State Investigators Identify ‘Serious Contractual Violations’ by the Heidi Group

A new report from the health inspector general says the Heidi Group, an anti-abortion group tapped to replace Planned Parenthood in state family planning programs, misused taxpayer funds, and calls for an expanded investigation of the group’s contracts.

Boxes of program and audit records filling one exam room in the Heidi Clinic.
Boxes of program and audit records filling one exam room in the Heidi Clinic. Spencer Selvidge

A new report from the health inspector general says the Heidi Group, an anti-abortion group tapped to replace Planned Parenthood in state family planning programs, misused taxpayer funds, and calls for an expanded investigation of the group’s contracts.

Boxes of program and audit records filling one exam room in the Heidi Clinic.
Boxes of program and audit records filling one exam room in the Heidi Clinic. Spencer Selvidge

State investigators now say an anti-abortion group tapped to replace Planned Parenthood in Texas’ reproductive health programs must repay nearly $1.6 million amid “serious contractual violations.” That tab could still go much higher.

In a long-awaited report released Thursday, investigators found that the Heidi Group misused taxpayer funds, appeared to overpay subcontractors and some employees, lacked oversight and contracts for their providers, and more.

The findings echo those in an Observer investigation published in June, which was based on financial statements, internal documents, and interviews with half a dozen former Heidi Group employees and the group’s founder. “Millions of dollars were funneled through there, and we only helped a handful of women,” one former employee told me this spring. “That’s sinful, to take that amount of money and not use it for what it was supposed to be used for.”

Carol Everett.
Carol Everett at the Heidi Clinic.  spencer selvidge

Texas awarded contracts worth millions of dollars in 2016 to Carol Everett, the head of Heidi Group and an anti-abortion activist. The state tasked Everett, who had no experience with state programs, with building a new network of family planning providers to serve about 69,000 Texans. That’s more than were previously served by Planned Parenthood, which saw 40 percent of patients in Texas’ women’s health program before lawmakers kicked it out in 2013.

The Texas Health and Human Services Commission (HHSC) clawed back funds several times from the Heidi Group’s initial grant award after indications that the group was not meeting its goals. Despite those concerns, officials renewed its contracts for two years.

Last October, the state announced it was cancelling the Heidi Group’s contracts, two weeks after the Observer reported that the group had served less than 5 percent of the patients it promised to in its first year.

The HHSC Office of the Inspector General then launched an investigation into $1.1 million in questioned spending during a seven month period of the contracts, ending in the findings issued Thursday. The new report is a stern rebuke of the Heidi Group’s failure to provide promised reproductive health services to tens of thousands of poor Texans. It underscores problems identified in a 2018 review by the HHSC Fiscal Monitoring Unit, and identifies more concerning issues that it says warrant an expansion of the investigation from seven months to the full two-year contract period. Since the earlier review, Everett “has tried to correct all errors, however the documentation submitted is not sufficient,” the investigators wrote in a footnote. “The response back to HHS was almost 500 pages of documents. It appeared to the [Fiscal Monitoring Unit] analyst that [Everett] pulled random invoices to try and cover expenditures.”

Everett did not immediately respond to the Observer’s request for comment about the report. Quorum Report, which first published the findings, said Everett disputed them. In interviews with the Observer at her group’s clinic in Round Rock this year, Everett acknowledged that she didn’t accomplish what she set out to, but mostly blamed the state, which she said “throws you in the water.” She claimed that HHSC’s data actually undercounts the number of patients her group served, but even Everett’s own numbers are a fraction of what’s pledged in her contracts.

During the investigation by HHSC’s Office of the Inspector General, Everett hired attorney Stuart Bowen, who previously headed that office, to help her. As inspector general, Bowen led the charge to eliminate Planned Parenthood from Texas’ Medicaid program until he was forced to resign in 2017.

The report also comes as a Trump rule goes into effect blocking abortion providers and their affiliates from participating in the Title X family planning program. The change follows in Texas’ footsteps by prioritizing anti-abortion groups for government contracts over established family planning providers. In January, just after her state contracts were pulled, Everett applied for Title X funding along with the Obria Group, a chain of Christian clinics that promotes abstinence and does not offer hormonal birth control or condoms. Obria received a grant (in California); the Heidi Group did not.

Everett continues to seek taxpayer funding. This summer, she quietly started a new group called Vita Nuova, or “new life,”  a “Christian, pro-life organization.” The organization sued the U.S. government, challenging Title X rules that it claims would bar the group from receiving funding due to its anti-abortion position and its refusal to recognize same-sex marriage⁠—in the hypothetical future scenario in which the group vies for the federal family planning funds.

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Sophie Novack is a staff writer covering public health at the Observer. She previously covered health care policy and politics at National Journal in Washington, D.C. You can contact her at [email protected].


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