As legal setbacks begin to mount for Gov. Bobby Jindal with the indictment of a former Jindal cabinet member coupled with an attorney general’s opinion that recently announced changes to state employee group health plans are most probably illegal, one political observer intimated to LouisianaVoice that Jindal’s political career “may be coming unraveled” even as he remains fixated on the White House.
The attorney general’s office on Tuesday (Sept. 23) released a legal opinion that could signal a devastating blow to the administration’s plans to overhaul health benefit plans offered through the Office of Group Benefits (OGB) to some 230,000 state employees, retirees and dependents.
The opinion was requested on Sept. 9 by State Rep. John Bel Edwards (D-Amite), who wrote, “…The Office of Group Benefits proposes to make major plan changes, effective Jan. 1, 2015, which changes conflict with existing provisions contained in the Louisiana Administrative Code.”
LouisianaVoice has learned that word of the request was leaked to the administration after seeking and receiving a copy of the request through a public records request and Jindal dispatched Executive Counsel Thomas Enright to Attorney General Buddy Caldwell’s office to lobby the state’s chief legal officer to issue an opinion favorable to the administration.
When it became evident that Caldwell’s opinion would not be favorable to the administration, Commissioner of Administration Kristy Kreme Nichols capitulated in advance when she said last Friday that the state would go through the rule-making process spelled out in the Administrative Procedure Act (APA).
“But they’ve already put the changes out there,” Edwards said. “They implemented changes in the prescription drug co-pay in August without observing the proper legal procedure and would be deemed null and void if challenged in court. It will be impossible to do this (the remaining proposed OGB changes) by Jan. 1. The process would have had to have been started as early as June and as late as July of this year in order to become effective by the time the new plans will go into place.
Edwards was not the only legislator to voice criticism of the administration just two days before the House Appropriations Committee is scheduled to meet on Thursday to hear comments on the proposed health care coverage changes.
State Rep. J. Rogers Pope (R-Denham Springs), a member of both the Appropriations Committee and the Joint Legislative Committee on the Budget, said he has consistently opposed the governor’s intervention into the operations of OGB both in committee and on the House floor.
“The heavy hand and somewhat sleight of hand of the Jindal administration to make such a drastic change to the health care benefit program that will impact some 230,000 people in Louisiana is a disgrace and a slap in the face for the many who have contributed to this health care program and expected it to provide basic healthcare coverage,” he said.
Pope urged those affected by the proposed changes to attend Thursday’s 10 a.m. meeting in the State Capitol to provide comments and to ask questions.
Former State Sen. Butch Gautreaux (D-Morgan City) also weighed in on the latest development. Gautreaux, who served on the OGB board of directors during his final term in the Senate, said he felt as though Jindal privatized the agency because he “couldn’t be embarrassed by the best managed and most cost effective health insurance department in all 50 states.”
Gautreaux said the OGB board began asking for answers as soon as Jindal indicated his desire to privatize the agency. “When the board couldn’t get the administration to a board meeting, I called a special meeting of the Senate Retirement Committee, again asking the governor to inform us of his intentions,” he said. “Paul Rainwater (then Commissioner of Administration) attended reluctantly but could only tell us that government had no business in running a health insurance agency. He couldn’t tell us why because the logical answer would be cost savings but the opposite was the truth. Our complaints fell on deaf ears because the business was already promised.”
Gautreaux said the “corruption began when Timmy Teepell (Jindal’s original Chief of Staff) instructed Tommy Teague (the OGB Executive Director until teagued by Jindal when he balked at the privatization of OGB) to write a tightly written RFP (request for proposal)…for northeast Louisiana so that only one company could meet the (bid) criteria.”
“Jindal’s OGB mess goes much deeper than we thought,” Edwards said. “The mismanagement of the $500 million OGB fund balance is just the beginning. Jindal’s mean-spirited solution to this self-created is being forced down the throats of state workers illegally.
“I believe this failure to comply with the APA speaks volumes about the quality of the plans. This administration knows that they are unfairly shifting the costs to state workers and teachers. Why else would they go to such great lengths, even breaking the law, to avoid public input and legislative oversight?”
Of the belated decision by the administration to comply with the law, Edwards said, “It’s too little, too late, from an administration that has consistently disregarded its legal obligations and fiscal duties to the people of our state.”
Under the APA, the procedure for the adoption of rules requires a minimum of 100 days which puts the administration under the gun to meet a tight deadline. Other requirements include:
- Notice of the intended action and a copy of the proposed rules at least 90 days prior to taking action on the rule;
- A statement, approved by the Legislative Fiscal Office, of the fiscal impact and the economic impact of the intended action;
- The name of the person within the agency who has responsibility for responding to inquiries (in this case, Ansafone temporary phone bank workers in California and Florida);
- The time when, the place where, and the manner in which interested persons may present their views;
- A statement that the intended action complies with statutory law, including a citation of the enabling legislation;
- A statement concerning the impact on family stability, on child, individual or family poverty;
- Publication of a notice at least once in the Louisiana Register containing the full text of the proposed rule at least 100 days prior to the date the agency will take action on the rule;
- Upon publication of the notice, copies of the full text of the proposed rule shall be made available upon written request within two working days;
- Notice of the intent to adopt, amend or repeal any rule and the approved fiscal and economic impact statements shall be mailed to all persons who make timely requests of the agency no later than 10 days after the date the proposed rule change is submitted to the Louisiana Register;
- All interested persons must be afforded a reasonable opportunity to submit data, views, comments or arguments—orally or in writing.
For a complete list of requirements of the APA, go here: apa
The attorney general opinion said the significant changes proposed by the administration “constitute a modification of the health care plans set forth in Title 32 and also has the effect of repealing and/or rendering many of the rules contained in Title 32 obsolete without following the required procedures established by the Louisiana Administrative Procedure Act.”
The APA “requires that agencies comply with the rulemaking procedures set forth in the act when adopting rules,” it said, adding if OGB failed to follow APA procedures which specify that no rules adopted on or after Jan. 1, 1975, is valid unless adopted on substantial compliance with APA, “then the validity of the plans becomes questionable.”
Additionally, the opinion said, “Louisiana jurisprudence has found that rules unlawfully adopted are invalid and unenforceable.”
The opinion noted that the Legislative Fiscal Office found that significant changes to the health plans include:
- Increasing out-of-pocket maximum for health plan options;
- Increasing deductibles for all health plan options;
- Increasing co-pays 100 percent for proposed health plans with co-pays;
- Increasing the out-of-pocket maximum for the prescription drug benefit by $300—from $1,200 to $1,500 (a 20 percent increase);
- Subjecting the prescription drug benefit to categories that will result in an increased cost for preferred and brand name drugs and a decreased cost for generic drugs;
- Implementing other various prescription drug benefit changes including high compound management, over utilization management and the exclusion of medical foods;
- Requiring prior authorizations for certain medical procedures;
- Eliminating the out-of-network benefit for some health plan options;
- Application of standard benefit limits for skilled nursing facilities, home health care services and hospice care services;
- Removing all vision coverage;
For a copy of the complete attorney general opinion, go here: ATTORNEY GENERAL OPINION
While we have not been in discussion with Gov. Jindal or Kristy Kreme regarding the latest legal setback, we feel we can safely predict that Jindal will call the opinion “Wrong-headed,” while Kristy Kreme will put on a happy face and assure us that everything is just fine and there’s nothing to worry about.