AUSTIN — State contractors who seek to spy on or do surveillance of lawmakers, whistleblowers and state employees — beyond standard background research — were dealt a blow in the Texas House on Friday.
Lawmakers gave overwhelming approval — a 122-0 vote — to outlaw the practice.
Rep. Jeff Leach, R-Allen, filed the proposal two weeks before revelations that Superior HealthPlan hired a background investigation firm to collect files on lawmakers while the company was embroiled in a lawsuit several years ago. The Austin-based company is a national for-profit managed care organization that has delivered Medicaid insurance to low-income Texans for decades.
The files included political backgrounds, professional information, divorce records and online satellite photos of cars and homes of Texas lawmakers — including Rep. Giovanni Capriglione, R-Southlake, and then-Sen. Dawn Buckingham, according to court documents that have been public for several years.
In early April, Capriglione, chairman of the House Committee on Delivery of Government Efficiency, enlisted the state auditor’s help with an inquiry into Superior. Its former CEO Mark Sanders acknowledged during an explosive March legislative hearing to ordering a private background investigations firm to collect information on patients, providers, a journalist and several Texas lawmakers from 2017 to 2019. He was fired the next day.
“If you didn’t read the news stories or talk to some of the on the DOGE committee about what was uncovered during that hearing, I encourage you to do so,” Leach told fellow representatives before the floor vote. “It’s incredibly troubling and, frankly, shocking. This bill is meant to address that, to crack down on that from happening now or in the future.”
Company officials have said the firm it hired never performed surveillance or took photographs of its subjects. While the company no longer engages in those kinds of investigations, representatives described their earlier actions as legal, ethical, standard background research commonly used in the corporate and political world.
House Bill 5061 would prohibit a state agency contractor or vendor seeking to work in the state from directly or indirectly using a third party to engage in surveillance, intimidation, coercion, extortion, undue influence or similar conduct against state lawmakers, employees of the Legislature and state agencies or an individual who raises concerns about state agency operations or contracting.
Private or confidential information couldn’t be used to manipulate or influence a state contracting decision or proceeding under the bill.
Social media monitoring is excluded from acts considered illegal under the bill as well as “collecting information that is publicly available or ... through a subscription service,” the sort of research that officials from Centene, Superior’s parent company, maintain was done in this case.
A confidential hotline and online portal for complaint submissions would be created, and the state auditor’s office would have 90 days to determine whether a violation occurred. The office could refer a matter to the Texas Rangers if officials suspect a criminal offense was committed.
First-time violators would be subject to immediate termination of state contracts and liable for a penalty of up to $500,000. Penalties could jump up to $2 million in cases where the violation involved undue influence or the misuse of private or confidential information.
Violators would be banned from seeking a state contract for 10 to 15 years.
The bill defines undue influence as “an improper use of power, position, or information to manipulate a decision-making process, including the use of private or confidential information for personal or organizational gain.”
Additional violations would result in the immediate termination of contracts, up to a $1 million or $2 million penalty and a permanent ban from business agreements with the state.
Billions in contracts at stake
In a newly released April letter to Texas Health and Human Services, Capriglione demanded that Superior immediately face billion-dollar repercussions for its actions, which were first revealed to him and others several years ago after the investigatory files were included in court papers.
On Friday, Capriglione told The Dallas Morning News that his renewed interest in Superior’s actions after knowing about it for a few years was triggered by his new post at the helm of the fledgling DOGE committee — created this session to mirror national efforts aimed at rooting out waste, abuse and fraud.
The fact that Superior was seeking to deepen its relationship with Texas, a process it had started more than two years ago, with ongoing Medicaid contracts just made the issue more timely, Capriglione said.
The company is embroiled in a heated court battle to hang onto nearly $1 billion in government contracts to ister the Medicaid STAR/CHIP programs.
Last year, state human services officials announced a procurement worth up to $116 billion over the next 12 years that would shuffle the health plans of some 1.8 million low-income Texans. It would drop or shrink the coverage of some of the state’s highest performing insurers – including Superior as well as plans run by three of the state’s four major nonprofit children’s hospitals.
The proposed new procurement could go into effect as early as next year if the state wins its court fight.
One of Capriglione’s biggest concerns is that rather than an employee doing Google searches and Facebook follows, Superior used an outside firm to find things such as his own divorce records, Capriglione said.
“And for what?” he said. “What we’re trying to address is some of the most nefarious things that some vendors are apparently doing. When you’re hiring a professional to do this kind of research, you have an intent and purpose. My question is how much did they spend, and then we’ll know how much effort they put into it beyond desk research.”
The battle over the most recent procurement is not connected to the old lawsuits that triggered the investigations. However, Capriglione asked Texas HHS – which runs Medicaid in the state – to leave Superior out of all future procurements, including those making their way through the courts.
HHS officials told him in a letter that they could not make decisions about procurements currently in litigation.
Also, cutting ties with Superior immediately could impact some of Texas’ most vulnerable children – those in foster care — because the company is the only insurer for them right now, HHS Executive Commissioner Cecile E. Young wrote in an April 14 response to Capriglione.
But the agency is developing contingency plans in case Superior, currently under investigation by the Texas Attorney General for the allegations, faces sanctions that prevent the company from delivering services, Young wrote.
“The Health and Human Services Commission shares your concern and horror that Medicaid clients, of the Texas Legislature, and other individuals and entities may have been victims of unethical or illegal conduct by anyone – let alone a health plan that has received billions of public dollars to serve Texans across the state for more than a decade,” Young wrote.
Lawmakers acknowledge that companies regularly gather information on those that could have an impact on their businesses, finances or ability to deliver services.
Superior health officials have defended the investigations as needlessly broad but entirely legal. They say the research practices ended in November 2019 — and were much less invasive than Capriglione and others described — in what company officials called “false allegations” in an April 22 letter to the committee.
“The research was performed remotely at the researcher’s desk and relied on publicly available information, such as LexisNexis, LinkedIn, Google, and the Texas Ethics Commission website,” read the letter, which was signed by the company’s attorney, Christopher A. Koster. “No legislator or government employee was followed or photographed. Not once. Not ever.”
In the March 26 hearing at the Texas Capitol, Sanders acknowledged that the company – at his behest at the time – did “what I would call general research, anything that’s publicly available … but nothing beyond what’s publicly available.” Sanders did not testify that the company was surveilling or trailing anyone.
Nonetheless, Sanders was terminated 24 hours later, followed by a public statement from Centene disavowing the actions he seemed to acknowledge in testimony.
“Notwithstanding these facts, we understand that the research felt invasive to the individuals whose information was reviewed,” Koster wrote. “The fact that Mr. Sanders received background research that contained more information than was necessary was a mistake, and Superior’s current management has made clear that this situation will never be repeated.”
Koster’s letter said the company met with each lawmaker on whom the company had collected a file, offered them copies and apologized. But that doesn’t mean the company did anything unusual, the letter added.
“It is a common and accepted practice for businesses, parties to lawsuits, political figures, and others to review publicly available records to better understand the backgrounds and interests of influential people with whom they interact,” Koster wrote.