Chummy Relations in HHSC Caused $20 Million 21CT Debacle

hhsc-building mdUPDATE: The Travis County Public Integrity Unit has forwarded the criminal investigation into the 21 CT matter to another undisclosed investigative unit.  Per the Unit’s head, the investigation is starting to move faster and was moved for reason of expertise and the complicated nature of the case.

Yesterday, the Houston Chronicle lifted the veil on the beginnings of the 21CT no-bid contract for Medicaid fraud detection software that shook the foundations of the Health and Human Services Commission just over a year ago.  The scandal caused the resignations of then-Chief Counsel Jack Stick, HHSC Inspector General Doug Wilson and ultimately the demise of Executive Commissioner Kyle Janek.

HHSC Deputy Chief of Staff had personal relationship with 21CT CEO

The Chronicle, through open records requests, obtained emails from HHSC that showed former HHSC Deputy Chief of Staff Stanley Stewart and Irene Williams, the CEO of 21CT, had developed a strong personal relationship after they met on an airplane in the spring of 2011.  The pair went for coffee, lunches, dinner and even a movie together and exchanged some 150 emails.

It is Stewart who introduced Williams to Jack Stick and Doug Wilson and touted 21CT to them.

Stewart apparently did nothing wrong, however.  He, himself, was a contractor brought in to fix the agency’s benefits processing system and to reduce fraud in the state food stamp program.  He left the agency three months before the contract was awarded to 21CT in December 2012 and had nothing to do with the awarding of the contract itself.

The $20 million 21CT contract was ultimately awarded through a no-bid process the state had in place for minor expenditures averaging around $3,493 per the Chronicle.  The contract before it was canceled at the end of 2014 was to be renewed for another $90 million even though officials, per the Chronicle, stated there was no tangible benefit from the software.

Little can be done about chicanery per ethics experts

While the Chronicle article alludes to investigations by the Travis County District Attorney and the FBI, it appears unlikely anything will come of them.   Even ethics experts polled by the Chronicle said little could be done about it – “The messages also illustrate how connections between companies and government officials can affect contracting, and how little the state can do about it, according to more than a dozen ethics experts.”

The long and short is that HHSC bureaucrats gave business to friends by skirting state regulations, lost the state and taxpayers $20 million on an untried and apparently valueless product and other than being asked to resign once the chicanery is exposed by a watchful media, there are no consequences.

Bureaucrats walk, providers found innocent continue to pay

Once again, the tremendous dichotomy is illustrated between how the state treats internal “fraud, waste and abuse” of Medicaid and taxpayer funds, and how they continue to treat some Medicaid providers.

As an example, while implicated bureaucrats walk away from their misdeeds, dental providers such as Harlingen Family Dentistry and Antoine Dental Centers, despite already having been exonerated of allegations of fraud by impartial courts at tremendous expense to their practices, continue to be prosecuted for the return of millions of dollars for treatment that was not only properly delivered to Medicaid eligible children but fully authorized by the state’s contractor.

There is a sad lesson here.






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