Fired fraud investigator claims she was ‘blacklisted’ by state

A fired Medicaid-fraud investigator is suing the state of Iowa claiming she was “blacklisted” after complaining about the need for improved methods of preventing fraud.

Wendy Dishman, who worked for the Iowa Department of Inspections and Appeals from July 2010 through May 2015, was the administrator of the department’s Medicaid investigations division.

In 2014, Dishman challenged the efforts of then-Gov. Terry Branstad to reclassify her job from merit to at-will. At the time, Branstad was reclassifying hundreds of state jobs in that manner, which effectively stripped them of protection from political influence.

That effort led to a wave of termination agreements with state employees, many of which included nondisclosure agreements coupled with taxpayer-funded payouts to the fired workers.

In a lawsuit now working its way through Iowa District Court, Dishman alleges that in April 2015 she informed DIA Director Rod Roberts of “numerous issues” with Iowa Medicaid. She says she insisted the state implement better measures for preventing fraud and abuse.

Roberts told Dishman he’d pass her concerns on to the governor and to Charles Palmer, then the director of the Iowa Department of Human Services, her lawsuit alleges.

About one month later, Dishman claims, she was fired. In March 2016, she applied for an administrator’s job with Truven Health Analytics, which was in the process of taking over the program-integrity contract for Iowa Medicaid Enterprises, which is overseen by DHS.

Dishman alleges she was hired for the job subject to approval by the state, which controlled Truven’s hiring of key personnel in connection with the contract.  Dishman claims Mikki Stier, then the state’s Medicaid director, approved her hiring but rescinded that approval on the day Dishman was to start work. Dishman alleges Truven told her Stier indicated the reversal was triggered by an order that “came from higher up.”

The state has denied the allegations.

Dishman’s lawsuit names DHS, DIA, Palmer, Roberts and others as defendants. She is seeking unspecified damages for contractual interference and blacklisting. A trial is scheduled for November 2020.