Cue Queen and crank up Another One Bites the Dust.
Charles Calvi and Patrick Powers are leaving the Office of Group Benefits (OGB) and Susan West, late of the Office of Risk Management has been named Interim CEO—the fourth person to head OGB in less than three years.
Meanwhile, that $540 million reserve fund balance OGB had on hand to pay benefits at the time of Gov. Bobby Jindal’s infamous raping of the agency now sit at $240 million and is dwindling at a rate of $20 million per month, no doubt the result of Jindal’s 7 percent premium reduction six months before the January 2013 takeover of OGB by Blue Cross Blue Shield (BCBS) of Louisiana.
But not to worry. In one of the administration’s now routine Friday press releases (so that the impact of the story is lost over the weekend when newspaper readership is down), Commissioner of Administration Kristy Nichols announced that (drum roll, please) Alvarez and Marsal (A&M) will be working with West in efforts to “continue the transformation and redesign of OGB.”
Bear in mind that OGB was one of those state agencies that was doing quite well in paying health care benefits to some 250,000 state employees, retirees and dependents. That included building up that half-billion dollar reserve fund while paying claims in a timely manner (average turnaround of three days) that kept both claimants and providers happy. But somehow, the administration deemed it in need of “transformation and redesign” and now health care providers are being asked to wait longer for payment of claims and BCBS is asking the state to waive the service level agreements and performance guarantees in place for Claims Timeliness and to not impose financial penalties for payments made later than 30 days during January and February.
But back to Alvarez and Marsal. That’s the company Jindal recently hired for $4.2 million to find presumed savings of $500 million in state expenditures by April—except it turns out there was nothing in the contract alluding to any $500 million savings; it was in the cover letter but not the contract. After being caught with her knickers down, Nichols, who initially assured legislators that the contract did indeed call for the $500 million savings, has said the contract will be amended to contain the language. Good for her. Oh, wait. It turns out that amendment also added another $800,000 to the contract, boosting it to $5 million. Yipee.
Alvarez and Marsal, you may remember from a previous LouisianaVoice post, was the firm that advised the state to fire 7,500 public school teachers in New Orleans following Hurricane Katrina in 2005. http://louisianavoice.com/2014/01/17/firms-advice-to-fire-orleans-teachers-after-katrina-may-cost-taxpayers-1-5b-hired-for-4m-by-jindal-to-save-state-money/
When those teachers were not called back and instead were replaced by new teachers, they sued and won and now the state is on the hook for about $1.5 billion, give or take a couple of dollars.
So now this firm is awarded a $4.2 million contract to do what the brilliant minds of all those Jindal appointees apparently could not do. Alvarez and Marsal is going to send its suits to Baton Rouge to figure out what the Legislative Fiscal Office cannot. If the fiasco in New Orleans is indicative of its work, will the last one out of Baton Rouge please turn out the lights? On second thought, never mind; Entergy will have already disconnected the meter.
On April 15, 2011, Tommy Teague, the man responsible for OGB’s accumulating that $500 million reserve fund and who, by all accounts, ran a highly efficient agency known for its rapid turnaround on claims payments and satisfied claimants, was summarily fired when he did not jump on board the Jindal privatization train. Within six weeks, his replacement, Scott Kipper resigned in frustration or disgust—or both—and was replaced with Calvi. So now OGB CEO Charles Calvi and his $170,000 salary and Chief Operating Officer Patrick Powers ($107,000) are leaving voluntarily, headed to Metairie to work for Teague and the Louisiana Health Care Exchange.
West, the fourth person to head OGB in three years, previously as ORM’s administrator for loss prevention, underwriting and statistics where she was responsible for policy development, risk financing and premium development and allocation. Before that, she served as a claims manager for multiple lines of insurance provided by ORM, the agency that insures all state agencies.
Oddly enough, in her announcement of West as the Interim CEO, Nichols never once alluded to the departure of Calvi or Powers. LouisianaVoice learned of their leaving through other sources. Calvi’s leaving, whether voluntary or involuntary, was not difficult to figure out after West was announced as his replacement, albeit without benefit of an accompanying announcement of his exodus. http://www.doa.louisiana.gov/doa/PressReleases/New_OGB_Interim_CEO_Susan_West.htm
It was certainly a ham-handed way of announcing West’s appointment with no explanation of Calvi or Power’s leaving. Nothing would surprise us though, given the manner in which this administration tends to handle such matters with all the subtlety of Larry, Moe and Curly trying to administer a cold buttermilk enema to a feral cat.