Evangelical pro-life org owes Texas $1.5 million for 'contractual violations'

CEO says nonprofit 'did everything as approved in our contract'

By Samuel Smith, Deputy Managing Editor Wednesday, November 13, 2019

People attend the March for Life rally in Washington, U.S., January 19, 2018. | (Photo: REUTERS/Eric Thayer)

Update Appended

An evangelical pro-life nonprofit that contracted with the state of Texas to build a network of women’s health service providers owes the state over $1.5 million for “serious contractual violations,” according to a preliminary determination.

In a report made public on Nov. 6, the Texas Health & Human Services Commission Office of Inspector General accused the Heidi Group of misusing tax dollars, overpaying subcontractors and employees, and lacking oversight on their contracts.

The findings of the internal report focus on a seven-month period from September 2017 through March 2018.

The organization contracted with the state in 2016 to create a network of women’s and family planning health clinics following moves by Republican lawmakers to exclude Planned Parenthood and other clinics with ties to abortion providers from state-funded family planning and women’s health programs.

The Heidi Group was founded by prominent Texas pro-life activist Carol Everett to offer alternatives to abortion in the 1990s.

In last week’s report, the HHSC said it will expand the scope of its investigation to include the entirety of the Heidi Group’s contract period with the state — July 2016 through December 2018 — according to the report. That could leave open the possibility that The Heidi Group could be forced to pay back more than $1.5 million.

In a phone call with The Christian Post on Monday, Everett assured that the Heidi Group “did everything as approved in our contract.”

“Neither I as the CEO or any of my financial people has ever been interviewed [by HHSC Office of Inspector General],” Everett said, adding that the organization has not been officially told that it owes over $1.5 million to the state. “This is a very preliminary report and we did everything as approved in our contract.”

The HHSC canceled its contracts with the Heidi Group in October 2018, weeks after The Texas Observer reported that the group served less than 5 percent of the patients it promised to serve in 2017.

The Heidi Group was awarded a $1.6 million contract for the fiscal year 2017 to serve 51,000 low-income patients enrolled in the Healthy Texas Woman program, according to the magazine.

The Heidi Group was also awarded a $5.1 million contract by the HHSC as part of the state’s Family Planning Program.

The Texas Observer reported last year that even though The Heidi Group spent $1.3 million in the fiscal year 2017, it only managed to serve 2,300 clients through the Healthy Texas Women program.

Despite the goal of serving 18,000 women through the state’s Family Planning Program in 2017, the magazine reported that The Heidi Group only served about 1,000 women. As a result, the state cut over $4 million from The Heidi Group’s $5.1 family planning contract.

“The difference in the number of recipients served and the funds expended implies that the Heidi Group mismanaged grant funds under both contracts,” the HHSC report said.

Everett contends that the Heidi Group has helped more patients than reports are leading on. Everett told CP that although the organization had a network of 34 providers, less than 20 of those providers submitted remittance and status reports for Medicaid to indicate that the patients were served.

“Less than 20 of our 34 providers reported and yet we have 30,499 R&S [reports] proving that we served 30,499,” Everett explained. “Several of our larger providers, like the Rio Grande Hospital District with five providers, would not give us those reports because there was too much administrative work involved.”

According to the HHSC, the Heidi Group charged over $8,000 in unallowable costs for food, gift cards, clothing, appliances and retail membership fees to both of its contracts.

“We have already paid that back,” Everett said. “We thought that we would be allowed food for training and we weren’t. We thought that when we went out 800 miles to train that all of our expenses would be reimbursed. It was $29,000 and we have already paid that back.”

The Houston Chronicle reports that the state’s investigation found that the Heidi Group paid hundreds of thousands in excess fees to medical providers and overspent on payroll as well as fringe benefits.

The HHSC report states that The Heidi Group paid $50 per claim in addition to the standard reimbursement to subcontractors and “could not provide a budget amendment, adequate documentation, or a clear methodology to justify the added expenditure.”

Subcontractor expenses were allegedly paid without proper oversight.

But according to Everett, the $50 per claim payment to providers was present in the initial contract with HHSC.

“That was for our providers. That was not for the Heidi Group. The Heidi Group didn’t take any funds,” she said. “The $50 was approved in the contracts signed off by contracting, legal and administration. It was in the original contract. It was in our provider contract that they actually approved.”

“The HHSC did not approve the provider contract until they had already renewed us once,” she continued. “It was over a year. But that was approved.” The HHSC renewed its contracts with the Heidi Group on Sept. 1, 2018, and then terminated the contracts six weeks later, Everett added.

“We had worked through all of these issues and they had the audit [in April 2018],” Everett said. “We worked through these issues and then The Observer article came out and said we only served 2,300 or something ridiculous and they immediately terminated us.”

“They reached out to us for possible repayment of $29,000,” she added. “They audited us in April of 2018. Supposedly they have been investigating us for all of this time and this [new] report is just a registration of that original report. No, they have not asked us to repay anything [more].”

Update: Nov. 14, 2019

The Heidi Group sent the following statement to The Christian Post:

The Texas Health and Human Services Commission’s Office of Inspector General (OIG)
recently released a “Final Report” regarding its investigation into The Heidi Group‘s
performance in Texas’ Women’s Health programs. The Final Report contains numerous
errors that the OIG could have avoided if it had interviewed Carol Everett, CEO of THG.
The failure to interview her violated THG’s and Everett’s due process rights.
In response to the Final Report’s errors, The Heidi Group notes the following facts:
1. The OIG departed from standard investigative practices by making substantive
findings without ever interviewing the subject of its investigation. This breach of
fundamental due process rights occurred, notwithstanding the fact that the OIG
interviewed a number of former THG employees, including one recently arrested
by the Williamson County Sheriff’s Office for illegal intrusion into THG's IT system.
2. The preponderance of the Final Report ‘s financial findings stem from the OIG’s
incorrect conclusion that THG’s $50 per-patient payment to providers to help fund
the programs’ administrative costs was “unbudgeted.” To the contrary, this fee
was included in the THG budget-proposal that HHSC approved in the summer of
2016. Moreover, it was approved again in THG’s contract renewal in August 2018.
3. The Final Report erred by concluding that THG improperly allocated costs between
the Texas Healthy Women’s Program and the Family Planning Program. The truth
is THG used the complained-of 50/50 cost-allocation pursuant to a budget that
HHSC approved in the summer of 2016. In April 2018, THG shifted to a
proportional cost allocation between the programs, upon receiving new guidance
from HHSC.
4. The Final Report grievously undercounts the number of patients actually served by
THG. As the Texas Medicaid Health Program’s Remittance and Status (R&S)
reports reveal, THG served over 30,000 patients (see attached chart). THG made
these R&S reports available for OIG review, but the agency’s investigators failed to
follow up.
P.O. Box 2050
Round Rock, Texas 78681
tel: 512.255.2088
fax: 512.344.9960
info@heidigroup.org
www.heidigroup.org
5. The Final Report makes several findings (Numbers 3, 4, and 5) already resolved by THG and
repaid to the State. The fact that the OIG apparently was unaware that these three findings
have been settled indicates that the OIG was operating with incomplete or incorrect
information.