the Walz administration came into office in early 2019, but she was not in the mix in the most recent search that led to Harpstead's selection, according to Walz spokesman Teddy Tschann.

"The Governor is grateful that Claire helped provide stability during this time of transition, and wishes her the best on her future endeavors," said Tschann.

At DHS, Wilson oversaw health care, children and family services, disability services, as well as the behavioral health division.

In addition to improper payments to chemical dependency providers and overpayments to the Indian bands, the behavioral health division drew scrutiny after a compliance officer alleged retaliation after she raised concerns about contracts. Faye Bernstein, who was escorted out of DHS headquarters shortly after sending an e-mail to colleagues detailing her experiences with department leadership, has since returned to work.

Wilson's announcement did nothing to mollify legislative critics of DHS.

"I am concerned about programs that are sloppily run," said Sen. Jim Abeler, R-Anoka and chairman of a key Senate health committee.

"This doesn't do anything to restore my confidence in the way they are running the agency," he said of Wilson's resignation. "It certainly was a four-year job."

Johnson will stay at the agency under the new commissioner, Wheelock told employees. He has been with the department for decades. He was the deputy commissioner before the start of the Walz administration this January and also served as chief operating and chief financial officer of the agency.

Glenn Howatt • 612-673-7192 Twitter: @GlennHowatt