HHSC Chief Counsel and Former OIG Enforcement Head Jack Stick Resigns

THHSC building
Texas Health and Human Services Commission

It is now official – Jack Stick, HHSC Chief Counsel and former OIG deputy inspector general for enforcement, has resigned from HHSC over published allegations of interference in the HHSC contracting process on two contracts – one for data mining software for Medicaid fraud for OIG and a second for an HHSC data warehouse.

The Tribune, Chronicle and Statesman posted stories on the resignation this morning.

Contract for Medicaid fraud data mining software  not “transparent”

Executive Commissioner Kyle Janek accepted Stick’s resignation, saying:

“Contractors have raised issues about the procurement for this project. I’ve looked into those concerns, and I’m not comfortable with the process used so I’ve withdrawn the request for state approval to extend the project and notified the OIG.”

“Regardless of the merits of this project, we cannot have doubts about the fairness of the procurement process. Our business should be conducted in the light of day in a transparent bid process open to all qualified companies.”

HHSC cancels data mining contract

HHSC has canceled the OIG contract for the Medicaid data mining software with 21 CT, an Austin-based company which had no prior experience in Medicaid fraud detection.  Stick’s longtime friend and business partner James Frinzi is a lobbyist for the company.  The software has already cost $20 million to the state and was to cost a further $90 million for licensing for the next three years.  Per the Texas Sunset Commission Report on HHSC, the Torch software had identified only 41 million worth of possible Medicaid fraud in 2014.

Sought to throw other business to company

Stick also allegedly interfered in another contract, seeking to throw the business to 21CT.

Per the Statesman article,

In August, Stick interfered with a tentative contract awarded to Truven Health Analytics, a Michigan company that after years of negotiations had been picked to build a so-called enterprise data warehouse — an expensive, omnibus and complicated project more than a decade in the making.

In a private meeting with state contract managers, Stick questioned why Truven had been chosen and suggested that 21CT could do the job instead, according to a person who attended the meeting. That person asked to remain anonymous because state employees sign agreements barring them from disclosing discussions about contract negotiations.

Under cloud from long outstanding DWI charge

Stick also, as top legal counsel at HHSC, was under the shadow of a DWI arrest that has been going on for over two years and is to come to trial next February.  The conroversy about Stick story made it to the pages of not only papers in Texas but the New York Times.

Responsible for OIG Sunset criticisms

More importantly, Stick, as deputy inspector general for enforcement and per his own comments in 2012 webinar, was probably the prime architect of the changes to OIG that led it to institute “credible allegation of fraud” payment holds inappropriately against providers.  These led to bankruptcy and financial hardship for dentists and others under investigation because they had no due process opportunity to defend themselves.

In the 2012 webinar, he made statements about the reorganization of OIG investigators to go “after the money” rather than fraud.

OIG’s lack of due process brought about SB1803, a bill for Medicaid provider due process rights,  in the last legislative session and the tremendous criticism of OIG in the recent Sunset Commission report and hearings.

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