Insurance company accused of spying on customers, lawmakers faces Texas Attorney General investigation

AUSTIN (KXAN) - A health insurance company managing the care of sick and disabled children in Texas faces accusations of spying on state lawmakers and private citizens.

On Thursday, Texas Attorney General Ken Paxton launched an investigation into Superior HealthPlan, one day after a heated public hearing at the Capitol. Lawmakers on the House Committee on Delivery of Government Efficiency, or DOGE, grilled the company's CEO over surveillance practices, they say, crossed a line.

During Wednesday's hearing, committee chairman Rep. Giovanni Capriglione, R-Southlake, revealed emails showing Superior hired private investigators to get information on lawmakers and customers.

"I don't think what any of us expected was for a health insurance company that is funded mostly by Texas taxpayer dollars, that they would use some of those monies to hire private investigators, that they would hire a private investigator to follow a mom whose child was being denied medical care," Capriglione said, referencing the emails.

'Appalled and disgusted'

For months, KXAN investigators have been working to verify and gain context about copies of similar emails they obtained, which showed exchanges between Superior CEO Mark Sanders and a personnel group known for background investigations. The emails, sent in 2017 and 2019, revealed Sanders asking for 'in depth' reports about certain lawmakers and various health care providers.

"Mr. Sanders, have you ever tasked a private investigator firm to dig into the background and financial or personal records of any state government official or their wife?" Capriglione asked during the hearing.

"I have," Sanders replied. "We've done what I would call general research, anything that's publicly available," he added.

"Why would you go and and run a background check, hire a private investigator to follow, to to dig into the records of people who are your customers?" Capriglione asked.

"First of all, I will say we no longer use that practice, and haven't for several years," Sanders answered. "At the time, we really just wanted to have information on those individuals, and really nothing beyond that of what was publicly available to us."

In another exchange, a representative for the group confirms they would not be able to obtain another specific lawmaker's divorce proceeding documents.

KXAN has reached out to Superior HealthPlan multiple times for comment and context about these exchanges since last year but has yet to receive a response.

KXAN also reached out to lawmakers mentioned in the exchanges for context or response, but many refused to comment on the record until Wednesday's committee hearing.

"There was a time when I asked a lot of questions," Capriglione said, "and I didn't know that you could be penalized for asking questions -- for trying to find out for the taxpayers and the constituents how their money was being spent."

Rep. Tony Tinderholt, R-Arlington, told Sanders he was "appalled and disgusted" when he saw the emails.

"I had to lean over and ask him, I'm like, 'Is this real?' I'm not joking. I've been doing this 10 years,' Representative Tinderholt said. "It's emails with your name on it, and you investigated people that are on this dais for doing their job for Texans. What do you have to say for that?"

Sanders replied, "I think going back in time, I think it was just understanding what interests and information we could have knowledgeable of -- be knowledgeable of when we're meeting with different individuals."

Throughout the hearing, Sanders insisted the company only sought publicly accessible information on people they were dealing with in their work.

Tinderholt fired back: "I disagree. You wanted leverage and you thought that you were going to use it."

He and other lawmakers expressed concern the company sought leverage to win future state contracts or to discredit their own customers seeking payment on legitimate insurance claims.

"I'm embarrassed that you would be sitting in front of us and that you would try to pretend like you were gathering information just to have it. You don't gather that kind of information to not use it," Tinderholt added.

'Constant daily battle'

Superior HealthPlan is one of several private companies that operate Texas' various Medicaid programs, under a system known as "managed care." The state funnels public dollars to the private sector to manage care for many low-income, elderly, or disabled Texans and foster children.

One of those programs, known as STAR Kids, provides Medicaid benefits to young people with disabilities. The state turned it over to the managed care system in 2016.

Since then, some families in the program say they've noticed changes in the availability and quality of care, according to the founder of advocacy group Protect Texas Fragile Kids. Hannah Mehta, a mom-turned-advocate, has spent hours at the Capitol since then, on behalf of these families.

"It's a constant daily battle for families to try to maintain the care that their child needs," she said.

A 2018 investigative series by the Dallas Morning News profiled Mehta's work. It also detailed the profits made by some companies operating the managed care system in the state, while denying or delaying vital medications and treatment to thousands of sick and disabled Texans. Dozens of bills were introduced in the legislative session that followed, aimed at addressing problems exposed in the series.

In an interview last year, Mehta told KXAN she believes more oversight is necessary.

"I think that many policymakers would be extremely alarmed to see the extent of influence and the dirty tactics that go on behind the scenes -- that families experience on a daily basis."

'Get to the bottom of this'

KXAN also obtained and reviewed a copy of a fraud, waste and abuse report prepared for Superior HealthPlan in 2018. It detailed personal information of some healthcare workers and private citizens featured in the Dallas Morning News investigation -- including social security numbers, personal histories and even an aerial photos of the property of a mother featured in the series, whose foster child had been denied care and suffered.

In the DOGE hearing on Wednesday, Rep. Capriglione went on to accuse Sanders and the company of "going after" the journalists who worked on the series.

Central Texas Rep. Ellen Troxclair joined in, accusing the company of misusing taxpayer dollars while potentially failing to provide the best care for Texas kids.

"Now we're up here talking to a company who has received millions, billions of dollars in taxpayer funds through Medicaid contracts who have used that money to then hire private investigators to follow around patients and legislators that are asking questions about what the heck is going on," Troxclair said.

She went on to say, "We are all just trying to do our best to, you know, take care of our kids and pay the insurance and run the errands and do all the things that we have to do, and we're paying into insurance, and we expect to see receive good medical care. And it's a constant run around. It's a constant hamster wheel. Texans continue to be sick."

Sanders again stated that the emails reference investigations from several years ago. "We have not used that practice since then," Sanders said in response to Troxclair.

"Why would we believe that?" Troxclair asked.

"I don't know. I'm just saying that," Sanders responded.

In that interview last year, Mehta told KXAN she wanted to see an investigation into exactly how public dollars were being used by the companies managing the program and "whether or not they're going to the children who they're intended for."

In his announcement Thursday, Attorney General Paxton said the investigation into "potentially unlawful actions" would begin immediately.

“I will get to the bottom of this, uncover any illegal activity, and hold bad actors responsible. Justice will be served," the release read.

KXAN's John Thomas and Nabil Remadna contributed to this report.