Janek, GEO in touch before Terrell deal
HHSC director communicated 11 times with fifirm pushing hospital’s privatization before plan OK’d.
In August 2013, a lobbyist for a national company that privatizes state prisons emailed a bold proposal to Kyle Janek, the top official over a Texas health agency that at the time was facing scrutiny for a spate of grue- some patient deaths at staterun hospitals.
GEO Care lobbyist Frank Santos, a longtime friend of Janek’s, laid out the company’s vision: GEO would take over a state psychiatric hospital, improve care and drive down costs. Even though no state offici al s had yet proposed privatization, the lob-byist’s pitch to Janek , the Health and Human Services Commission chief, included a road map showing the state how to make the lucrative deal happen — including which legislators to woo and a timetable for the job.
A review of the executive commis si oner’s person- al phone and text messaging records shows that, over the next year, Janek routinely
communicated with GEO lobbyists.
On June 9, 2014, in an announcement that surprised both mental health advocates and legislators, the commission said it was soliciting proposals to privatize Terrell State Hospital.
Twelve minutes after the announcement, records show, Janek and another GEO lobbyist, Gabriel Sepulveda, were on the phone. GEO was later awarded a tentative contract to privatize the hospital. (The company is now owned by Correct Care Solutions.)
The communications and internal memos obtained by the American-Statesman detail the behind-the-scenes campaign of a private company to use its personal connections inside the Health and Human Services Commission to make a profit operating mental health hospitals.
It also raises questions about Janek’s role in promoting the deal, which officials later complained was rushed and broke state purchasing rules.
State contracting laws don’t forbid all contact between bidders and state officials; the rules only forbid the parties from discussing the contract. However, because it’s difficult to know what is being discussed, many officials and companies prefer to limit contact during sensitive negotiations.
The string of contacts between Janek and the GEO lobbyists is “almost unbelievable,” said Bob Libal, who criticized the Terrell privatization as executive director of Grassroots Leadership, a group that opposes a national movement to privatize hospitals and prisons.
“I think that we certainly have known these companies do whatever they can do to influence the process, but the fact that they were so influential, and perhaps even helped write the proposal, seems exceptionally beyond the pale,” Libal said.
The content of the calls and texts between Janek and the lobbyists is unclear; the Statesman received only their times and duration. Janek said he never discussed Terrell State Hospital in the texts and phone calls with Santos or Sepulveda, who works for Santos. Janek added the three have known each other for years; the two lobbyists have coached his son in lacrosse.
“We could have spoken about any number of things,” Janek said.
Santos, however, said, “We communicated on a variety of topics, including the role of public-pri- vate partnerships.”
Questions surrounding the Terrell deal add to concerns about contracting problems at the Health and Human Services Commission under the leadership of Janek, who has weathered numerous calls for his resignation since December. Criminal investigators are scrutinizing the agency’s $110 million in Medicaid fraud detection deals with Austin tech company 21CT.
A $100 million contract with AT&T Global Services was so badly managed that the state didn’t even know how much it had paid the company, according to a state auditor’s report.
Janek has distanced himself from the scandals, saying he wasn’t directly involved and that he was misled by those under his command. But the state auditor recently blamed much of the Terrell procurement blunders on Janek, stating in a recent report that he awarded the tentative Terrell contract to Correct Care/GEO before its application had been scored.
Records show Janek also declared the company the winner days before state contract managers even drafted their justification for choosing Correct Care/GEO, the sole company to submit a complete proposal to the Health and Human Services Commission.
A second chance
The Terrell plan wasn’t the state’s first run at privatizing a state psychiatric hospital. In fact, an earlier effort to privatize with GEO had fallen apart in 2012.
In 2011, legislators ordered the commission to explore hiring a company to operate a hospital for 10 percent less than it cost the state. GEO Care was the only company to submit a proposal.
That bid was rejected in October 2012 because GEO proposed cutting the staff so much that the deal “would put both our patients and the State of Texas at risk,” wrote David Lakey, then-commissioner of the Department of State Health Services, to the Legislative Budget Board.
Privatization seemed off the table until April 2013, when the Statesman wrote about questionable medical care at the state hospitals and specifically about the case of Ann Simmons, a 62-year-old Pittsburg woman who died of a pulmonary embolism in Terrell State Hospital after being restrained for 55 hours.
The federal Centers for Medicare and Medicaid Services investigated and threatened to cut off federal funding unless the facility improved.
GEO Care has had its own problems. The company has been sued at least 160 times over deaths, excessive force, poor medical care and confinement conditions in its hospitals, according to an internal commission memo.
Still, Janek met with Santos and GEO’s chief executive, Jorge Dominicis, 10 days after the Statesman story, according to state records. The group met again on July 24, 2013. Janek said the three talked about how to improve the facilities.
“I’ve made no secret of the fact that we can find a better way to run these hospitals,” he said.
Less than two weeks after that meeting, Santos sent Janek a 12-page email on Aug. 6, 2013, with a detailed plan to privatize a state hospital. The timeline was more than ambitious.
First, Santos wrote, they needed a hospital: One of the state hospitals in Austin, Rusk, San Antonio or Kerrville would work.
Next, the lobbyists and Janek needed to team up, target key legislators and set up meetings with the important players. On Sept. 12, 2013, GEO would “Meet with Commissioner Janek and HHSC staff to debrief on preliminary outreach; determine possible opposition or challenges; and discuss next steps.”
Then the health agency would put the hospital up for bid, Santos wrote, award the contract to GEO Care and allow the company to start running the place by Jan. 1, 2014.
“We’d like to set up another time to come in and plan out the strategy so that we are providing HHSC with the most effective support possible whether that is political, research or strategic,” Santos said.
Janek said last week he was “offended” by the lobbyist’s email, calling it “a little over the line.” Janek said he called Santos to object.
“OK, I’ll listen to ideas, but don’t send me a timeline,” Janek said, summarizing that conversation.
Santos said his communications with Janek always follow the letter and spirit of the law.
“We want to ensure our clients’ interests and concerns are heard by state agency staff, and we also realize that the decisions HHSC makes in regard to contracting and policymaking are theirs alone, and we respect that fact,” Santos said.
Janek said he couldn’t remember whether he spoke with the lobbyists over the next six months. Records show their communication resumed in 2014. Between Jan. 17, 2014, and June 9, 2014, Janek had calls or texts with Santos or Sepulveda 11 times.
At least four of those contacts came on or near key dates in the planning process.
On March 7, 2014, two days after the department started writing its request for proposals, Janek called Santos at 6:56 a.m. The call lasted one minute, and Santos texted him later.
On March 25, 2014, the day after the agency finished its first draft of the proposal, Santos texted Janek.
On June 3, 2014, the day the commission sent its final report on the solicitation to the contract review team, Janek spoke with Santos for six minutes around 8 p.m.
And on June 9, 2014, Sepulveda called Janek at 5:44 p.m. — 12 minutes after the bid had been publicly posted online.
‘Awful timing’
Janek says the call had nothing to do with the bid. Janek, a physician, said Sepulveda had called to update him on a child who had recently been injured at a lacrosse match, which they both had attended a few days earlier. Sepulveda also said the conversation was about lacrosse.
“It was awful timing, but, like most things, I wasn’t fully aware of the timing of things being released,” Sepulveda said.
Advocates and legis- lators complained that the effort to privatize the hospital was cloaked in secrecy from the start, saying they were blindsided when the state announced its plan. Janek explained that he didn’t want to involve the public in early discussions because it would have slowed the process.
In an interview last week, Janek said his relationship with Santos and Sepulveda didn’t affect his decision to go with GEO. He said he didn’t know why the deal was rushed and that he never pressured state contract negotiators or was involved in the minutiae. He just asked his staff about the project from time to time, he said.
Three other vendors had shown interest in the contract, including two state university hospitals. But none submitted a complete bid package. Green Oaks, a pri- vate hospital company in Dallas, submitted an incomplete bid. The company didn’t return a call for comment.
In October, Correct Care/GEO won a tentative contract to privatize Terrell, despite a chorus of opposition from patient advocates and some legislators. But the deal was scrapped this month after a scathing report from the State Auditor’s Office found the deal had been rushed, broke contracting rules and failed to prove it was a good deal for taxpayers.
Janek said he understands how his regular communication with the lobbyists might seem irregular. But the process seems inappropriate, Janek said, “only if you look at it in that light.”