Taxpayers paid millions for migrant kids' shelters that never opened, investigation finds

A bipartisan U.S. Senate committee this week concluded that the federal government’s failed oversight of a program to shelter unaccompanied migrant children cost taxpayers $32 million for several planned facilities that will never open, including one in North Carolina.

The report from the Senate’s Permanent Subcommittee on Investigations was released Tuesday after a year-long probe focusing on two companies, VisionQuest National and New Horizon Group Home. Both firms received multimillion-dollar grants from the federal Department of Health and Human Services to house children swept up by immigration officials while traveling alone or separated from their families.

But the Senate report found HHS officials were unaware of either company’s troubled history running facilities with substantiated cases of child abuse and neglect – issues that jeopardized their ability to open shelters at all.

The federal agency didn’t know, Senate investigators found, because it didn’t ask.

“HHS did not require either company to disclose prior adverse actions their respective state and local governments had taken against them, and the Department did not research the disciplinary history of either company,” the report states. “These oversights could have endangered UACs trusted to the care of these companies.”

In the case of New Horizon, based in Raeford, federal officials said they didn’t learn about issues at the company until August 2019, after members of Congress started asking questions about the grant. That inquiry, the report said, cited the first of a series of reports by WRAL News detailing treatment of children in New Horizon’s care that was so concerning, regulators abruptly shuttered one of the company’s facilities about a month after it opened.

HHS has canceled grants to the two companies and is working to claw at least some of the money back. The agency has also rolled out several reforms, including funding restrictions for unlicensed companies and new requirements to disclose abuse allegations.

But Senate investigators concluded the agency “is unlikely to recoup all of the funds disbursed” to the two companies. The report also outlines several additional recommendations for the program, including proactively confirming that “no prospective grantee has a recent history of placing children in harmful situations.”

“We can and must do better, and I’m pleased that [Office of Refugee Resettlement] has adopted many of the recommendations outlined in this report,” Republican Sen. Rob Portman, who chairs the committee, said in a statement. “I look forward to working with them to continue to improve their operations and meet their responsibilities under the law.”

In an emailed statement, an HHS spokesman said the agency worked “expeditiously and diligently to review and implement new procedures” related to the grant program beginning in November 2019.

“HHS’ priority is the well-being of each child in our care. We support this report, which promotes operational accountability,” said the spokesman, who declined to provide his name. “The central goal is to assure programmatic compliance with all appropriate child welfare standards. HHS is committed to improving our program’s safety and continues to review all recommendations outlined in the report for additional actions.”

‘Caught off guard’

Administered through the Office of Refugee Resettlement, the Unaccompanied Alien Children Program has doled out more than $9 billion in contracts since 2008 to private companies operating shelters nationwide – the majority of them in Texas, New York and California. As of late September, about 1,500 children were housed in 120 shelters across the country, a number that’s dropped amid the COVID-19 pandemic.

On average, children had been housed in these facilities for 60 days without a parent or guardian.

With operations across six states, the Arizona-based VisionQuest wasn’t new to ORR, and in fact held contracts with the agency since 2016. The company managed to secure more than $50 million in 2019 for several new facilities, despite findings from regulators in Philadelphia a year earlier that one of its existing shelters was unsafe for children.

“Confirmed incidents included residents escaping from a facility, numerous fights among residents resulting in serious injuries, and facility staff organizing further fights among residents,” the Senate report said.

Problems with zoning, litigation and local political opposition ultimately prevented the company from opening five of the proposed facilities in Pennsylvania, California and Texas, despite drawing down $28 million in government funding for the projects.

But to federal officials, New Horizon was an unknown.

Federal data show the company had never contracted with HHS before. And in fact, the lack of such migrant shelters in North Carolina made the grant with New Horizon particularly attractive to then-ORR Director Jonathan Hayes, who recommended the grant’s approval.

Agency leaders told Senate investigators they wanted to build a “footprint” in North Carolina because of its status as a “high release point” close to family members and others who could potentially sponsor the unaccompanied children.

In its application to ORR in November 2018, New Horizon did not tell federal officials about serious problems at one of its facilities just months before, nor was the company required to, according to Senate investigators.

But in July 2019, reporters with WRAL News revealed that New Horizon managed to secure millions of dollars through the federal program to house dozens of children at a new facility in Laurinburg, despite lacking a license to operate such a facility. The reporting also provided details – available publicly – about the abrupt shutdown of the company’s Lumber Bridge group home in July 2018.

North Carolina regulators had given New Horizon just hours to close the facility after an investigation substantiated allegations of neglect and abuse. The location housed boys between 9 and 17 who suffered from a range of mental health issues.

“The violations included New Horizon’s failure to hire necessary medical personnel, failure to protect two of its five residents from serious harm and the use of an unauthorized time-out room for residents,” the Senate report read.

The violations prompted the state to revoke the company’s license, an action that prevented New Horizon from obtaining a separate certification it needed to run the migrant children’s home.

It took questions from North Carolina Congressman David Price, citing WRAL’s reporting, to alert HHS officials to the company’s licensing problems.

Within days, the federal agency prohibited New Horizon from withdrawing any more of its funding.

“By this point, however, New Horizon had already drawn down $3,984,803 in grant funds from the payment system,” the report says. That’s almost half the nearly $8 million the company was approved for.

The agency, federal officials told Senate investigators, “were ‘caught off guard’ by New Horizon” and that they were hobbled by a lack of expertise with North Carolina law. One senior leader told the Senate committee that New Horizon was “the first ORR award recipient that could not obtain a license to operate in the state.”

All told, the Senate report found that, before the agency shut off the funding tap, a combined $32 million went to VisionQuest and New Horizon for facilities that will never open.

HHS has asked for the majority of that money back from New Horizon, and it’s begun a similar process for VisionQuest. But both companies have the option to appeal clawback efforts to an HHS board, an action New Horizon initiated back in July.

An attorney for New Horizon CEO Barbara Brockington did not respond to a request for comment Wednesday afternoon, and Brockington did not respond to an email or phone message. Nor did representatives from VisionQuest.

Changes implemented

Senate investigators did note the program to house unaccompanied migrant children has seen oversight improvements since their probe began.

As of October 2019, program officials now require applicants to disclose potential licensing problems. In November 2019, program officials began restricting funds for companies that hadn’t yet secured licenses – a move Senate investigators said could have saved taxpayers more than $32 million if implemented sooner.

This summer, the agency started requiring companies to disclose details on any allegations of abuse and neglect. One senior leader explained that the agency “now pursues greater engagement with the home state government of applicant – including the state licensing body or child welfare agency – before awarding a grant.”

But the Senate committee issued three additional recommendations to the agency: to make disclosure rules permanent, require companies to obtain licenses before applying for funding and to ensure HHS officials “proactively check state databases” for past issues.

“These efforts would provide a more complete picture to HHS regarding whether a grantee’s prior history could affect its ability to obtain an operating license,” the report’s recommendations read. “This would also allow HHS to confirm that no prospective grantee has a recent history of placing children in harmful situations.”

In a statement, Sen. Tom Carper, a Delaware Democrat and the committee’s ranking member, said despite “moderate steps” by HHS, there remain “significant gaps” in the immigration system that directly impact vulnerable children in government custody.

“While our findings show a serious need for improvement, I’m hopeful that our recommendations lay out concrete steps that the next administration can take to prioritize the care and safety of minors who are already fleeing unspeakable conditions in their home countries,” Carper said. “I look forward to working with the incoming Biden-Harris administration to ensure that our nation upholds our moral responsibility to these children, including by reducing the number of children who require time in shelters in the first place.”

This story was published jointly by WRAL News and The News & Observer.