The Shrill Whistle-blower

The war between a state agency and a self-appointed watchdog degenerates into accusations of racism, revenge and name-calling--and your tax dollars pay for it

Johnston, managing partner of the law firm of Johnston Maynard Grant and Parker, usually appears in venues classier than the cramped justice courtroom where he sought a restraining order against his ex-wife, Polly Parker-Johnston. Johnston claimed that Parker was stalking and threatening him. Parker denied Johnston's charges, and said he was using litigation to harass her.

Ordinarily, this would be a private matter, one of the uglier cul-de-sacs along the road of domestic life. What dragged this painful moment out in public was a diary entry, 24 years old, and the one word it contained which might have an impact on Johnston's career and his position as attorney for the Arizona Health Care Cost Containment System (AHCCCS).

In 1973, while considering the bar exam he'd just taken, Johnston--a product of Harvard and Yale--wrote, "The worst part was having to sit next to a belching nigger for the two days." (Emphasis his.)

It was, as Johnston put it to New Times, an "unfortunate choice of words"--made even more unfortunate because it had been distributed to the media and the local chapter of the NAACP by Greg Kahlstorf, a former AHCCCS employee who is now the central--some say the only--figure behind AHCCCSWatch, a loosely organized coalition of whistle-blowers and others who find fault with the agency.

One reason Johnston sought a restraining order against his ex-wife was because Kahlstorf got that diary entry.

"She has been threatening to take her story--whatever that is--to my clients and to the tabloid papers that would be interested in such things, for the purpose of injuring my reputation, all with the innuendo that I am a racist, when she knows perfectly well I am married to an African-American woman," Johnston told the court.

Parker's attorney argued the restraining order was retaliatory, that it only came about after the diary entry was made public.

While Johnston denied the restraining order was meant to keep Parker from talking to the press, in his cross-examination of her, he asked his ex-wife:

"Did you give my diary entry to Greg Kahlstorf?"
Judge Ortiz sustained her attorney's objection, but not before Polly Parker-Johnston answered, "Yes."

Johnston got his restraining order--the court decided there were sufficient problems to keep the two apart. "I think that each of you, in some manner, is on the edge," Ortiz told the pair.

It might have been a victory for Johnston, but the diary entry had already raised the interest of federal officials as well as forced Johnston to defend his reputation.

This was, more or less, just what Greg Kahlstorf wanted.

These are the latest developments in the ongoing war between AHCCCS and AHCCCSWatch, which has included charges of conflicts of interest, fraud and mismanagement, and which has, according to one agency official, cost taxpayers a six-figure sum so far.

AHCCCS, Arizona's system for delivering health care to the poor through health-maintenance organizations, has won praise at a national level for its innovation. The massive agency, staffed by more than 1,000 people, spends $1.8 billion a year delivering health care to 472,000 of Arizona's neediest citizens.

But it's also a big target for critics--not the least of which is AHCCCSWatch--who claim the program is riddled with problems and poor oversight. Two years ago, the Department of Justice and the office of the inspector general of the federal Department of Health and Human Services announced a joint investigation into AHCCCS' finances. That probe continues today.

The investigation was triggered in large part by allegations of AHCCCS whistle-blowers Greg Kahlstorf, Janice Schoonover and Farrell Janssen, first published in New Times. They charged that AHCCCS paid providers for dead people who had been left on the rolls, that managers had conflicts of interest and that fraud and intimidation were used to cover up these problems.

While AHCCCS now admits there were some problems--it concedes it paid for health care for some dead people--the agency says there was never any fraud, and has denied it punished whistle-blowers.

The Health Care Financing Administration, which oversees how AHCCCS spends its money, is now "looking into" allegations of noncompliance with affirmative-action programs at the law firm that represents AHCCCS, Johnston Maynard Grant and Parker. This inquiry was precipitated by Kahlstorf.

But these claims of racism, hardly as clear as bottled water to begin with, are clouded even further by the personal pissing match between AHCCCS and its self-appointed watchdog.

AHCCCS personnel say Kahlstorf is a bitter, disgruntled and possibly dangerous ex-employee bent on revenge. Kahlstorf responds that he's just a good citizen trying to shed a little light on a bad program, and that AHCCCS is out to smear him.

Both sides say it's nothing personal. But the charges and documents fired back and forth suggest otherwise. Now, as the price tag for this feud mounts and the accusations descend into racism, it's starting to get ugly.

Sharon Yee, of the Health Care Financing Administration's Division of Medicaid, confirms that her agency is "looking into" claims of racism raised by Kahlstorf. But that doesn't mean the federal government is about to stomp on AHCCCS and the law firm that represents it.

Kahlstorf first raised the issue of racism at Johnston Maynard Grant and Parker in an April 24 letter to AHCCCS director John Kelly; the letter included a copy of the 1973 diary entry.

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