The Untold Story

What's MUSTFA?

MUSTFA stands for the Michigan Underground Storage Tank Financial Assurance Fund.  The purpose was to provide monies to owners and operators of underground storage tanks so that leaking tanks could be removed.  

Who managed the Fund?

The Fund was managed by different agencies within the State of Michigan?

Where did the monies come from to support the operations of the Fund?

Monies came from oil refiners who paid 7/8¢ for each gallon of gas refined in Michigan.  Of course, as with most taxes, you can be assured that the price of this tax found its way into the pump price for gasoline.

How much money was expended by the Fund?

The last records I have show that over $400 Million was expended and I assume total expenditures are now far in excess of that amount.

Is the Fund still accepting claims?

To the best of my understanding, no.  The Fund ran out of money at least two times and was then supported by loans from the State of Michigan.  I assume these loans have been paid back if not already paid back.  

Who were the biggest beneficiaries of the Fund?

The oil companies.  Millions of dollars were paid out to the major oil companies.  This was allowed under the law.  

What were the major problems associated with the Fund?

In my opinion, the Fund was mismanaged by the State due to lack of planning and incompetence on the part of those who managed the Fund.  This lead to widespread abuses and fraud.  

Was the original law that provided for the Fund rewritten to provide for some additional safeguards?

Yes, but by then millions of dollars had already been expended and the State didn't seem to have much interest in investigating prior abuses.  

Who approved claims for payment.

Claims were approved by a Third Party Administrator ("TPA") hired by the State.  In the beginning there was a process where claim denials could be appealed to a MUSTFA Policy Board.  

The original administrator was replaced by a new TPA after a competitive bidding process.

In actuality only one bid was opened because it was the only bid to obtain a minimum number of points.  The original TPA did not receive the minimum number of points because of the low grades given by one of the evaluators. Thus, one person effectively eliminated the original TPA from the process.

Interestingly enough, the winning TPA received almost the entire contract award in the first year of a multiple year contract.

Did anyone investigate the fraud and abuse?

Somewhat.  The State Police started a Task Force but that was shut down.  The Attorney General pursued some claims but the amount of actual recovery is unknown.  As far as I know no one has ever investigated or audited each of the paid claims.  The Auditor General apparently never audited any individual claims.  

Why haven't I heard more about the Fund?

I assume because this is an embarrassment to State and the funds did not come directly from the General Fund--i.e. our tax dollars.  As this Fund was under the control of the State, any incompetence in management and the ultimate fraud and abuse associated with it is a reflection on the State.  Thus, apparently the State is quite content to ignore any and all problems associated with the Fund.  As an example, the rewritten legislation provided for rewards for information that lead to the recovery of funds.  The legislation required that rules be written to allow enforcement but a State agency refused to to develop any rules. Of course, no one in the legislature ever followed up to question why no rules were written.

What can I do?

Probably nothing.  Unless a major newspaper or radio or TV station chooses to investigate the Fund, all the incompetence, mismanagement, abuse and fraud will go unreported.  That's a shame as I have numerous documents to support my contentions.  Hopefully some one will come forward and pursue this very important matter.