Former Employees Now Talking about Stick and HHSC/OIG Toxic Environment

Jack Stick's $2,800 chair.  Photo credit: Callie Richmond
Jack Stick’s $2,800 chair. Photo credit: Callie Richmond

Former Health and Human Services Commission chief counsel Jack Stick’s name was again prominent in the Houston Chronicle yesterday.

Former employees coming forward

Former employees of HHSC and the HHSC-Office of Inspector General where Stick worked earlier as deputy inspector general for enforcement are now talking to the press with their tales of Stick’s excesses that led to their firings. And unfortunately for HHSC, even though Stick has long since resigned, the agency appears unwilling to redress those individuals and their concerns.

Fired on Stick’s word alone

Prominent in the Chronicle story is the case of former HHSC project manager Leah Rayne. She was alleged to have tipped off a contractor that Stick wanted to replace them with 21CT for a data warehouse project. Stick was the one who accused her and she was fired by Kyle Janek, the executive commissioner, on Stick’s word alone, per the article. Rayne denies the allegation and is now threatening suit for wrongful employment. However, she had figured that once Stick had resigned things might revert back to normal but this is not the case.

Earlier warnings about toxic culture at HHSC and OIG

This speaks to a toxic culture at HHSC and OIG created by Stick although it appears it was even there earlier.  Warnings about this came to light in legislative testimony given by former OIG Director of Sanctions Fread Houston back in the last legislative session in 2013. Houston was testifying before the House Human Services Committee on the need for due process rights for Medicaid providers and outlined some very serious concerns.

Former OIG director of sanctions raised alarm two years ago

Here is what he said, in part:

My name is Fread Houston of Austin, Texas. I formerly served as the Director of Sanctions for the HHSC Office of Inspector General (OIG) from January 2009 to May 2012. Among other duties it was the responsibility of the Sanctions Division to review and prosecute cases received from the OIG investigators and to initiate payment holds…

The current OIG management has charted a more aggressive stance in seeking to recoup dollars.

Potential collections rather than evidence

However, this aggressive enforcement stance is not supported by a focus on the fundamentals of adequately developing a case but instead it relies upon a process heavily driven by potential collection amounts and novel reinterpretations of policy instead of evidence and proper enforcement of the Medicaid rules. While I was at the OIG I encountered a number of concerns regarding the agency’s processes:

Retaining experts with no Medicaid experience

There were concerns about the process of retaining experts who had little to no experience with the Medicaid program and the use of those experts to reliably interpret Medicaid policy.

Expert reports edited by management

I received expert reports that were unsigned by the expert. I was told that expert reports were edited by Enforcement management to remove statements that were supportive of a provider’s actions.

Stick stole the show

Normal intake processes for reviewing cases for legal and evidentiary sufficiency and for the determination to initiate prosecution were effectively removed from attorneys in the Sanctions Division who are legally and professionally responsible for those prosecutions, such that it resided almost solely in the discretion of the Deputy of Enforcement (DOE) [Jack Stick], who directly oversees the Medicaid Program Integrity (MPI) Division which is responsible for initiating and conducting investigations on providers…

Any questioning of evidence against dentists swiftly disapproved by Wilson and Stick

Under the orthodontic initiative, the agency retroactively applied a new Medicaid policy interpretation regarding ectopic eruptions and declared past orthodontic treatment to be fraud or willful misrepresentation under the new credible allegation of fraud mandate.

This strategy would allow the agency to impose 100% payment holds on Medicaid practices based upon a reinterpretation of policy with no evidence of actual fraud. Despite recent claims by OIG management made to the Legislature of an extensive case vetting process, any questioning of the evidentiary sufficiency of a case by legal staff was met with swift disapproval from the IG, the DOE and the Chief Counsel. The discretion to consider any good cause exception including financial burden was limited to the IG’s personal discretion instead of being based upon the recommendation of the Sanctions Division Accountants who would typically perform an independent review of the provider’s financials…

The actual evidentiary case itself could take years to complete investigation and even a payment hold hearing could take 8 months or more before a decision is issued and the payment hold remains in place during that time. This process could easily destroy a medical or dental practice in a short amount of time if it treats a significant amount of Medicaid patients.

OIG Informal conferences became demand for payment

As an alternative a provider could request an informal conference…The informal conferences focused heavily on the agency’s demand for payment as articulated by the DOE and very little discussion of the evidentiary merits of the case itself. Due to the high error rates determined by the new policy reinterpretation and the process of extrapolating the resulting dollar amounts, the overpayments typically ran into the millions of dollars.

HHSC judge who sided with dentist forced into retirement?

In the sole OIG CAF payment hold case to complete the contested case process, the administrative law judge of the State Office of Administrative Hearings found insufficient evidence of fraud or willful misrepresentation by the provider. When the SOAH judge’s proposal for decision was returned to the HHSC’s administrative law judge who was delegated the responsibility of entering a final order for cases referred to SOAH under current rules, the HHSC judge entered the final order as required. However, the OIG challenged the HHSC judge’s entry of the final order in an attempt to overturn the findings of the SOAH judge who actually heard the case. The final order was inexplicably put on hold for months until the final decision was once again affirmed. The HHSC judge then retired from the HHSC. This has lead to concern as to the independence of the HHSC judges and the HHSC contested case process…

Independent review of Medicaid cases necessary

Also, in order to ensure fairness throughout the process, I also believe that it may be necessary to consider having a panel of independent experts review Medicaid cases after the investigative process and before the initiation of prosecution to ensure proper sufficiency of the cases.

There have been fair warnings that HHSC and OIG have been tainted for years. It is hoped that this latest round of revelations will lead to real change for HHSC, the Medicaid patients and providers they are supposed to serve and the people of Texas.

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