- Associated Press - Thursday, December 18, 2014

AUSTIN, Texas (AP) - State public corruption prosecutors said Thursday they expect to investigate $110 million in no-bid contracts to an Austin tech company that led to the resignation of a top state health official.

The possible criminal investigation is the latest fallout from the Texas Health and Human Services Commission earlier this year hiring 21CT to help root out Medicaid fraud without letting other companies bid for the job.

State Health Commissioner Kyle Janek canceled the contracts this month but has said he doesn’t believe anyone acted illegally. Gregg Cox, a Travis County assistant district attorney who heads the state’s Public Integrity Unit, said his office has previously received related complaints about “some of the same people involved” but would not elaborate.

“I do anticipate that we will be opening an investigation very shortly,” Cox said.

Republican House Speaker Joe Straus also expects lawmakers to take a closer look at the contracts, spokesman Jason Embry said.

Jack Stick, former chief counsel for Texas Health and Human Services, resigned last week after Janek said he was uncomfortable with how 21CT landed the job. Stick steered the agency toward hiring 21CT to revamp efforts to identify Medicaid fraud, waste and abuse.

His resignation and the severed ties with 21CT followed an Austin American-Statesman investigation into the contracts. Stick has defended the company’s work to the newspaper, saying no one has questioned the relationship except competitors, fired state employees and others who did not want to be held accountable to higher standards.

State health officials did not return messages Thursday, and a phone number for Stick could not be found.

Irene Williams, 21CT chief executive, said she is “saddened” by unsubstantiated claims and defended the company’s work. The company also announced Thursday that it would lay off workers due to the canceled contracts, but did not indicate how many.

“21CT followed the competitive process,” Williams said. “We look forward to fully restoring our good name and explaining the power and success of our analytics and capabilities.”


Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber .

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