Former leaders of Oklahoma’s Department of Mental Health and Substance Abuse Services “likely” violated the law by providing GRAND Mental Health with “advanced information” about the 2023 bid process for a lucrative contract in Tulsa County, according to an administrative law judge.
Alex A. Pedraza, the administrative judge, wrote his seven-page order to conclude a lengthy RFP appeal filed by a pair of certified community behavioral health centers — Family & Children’s Services and CREOKS — in protest of the 2023 decision to award GRAND Mental Health a new service zone for enhanced Medicaid reimbursement. FCS already held a contract for the area, serving uninsured patients in the northeast quadrant of Tulsa County by leveraging enhanced Medicaid payments. CREOKS responded to the 2023 request for proposal but was not selected, and both organizations accused ODMHSAS of improperly favoring GRAND.
While Pedraza determined the Office of Management and Enterprise Services’ April 2025 decision to cancel all CCBHC contracts in Tulsa County made the appeal “moot,” his description of emails and text messages questioned the neutrality of former ODMHSAS Commissioner Carrie Slatton-Hodges’ administration.
How Oklahoma’s mental health agency handled the lucrative RFP — worth millions in Medicaid funding to the nonprofit CCBHCs fighting for Tulsa County contracts — has been on the radars of state and federal law enforcement for more than a year. Pedraza’s Sept. 10 order became the most public acknowledgment of the allegations yet.
“It appears possible, and even likely, in [my] view, that protestant may have been able to demonstrate violations of law by ODMHSAS at the time of hearing,” Pedraza wrote.
However, Pedraza noted that “clear proof of the same is not presently before the tribunal at this time” because OMES’ decision to cancel the controversial contracts precluded the need for a hearing in the challenge brought by FCS and CREOKS.
“Considering the lengths ODMHSAS went to avoid or delay relevant discovery production in this matter, it should be specifically noted there exists more than an indicia of likelihood that evidence of improper conduct by ODMHSAS’ former leadership, including during the time preceding the solicitation and pervading through the contract award process, may have been presented at hearing, but for cancellation of the previously awarded contracts,” Pedraza wrote.
In a lengthy footnote to that paragraph, Pedraza offered further detail about the evidence he had already reviewed, writing that FCS and CREOKS had presented emails showing how:
- Slatton-Hodges and her administration “provided information in advance to GRAND that it would be issuing the solicitation” for Tulsa County;
- The “advanced information” came after GRAND Mental Health informed ODMHSAS “that it desired CCBHC status in the service area covered under the contemplated and discussed, but not yet issued, solicitation”;
- The “advanced information” followed GRAND’s “receipt of information from ODMHSAS to position itself into eligibility” for the solicitation;
- Slatton-Hodges “requested that GRAND’s CEO (Larry Smith) forego informing [FCS] CEO (Gail Lapidus) that ODMHSAS intended to issue a RFP”; and
- “GRAND — equipped with advanced information from ODMHSAS — expanded into Tulsa County with an apparent motive of improving its likelihood of securing the contract.”
Pedraza referenced a new law the Oklahoma Legislature passed in 2025 that established self-dealing by state and county officials as a felony punishable by a fine up to $10,000 and/or imprisonment up to five years.
“Notably, this type of conduct, if true, is precisely what [House Bill 2164] seeks to prevent and imposes penalties for violating,” Pedraza wrote.
Authored by Rep. John Pfeiffer (R-Orlando) and passed into law after Gov. Kevin Stitt’s veto was overridden, Title 21, Section 365 is labeled “Corrupt Use of Nonpublic Information.” It expands the definition of “corruption in office” to include “the use of public office or authority to procure or attempt to procure a personal benefit, profit, or perquisite.”
The new law also states that “any agreement or collusion among bidders or prospective bidders in restraint of freedom of competition by agreement to bid at a fixed price or to refrain from bidding for any purpose (…) shall render the bids of such bidders void.”
House Appropriations and Budget Committee Chairman Trey Caldwell acknowledged that some legislators were aware of concerns with how prior ODMHSAS leaders had handled the Tulsa County CCBHC catchment area RFP.
“The concern that I heard — and it was through the grapevine — was essentially there were people alleging that those RFPs were not let properly,” said Caldwell (R-Lawton). “I don’t have the details of what those alleged improprieties are.”
Still, Caldwell said inquiries into the state mental health agency were numerous in 2025.
“I know, at one point in time, there were multiple investigations into the Department of Mental Health and some of their employees that ranged everything from grand juries to the special committee in the House, to the state auditor, to the attorney general, to multiple federal three-letter agencies,” Caldwell said. “I do not know if any of them are still ongoing. I have no confirmation of that, but I do know, at one time, there were up to, like, seven investigations into them. For different things, not all the same thing.”
Contract concerns ‘referred to law enforcement’
Whether the 2023 decision to give GRAND Mental Health a CCBHC catchment area in Tulsa County involved criminal misconduct has been discussed for months behind the scenes of ongoing upheaval in Oklahoma’s mental health system.
With little clarity as to the status of investigations, however, ODMHSAS recently re-awarded its CCBHC designations for Tulsa County. The reaffirmed decision essentially eliminated boundaries and maximized competition, with FCS, CRS, GRAND (added in 2023) and CREOKS (added in 2024) all awarded “unrestricted” service areas in Tulsa County.
“We are excited to continue our partnership with the Oklahoma Department of Mental Health and Substance Abuse Services in our shared mission to serve Tulsans,” GRAND Mental Health’s current CEO, Josh Cantwell, said in a Jan. 8 press release. “The continuation of our CCBHC status in Tulsa County allows us to continue to provide unbridled access to behavioral health care to those in greatest need across all greater Tulsa communities.”
While decisions about who would receive enhanced reimbursements and responsibilities in Tulsa County lingered last year, hints of investigatory activity landed in public records, with Pedraza’s order in September renewing murmurs about which law enforcement agencies might be investigating the matter.
Tulsa County District Attorney Steve Kunzweiler acknowledged the sensitive situation to NonDoc, but he said he could not discuss details.
“I am aware of that ALJ report, and I am confident that matter has been referred to law enforcement for investigation,” Kunzweiler said in December.
Like others, Kunzweiler has watched the ongoing conversation about Oklahoma’s mental health system closely. After the Oklahoma House formed a “special committee” to “review mental health finances” when then-Commissioner of Mental Health Allie Friesen discovered the agency’s practice of paying last year’s bills with next year’s money, Kunzweiler testified April 17 about his frustrations with ODMHSAS.
“As a prosecutor since 1989, the state of mental health in Oklahoma was better in the late ’80s and early ’90s than what it is today,” Kunzweiler said.
On April 28, Kunzweiler told NonDoc he could not discuss his conversations with federal investigators about the CCBHC contract controversy in Tulsa County, but he did criticize ODMHSAS as having a “culture of moral corruption, decay, gross incompetence (and) extreme indifference (that) is the very definition of malfeasance.”
One former ODMHSAS leader is already facing criminal proceedings in Oklahoma County. Heath Hayes — who served as Slatton-Hodges’ chief of staff and the agency’s legislative liaison in 2023 and 2024 — was charged in August 2024 with felony embezzlement for allegedly diverting tens of thousands of dollars from the Healthy Minds, Healthy Lives Foundation, a nebulous 501(c)(3) nonprofit governed by ODMHSAS leaders since 2015.
Hayes appeared in Oklahoma County District Court on Aug. 13 for a preliminary hearing conference, and the day’s court minute offered another indication that broader criminal investigations remain in motion. The document indicated that Hayes had been “served by” the Attorney General’s Office and was expected “to plea” in his criminal case.
“We probably can’t talk about that,” Attorney General Gentner Drummond said Sept. 18 when asked about the notation in Hayes’ case.
On Wednesday, a hearing in Hayes’ criminal case was again continued until Feb. 24, but he recently reached a settlement agreement with the Oklahoma Ethics Commission to resolve allegations of unregistered lobbying conduct, seemingly after he left ODMHSAS in February 2024.
Hayes’ former boss, Slatton-Hodges, did not respond to a call seeking comment prior to the publication of this article. She announced her departure from ODMHSAS on Nov. 7, 2023, one day before state officials told FCS its application for the northeast Tulsa County catchment area was “not selected.” On Nov. 9, representatives of GRAND and ODMHSAS received an email from the state Central Purchasing office that contained the contract award.
“Agency and vendor may now have direct contact with each other,” wrote Richard Williams, an OMES procurement specialist.
Asked about the 2023 contract concerns and the state’s recent decision to re-establish contracts with four CCBHCs in Tulsa County, Adam Andreassen, the current CEO for FCS, said all parties should remain focused on meeting Oklahomans’ mental health needs.
“While FCS protested the release of the RFP and all that followed because of the uncertainty it created, we have never lost focus on the wellbeing of those we serve,” Andreason said. “Our teams have always collaborated with all of our CCBHC partners in Tulsa, and we communicate with them constantly as we coordinate care for the good of the community.”
A spokesman for GRAND Mental Health did not return a call seeking comment prior to the publication of this article, although he previously confirmed that the GRAND Mental Health board had terminated former CEO Larry Smith in November 2024 following an “internal audit.”
Smith’s $1.3 million salary drew Stitt’s ire during the 2025 legislative session when the governor pledged to “hold CCBHCs accountable.” Months prior, Smith’s communications with Slatton-Hodges had drawn repeated questions during his deposition for the FCS and CREOKS protest of the 2023 RFP award. In the deposition, Smith discussed GRAND’s 2022 decision to merge with and pay off the debts of the 12&12 addiction recovery center near I-44 and Sheridan Road in Tulsa, as well as his conversations with ODMHSAS leaders about the 2023 RFP.
“That would be Carrie Slatton-Hodges and Courtney Blaylock. They got me on the phone and said, ‘Are you interested in going into Tulsa County,'” Smith said. “And I went to the board and asked them. And they said, ‘Man, if that’s what you want to do, we’ll — we’ll do it, but, you know, we’ve already been there once. And so we — and then Carrie called back right after that. I believe she called me. Courtney called me. Somebody called me. And said, ‘We just found out we have to do an RFP, you can’t just come in here.’ That was kind of the conversation.”
In his December 2024 deposition, Smith ultimately revealed how a trio of GRAND board members visited him in the hospital one month prior to terminate his employment for reasons he said they did not disclose. Ron Brady, GRAND Mental Health’s vice president of communications, described that decision last year.
“Much like [ODMHSAS] is going through its own investigation and research of additional administrations, I think our board did the same thing and sort of recognized the need for a change, and with that change came compensation changes, organizational changes,” Brady said.
Stitt commissioned one of the ODMHSAS investigations that dominated discussion during the 2025 legislative session, and he hired Gable Gotwals attorney Robert McCampbell to lead it May 12. But with the Legislature removing Friesen from office in late May and the governor appointing former U.S. Navy Admiral Greg Slavoic as commissioner of mental health, McCampbell wrote Stitt a July 29 letter to conclude his inquiry — without findings.
“I write to recommend that the investigation I was retained to conduct concerning the Department of Mental Health and Substance Abuse Services should be transferred to the responsibility of Interim Commissioner Slavonic and his leadership team, including the newly reestablished Internal Audit Division,” McCampbell wrote. “Events transpiring since my appointment make it apparent that work completed by others and planned to be completed internally by Admiral Slavonic and his team has made much of the work I would do unnecessary. Accordingly, it is my recommendation that my continued involvement would no longer be cost effective for the taxpayers.”
Read the ALJ order on the 2023 CCBHC decision
