A Paige from the Past?

A lawsuit accuses HISD's former chief and a trustee of influence-peddling

Frank Watson says he was just following the orders of then-HISD superintendent Rod Paige on that summer day in 1998 when he walked into that first meeting with Larry Marshall.

Watson, a 32-year district employee, was assistant superintendent over workers' benefits and claims management. Paige, he said, had told him to see Marshall. "Frank, I want you to help [Marshall] in every way you can," Watson quoted his boss as saying.

Marshall had also been a longtime HISD supervisor until his retirement, but now he was even more -- a trustee for the Houston school board. Watson says he went into Marshall's office and found him pleasant enough at first, but as the conversation went on, he began to feel uncomfortable.

After many scheduling conflicts, Paige was finally deposed, but not in the Lincoln bedroom.
After many scheduling conflicts, Paige was finally deposed, but not in the Lincoln bedroom.

The trustee wasn't conferring with Watson in any capacity as an elected official of the district's policy-making board. In this private session, the man who would be voting on district budgets and even employee firings was suddenly a paid lobbyist trying to boost business for a private client doing business with HISD itself.

Watson says Marshall wanted him to transfer roughly 300 district employees (these workers had not designated a primary care doctor) to People 1st Healthcare Network, Inc., a physicians group that had hired Marshall as a consultant. People 1st stood to gain about $15,000 monthly from the transfers.

Marshall's request -- and other alleged requests for favorable treatment -- were ultimately rejected by Watson. In 2000, the assistant superintendent found himself ousted by the same school board that included Larry Marshall.

Watson accused the district of wrongful termination in a whistle-blower lawsuit. Now, after almost three years of litigation, depositions and other evidence have yet to support much of the former supervisor's allegations.

But his case has raised serious questions about the potential for conflicts of interest in the highest echelon of HISD during the administration of the man who is now the secretary of education for the United States, Rod Paige.


Watson says trustee Marshall was blunt about his job to boost business for his client, the minority-owned physicians group.

"He told me when we met he was a consultant for People 1st and his function was to increase membership," says Watson, who, like Marshall, is black. "His exact words were 'Frank, we need to get this done and move these people to People 1st because these white boys have been doing this long enough.' "

Watson says he sensed the move was unethical, but he wanted to avoid trouble and told Marshall he would look into it. After contacting HISD's in-house attorney as well as the district's health insurance carrier, NYLCare, Watson learned that if he transferred employees without their permission, he would be breaking HISD's contract with NYLCare and could get into serious legal trouble. Watson says he explained this problem in a letter to Paige.

"I thought that would take care of it, but it didn't quite work," says Watson. He says Paige and Marshall were soon requesting a list of all nondesignated employees, then asking Watson to solicit them to join People 1st. In a January 1999 memo from Marshall to Paige, Marshall reflects obvious frustration over the lack of participation by Watson and NYLCare.

"HISD requested information via telephone call and letter regarding HISD's undesignated or unassigned members. NYLCare's upper management responded by stonewalling and using delay tactics," Marshall wrote. "Once the information was provided, it was untimely and was not in a usable form (with addresses and telephone numbers)."

The final straw came during the fall of 1999, as a period of open insurance enrollment approached for HISD workers. Watson says Paige called him into his office again and asked him to put People 1st brochures in all employees' information packets.

"I said, 'I can, but if we do it for People 1st, we need to do it for everyone else,' " says Watson. He claims that, in reaction to that comment, Paige "looked at me for what seemed to be two or three minutes and then walked out of the room. He just left me sitting there…That's when the cold war really started."

A few weeks later, Watson's doctor put him on medical leave for hypertension and exhaustion. When he returned to work after a nearly five-month absence, he was told his contract was being terminated because his department was being restructured. His supervisor added that his performance had nothing to do with it (Watson had exemplary work evaluations) and he would be paid the remainder of his contract, including vacation days, Watson says.

"I was stunned," says Watson. "I said, 'You want to fire me because Paige didn't like me, and that's the real deal.' "

In the months that followed, Paige would become President George W. Bush's nominee for U.S. secretary of education. Marshall would continue serving as an HISD board trustee while acting as a paid consultant to companies doing business directly with the district. And Watson went to court with his allegations. "I always envisioned when my career was over I'd go out and have a party with my friends," says Watson, now 65. "I never thought it would end like this."

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