AUSTIN — Texas Attorney General Ken Paxton cleared a Texas health insurer of wrongdoing Monday after a seven-week investigation into whether the company had illegally or unethically spied on lawmakers, patients and whistleblowers.
Paxton launched his inquiry into “spying or blackmailing” by Superior HealthPlan, one of the state’s largest providers of Medicaid, after allegations by a Texas House committee chairman that the company had hired a private investigator to conduct surveillance and collect confidential and personal information during a lawsuit several years ago.
The attorney general said Monday the company had not done anything illegal and there was no evidence the background firm it had hired to research stakeholders and journalist J. David McSwane, then a Dallas Morning News reporter, in a 2017 lawsuit had engaged in any surveillance activities, which would include tailing or taking photographs.
The investigation also did not uncover any proof that confidential records, such as private health care information, had been collected, Paxton said in a statement.
“Superior’s activities involved researching and consolidating publicly available documents into internal reports, which does not violate Texas law,” Paxton said. “Those reports were limited to publicly available information, including internet search information, public information pulled from subscription databases, Texas Ethics Commission filings, and other publicly available information.”
Company executives fired CEO Mark Sanders after the allegations came out in an explosive hearing of the House Committee on Delivery of Government Efficiency, chaired by Rep. Giovanni Capriglione, R-Southlake and formed this session to look into government waste, fraud and abuse.
But the company has maintained the backgrounding involved only legal, desk-based research that was typical of corporate America and even the political world — although the company said it had abandoned the practice years ago.
On Monday, executives with Centene, Superior’s parent company, expressed relief at the “swift” conclusion of the investigation in a statement to The Dallas Morning News.
“We appreciate the swift work of Attorney General Paxton and his team, and we are pleased the numerous false accusations resulting from the March 26 DOGE committee hearing have been rebutted by the Attorney General’s review,” the statement reads. “Superior remains committed to transparency and ability, and we will continue to ensure that all partners and practices reflect the integrity we expect of ourselves. … We look forward to returning our focus to serving our 2 million , providers and community partners.”
Paxton’s decision to close the investigation comes as new legislation banning surveillance and spying by state contractors — inspired by the Superior episode — heads to Gov. Greg Abbott’s desk.
The House and Senate both ed the bill with no objection. Abbott may either sign or veto the legislation or let it become law without his signature.
Rep. Jeff Leach, R-Allen, filed House Bill 5061 two weeks before the revelations in the March House committee hearing that Superior had hired a background investigation firm to collect files on lawmakers while the company was embroiled in a lawsuit. 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 Capriglione and then-Sen. Dawn Buckingham, R-Lakeway, according to court documents that have been public for several years.
The revelations triggered Paxton’s inquiry and a separate one by the committee. In April, Capriglione enlisted the state auditor’s help to examine Superior. Capriglione could not be reached immediately to comment on the status of the committee’s investigation.
Capriglione also asked Texas Health and Human Services Executive Commissioner Cecile E. Young to phase out Superior, which has delivered Medicaid in Texas for 25 years, from its contracts and cut it out of a current procurement of nearly a billion dollars in contracts over the next decade, which Superior is fighting in court to defend.
Young has maintained that the agency can’t do those things while the procurement is in court but that the agency was preparing for a transition to a new insurer in case the investigation turned over information that would make it more difficult for Superior — the only provider in the Medicaid plan for foster kids — to deliver services.
New legislation on the way to Abbott
Leach’s bill 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 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 for cases in which the violation involved undue influence or the misuse of private or confidential information.
Violators would be banned from seeking a state contract for 10-15 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 $2 million penalty and a permanent ban from business agreements with the state.