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Archive for the ‘Attorney General’ Category

If anything at all can be taken from the 100-plus pages of grand jury testimony of Bruce Greenstein, it’s that Greenstein’s memory lapses and his reluctance to adequately answer repeated questions about his role in the awarding of a major contract to his former bosses taxed the patience of members of the grand jury who were forced to listen to his verbal sparring with prosecutors for hours on end.

But in the end, there was no smoking gun, although Greenstein, former Louisiana Department of Health and Hospitals (DHH) Secretary, on several occasions during his testimony said an agency-wide memorandum cautioning DHH employees to avoid contact with bidders on the $189 million contract during the selection process did not apply to him.

Though grand jury testimony is normally secret, several perjury counts returned against Greenstein in the nine-count indictment were based on his grand jury testimony so it would be subject to discovery in order for Greenstein to prepare his legal defense and therefore would be public.

Greenstein also admitted he initiated what has come to be known as “Addendum No. 2,” which was crucial in allowing his former employer, CNSI, to qualify to submit proposals for the contract, which it ultimately won in mid-2011. The contract was cancelled in March of 2013 when it became known than the FBI had been investigating the contract since January of that year.

During his testimony, it was revealed that Greenstein had maintained constant contact with a friend at CNSI, Vice President of Government Affairs Creighton Carroll and that the frequency of those contacts increased dramatically during Greenstein’s interviewing for the Louisiana job and during the formulation of Addendum No. 2.

In the first five months of 2010, for example, there eight total contacts consisting of texts and phone calls between the two men. In June of, however, just before he began the interview process for the DHH position, there were 75 contacts. From July through January, there were 864 contacts, including 227 in January of 2011 alone, when “the whole Addendum 2 stuff was going down,” according to Assistant Attorney General Butch Wilson. “Before you take office,” Wilson said, “we have not even a dozen contacts with Mr. Carroll. And after you take office, we have a total…of 2,882 communications. How do you explain that?”

“He is a prolific texter,” Greenstein replied.

Further into the questioning, Wilson was still trying to reconcile Greenstein’s testimony before the Senate and Governmental Affairs Committee in which he claimed he had no contact with CNSI officials during the bidding process and the facts to the contrary as revealed by the thousands of text messages and telephone calls between Greenstein and CNSI.

“…Four months after a very important conversation with your friend and former employer, Mr. (CNSI co-founder and President Adnan) Ahmed, and you tell Sen. (Karen Carter) Peterson (D-New Orleans) there were no vendor conversations regarding the RFP (request for proposals) after it was released,” Wilson said. “And you admitted a minute ago that that conversation with Mr. Ahmed definitely involved the RFP. So that was not an accurate statement, was it?”

“I did not make it at the time thinking it was an inaccurate statement,” Greenstein said.

Greenstein’s memory appeared to grow progressively worse as the questions became more pointed.

“Do you recall a meeting with DHH officials and DOA (Division of Administration) people, specifically (then-Commissioner of Administration) Paul Rainwater and (DHH Assistant Secretary) J.T. Lane…where you had a meeting regarding the emails that had been found? Do you remember that meeting?”

“I don’t.”

“You don’t remember that meeting with Mr. Lane and Mr. Rainwater and several other people in between your testimonies before the Senate?”

“I don’t remember it.”

“Do you recall being explicitly asked by folks at the meeting from both DHH and DOA, ‘Is this all there is?”

“No.”

“I’m going to ask you again,” said Wilson. “Are you sure?”

“I don’t remember having a meeting with Paul Rainwater about these emails.”

At one point during Greenstein’s testimony, it was revealed by Wilson that Greenstein supposedly agreed to a letter of recommendation on behalf of CNSI to his counterpart in Arkansas. He cited a Feb. 5, 2013 email from Carroll to DHH executive counsel Steve Russo which said, “As you know, B.G.—which I believe probably means Bruce Greenstein—has agreed to a letter of recommendation…to the Arkansas Department of Human Services on behalf of the CNSI, which was also trying to get a contract for a (sic) MMIS (Medicaid Management Information Systems) system in Arkansas, correct?”

The letter subsequently went out over Undersecretary Jerry Phillips’ signature, Wilson noted, asking “Whose idea was that?”

“I can’t remember who wanted to sign it,” Greenstein said. “I know that I didn’t want to sign that.”

“Then why does Creighton say, ‘As you know, B.G. has recommended a letter of recommendation’?”

“I probably said that when asked about a recommendation,” Greenstein said.

“Your friend asked you to help his company…get more business and you said, ‘I will do that,’ right?”

“I didn’t say I will do that.”

“Well, if you said yes, why is Jerry Phillips sending out a letter?”

“Well, it’s not Bruce Greenstein on the letter.”

“I’m going to ask you pointblank. True or false: this letter that was rewritten and signed by Jerry Phillips, you directed him to do that?”

“I do not remember that,” Greenstein said.

“How could you not remember that?”

“Because I don’t remember that.”

“That’s hard to believe, Mr. Greenstein,” Wilson said. “I mean, this reference is clearly a discussion that you had with Creighton Carroll regarding this letter that he sends to your department that he, or someone from CNSI, wrote that is then minimally changed and signed by not you, but your under-secretary.

“Jerry Phillips didn’t show you this letter before he sent it out?” Wilson asked.

“I can’t remember seeing…I don’t remember seeing it.”

“It just looks to me like between Creighton’s comment here about ‘B.G. has agreed to a letter of recommendation’—and that was on Feb. 5th and the letter was issued on Feb. 14th, nine days later—this was almost sounds like cold feet. The former letter he sends is for your signature, but in nine days, now it’s got Mr. Phillips’ …signature on it.”

[The Arkansas Department of Human Services, in July of that year, disqualified CNSI from participating in the bidding on its system as a result of the Louisiana investigation and resignation of Greenstein.]

Wilson also questioned the propriety of allowing CNSI to bid on the contract to process Medicaid claims for DHH. Brandishing a letter dated Dec. 7, 2010, from the Charlotte, N.C., law firm McGuire-Woods, he said the firm was representing CNSI in a major financial default case that threatened to bankrupt the company—a full six months before the CNSI contract was signed.

“Were you ever aware of the fact that they were basically in receivership with BOA (Bank of America) at the time they were bidding? Were you ever informed of that? Were you ever told that, as a matter of fact, their line of credit had been restricted by Bank of America to the extend they could not spend money unless they got prior approval from BOA? Did Mr. Carroll and Mr. Ahmed ever tell you about the troubles, the clear financial troubles that the company was having at the time they were trying to get this money from this bid?

“Should that have been disclosed to DHH?” Wilson asked.

“That’s a good question,” replied Greenstein.

Further into Greenstein’s testimony, he was asked if he was told to resign or be fired.

“I was told to resign,” he said.

“Were you specifically told by the administration officials that you had lied to them?”

“No.”

“They just said, ‘Get out’?”

“Actually, it was Paul Rainwater—when he was in the Chief of Staff’s office.

“And did Paul ever say, ‘Bruce, you lied to us’?”

“No.”

“You are sure about that?”

“I don’t remember it.”

“You tried not to tell the Senate that CNSI had won (the contract),” Wilson said. “You didn’t tell the Senate about communications with CNSI regarding Addendum No. 2. You didn’t tell the Senate about hundreds of communications with Carroll. You did not tell DHH and DOA officials about communications with Carroll after they asked you if there was anything else, although you say you don’t recall that meeting.”

At one point in the questioning, this time from Assistant Attorney General David Caldwell, it appeared there would be a link established between the events surrounding the contract and Gov. Bobby Jindal’s office, but the line of questioning ended almost as abruptly as it started.

Referencing the date of Jan. 10, 2011, Caldwell said, “I see some calls from Bruce Greenstein’s work cell back and forth between you and Timmy Teepell. What did Timmy have to do with…was he was with Division of Administration or the governor’s office at that time?”

“At that time I think he was with the Chief of Staff for the governor,” Greenstein said. [Teepell never worked for DOA].

“Do you recall what he was talking to you about?” Caldwell asked.\

“I have no idea,” replied Greenstein.

“Was he talking to you about that amendment [Addendum No. 2] of this particular contract?”

“Probably not.”

“What involvement did Mr. Teepell have in this process? What information did he have about the DHH contracts? Because I think that maybe even Mr. Ahmad said in the paper that he had gone over to the governor’s mansion to talk to him, right? I’m just trying to get a sense as to how much involvement people within the governor’s office might have had.”

Caldwell also singled out a series of communications between Greenstein and Alton Ashy, who was the lobbyist for CNSI. “Was he trying to push this amendment for CNSI, this Addendum No. 2?”

“Yeah, I mean, he should have been… but he had a lot of other business at DHH as well.”

Caldwell later noted that Greenstein at one point had asked DHH Chief of Staff Calder Lynch specific questions about Ashy, saying, “A company I know wants to hire him” and that Lynch had responded, “Not that it’s terribly helpful or relevant, but we can speak offline.” Offline could, for example, mean speaking by phone rather than leaving a paper trail of emails.

“How did you come to get involved with recommending a lobbyist on CNSI’s behalf? I don’t understand how all that went down.”

Caldwell also grilled Greenstein on his intervention on behalf of CNSI when it became apparent that CNSI was unable to make good on its required bond for the contract. “Did you have discussion with (DHH executive Counsel) Steve Russo in which it was discussed whether you could wait until the contract was signed to call for the bond to be posted?”

“I don’t remember a conversation like that.”

Greenstein and Caldwell sparred over the refusal to allow Greenstein to communicate with Russo after the investigation was initiated. “DHH wouldn’t allow me to talk with my own attorney,” Greenstein complained.

“Is he your personal lawyer?” Caldwell asked.

“He represented the secretary in many proceedings…he reiterated many, many times…that he was my attorney and we have attorney-client privilege.”

“Let me explain to you why he doesn’t want to talk to you,” Caldwell said. “There’s all these things in your deposition where you have said that people said something or they didn’t say something—and I will tell you right now, it is directly contradicted by what those people have said. [Caldwell hinted at but never actually said that Russo was—and is—paid by the State of Louisiana and represents DHH but not any DHH personnel once they come under investigation for or charged by the state with wrongdoing].

Later, Caldwell brought up boasts by CNSI officials that they had political influence with Greenstein’s office. “Are you aware that they constantly threw it around that they had influence on the ninth floor and this is how they were going to get the contract?”

“No,” Greenstein replied.

Even though Greenstein maintained that he pushed for Addendum No. 2 as a means of opening up the bidding process to more vendors in the hopes of obtaining the best deal possible for the state, Caldwell noted that when another bidder, ACS, requested an extension of the proposal deadline, “Bruce said no,” according to an internal DHH email.

After the attorneys took their shots, individual members of the grand jury had their turn at asking questions of Greenstein and the mood of the grand jury was best summed up by one member near the close of testimony who said:

“Sir, I just have two questions. How are you being transparent when you can’t recall anything and secondly, when you sit down with your children and you explain your part in Louisiana history, what will you tell them?”

For those with lots of time on your hands, here is a link to the full transcript of the grand jury testimony: http://www.auctioneer-la.org/Bruce_Greenstein_Grand_Jury_Testimony.pdf

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You have to love the Division of Administration (DOA) and the Office of Group Benefits (OGB). Their concern for the 230,000 state employees, retirees and dependents is surpassed only by their arrogance.

Saying “We heard the financial concerns of our members and Legislators,” Commissioner of Administration Kristy Nichols made the self-serving announcement that OGB has decided to delay the effective date of changes arbitrarily (and illegally) implemented to medical and pharmacy plans from Aug. 1 to Sept. 30. OGB RELEASE

Here is the information provided on the OGB web site: https://www.groupbenefits.org/portal/pls/portal30/ogbweb.get_latest_news_file?p_doc_name=4D7A4D344D6A45794E533551524559334E6A4D32

Never mind that State Rep. John Bel Edwards (D-Amite) told Nichols and OGB CEO Susan West back on Sept. 25 that they were flirting with major litigation and the threat of having to refund millions of dollars to OGB members who were hit with benefits changes which were illegal until such time as a rule could be adopted. Here is the link to video clips of that hearing: http://youtu.be/ct652tBa8Mc.

Except for Edwards who said the move was illegal. He requested and obtained an Attorney General’s opinion that agreed with him.

            Nichols, as is her custom, was not going to promulgate rules at all in implementing the new rates members would have to pay for prescriptions even though the law requires advertisement and public hearings on such changes. Instead, the administration, facing a shrinking OGB reserve fund because of its repeated premium cuts, plunged ahead, the law and state employees be damned.

The premiums were reduced so that the state would enjoy a similar reduction in the 75 percent of premiums it is required to pay for health coverage of OGB members. Gov. Bobby Jindal and Nichols cut the rates by nearly 9 percent despite a report from Buck Consultants which stated flatly that it never made such actuarial advice.

Pursuant to testimony given in the Sept. 25 hearing by the Joint Legislative Committee on the Budget (JLCB) in which Kristy said Buck Consultants had recommended a premium reduction, Edwards requested a copy of the actuarial recommendations.

            “I still have not received any actuarial recommendations for the 2013 and 2014 premium reductions at OGB,” Edwards said Tuesday. “Nor have they told me that such recommendations do not exist. Clearly, they do not.”

The OGB web site does contain a request for proposals (RFP) for an actuarial that is dated Sept. 26: https://www.groupbenefits.org/portal/pls/portal30/ogbweb.get_latest_news_file?p_doc_name=4D7A4D774E4445794D793551524559334E444531

The Baton Rouge Advocate said the refunds the state must now make to OGB members who were overcharged in the form of out-of-pocket expenses will come to nearly $4.5 million and is expected to be refunded within 60 days.

http://theadvocate.com/news/10718472-123/group-benefits-change-announced

Getting the refunds for the overcharges won’t be a walk in the park if past experience with the OGB pharmaceutical benefits administrator is any indication. “Members who incurred increased pharmacy costs between Aug. 1 and Sept. 29 based on exclusions must submit an appeals form to MedImpact,” said the news release from OGB, adding that Blue Cross and Blue Shield of Louisiana (BCBS) will reprocess claims for members who incurred increased medical costs through their providers during that time period. There is an appeals form for MedImpact on the OGB web page, but it appears to apply only to prescriptions that were rejected or denied by pharmacies in August and September: https://www.groupbenefits.org/portal/pls/portal30/ogbweb.get_latest_news_file?p_doc_name=4D7A4D344D6A45794E693551524559334E6A4D33

If members incurred costs that were not submitted through a provider, they must submit an appeal request form to Blue Cross and Blue Shield,” the release said. “The forms can be found on the OGB website at www.groupbenefits.org.”

Edwards said the burden should not be placed on state employees and retirees to file appeals on overpayments. “Group Benefits has the claims information and they should be required to make the determination of who is owed what and it should be Group Benefits that takes the initiative on this,” he said.

Of course, by placing the onus on employees and retirees, DOA is counting on members being unfamiliar with the process or uninformed about the refund program altogether. If they do not file appeals for refunds, no refund will be made and the state will not have to repay victims of the overcharges. “That’s why Group Benefits should be the one responsible for seeing to it that everyone who was overcharged because of its illegal actions in implementing the changes in the first place should get those overcharges refunded,” Edwards said. “The members should not be held responsible for the illegal actions of Group Benefits and DOA.”

Here are links to the after-the-fact DOA Emergency Rule declaration: http://www.doa.louisiana.gov/doa/Presentations/Emergency_Rules_-_Office_of_Group_Benefits_9-30-2014.pdf and DOA’s Notice of Intent: http://www.doa.louisiana.gov/doa/Presentations/Ordinary_Rule_-_Office_of_Group_Benefits_10-01-2014.pdf

The clumsy attempt at circumventing the law is just another in a long line of embarrassing episodes perpetrated by the Jindal administration as the governor pays less and less attention to the home front in his quest for the Republican presidential nomination, leaving the job of running the state to appointees equally unqualified as he to run so much as a snow cone stand.

Nichols typically ignored the threat of litigation in making the announcement just as the administration ignored the law in implementing the changes, even disagreeing in that Sept. 25 hearing on the necessity of publishing the proposed changes and conducting public hearings.

And West even attempted to justify the changes by pointing out to retirees and active members that she must pay the same premiums as they. She apparently failed to consider the fact that most state employees and certainly most retirees do not make her $170,000 per year salary.

The Retired State Employees Association (RSEA) threatened a lawsuit, challenging the administration’s contention that it could use the emergency rule (employed repeatedly by the administration during Jindal’s nearly seven years in office) to make changes in the medical and pharmacy plans.

Nichols was not even around for the conclusion of that Sept. 25 JLCB meeting, having stepped out of the committee room ostensibly to take an “important” phone call. In reality, it turned out she stepped out permanently to take her daughter to a boy band concert in New Orleans where she watched from the comfort of the governor’s luxury box at the Smoothie King Arena (see the snow cone stand reference above).

“Let’s hope that the legislature will continue to exercise oversight on this issue to drive more changes in the plans whereby the out-of-pocket cost increases of OGB members are reduced and (so that) the state will share in the cost of restoring the system’s soundness,” Edwards said in a prepared statement.

 

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What kind of person, serving as a municipal fire chief, would purchase ribbons and decorations of previous conflicts from a military surplus store and pen them on his own uniform?

Apparently the kind of person that Deputy Secretary of the Department of Public Safety (DPS) and Gov. Bobby Jindal would want to protect even to the point of prevailing upon an ally in the legislature to file an amendment to abolish the very agency conducting an investigation of that and other offenses.

At the same time State Fire Marshal Butch Browning was being reinstated in May of 2012 by his boss, Mike Edmonson who serves as both State Police Superintendent and Deputy Secretary of DPS, State Rep. Joe Harrison (R-Napoleonville) was introducing an amendment to House Bill 1, the state’s operating budget, to pull the $1.7 million funding for the Office of Inspector General (OIG) in the middle of OIG’s investigation of allegations of payroll fraud and a sloppy inspection of a carnival ride in Greensburg only seven hours before teenage siblings were injured by the ride.

The timing of the amendment was enough to make you toss your lunch of stone cold ethics and hot back room politics.

Browning “retired” on April 18 in the middle of that investigation but returned just 12 days later, on April 30, with an $8,000-per-year increase in pay after being “cleared” by Edmonson of any wrongdoing—six months before an investigative report by OIG was even issued.

But if Jindal and his co-conspirators intended to thwart the investigation by abolishing the agency led by Stephen Street, those efforts wilted in a backlash of public support for the office immediately ensued which caused the legislature—and Jindal—to back down from the effort despite a favorable 11-5 vote on Harrison’s amendment by the House Appropriations Committee.

Remember, this is the same governor who two years later would attempt to sneak through another amendment granting Edmonson a lucrative $55,000-a-year increase in retirement benefits only to have that plan crash and burn when LouisianaVoice learned of the implications of the amendment by State Sen. Neil Riser (R-Columbia).

OIG serves as white-collar watchdog and as an internal affairs division within state government but Harrison, in offering his amendment, argued that OIG’s functions overlapped those of State Police and the Attorney General’s Office.

As we have already seen, State Police, under the direction of Edmonson, gave Browning high marks in exonerating him from any wrongdoing and as we have also seen in other matters, the Attorney General’s Office is more than a little reluctant to involve itself in the investigation of any state agency—except of course in a situation such as that of former Department of Health and Hospitals Secretary Bruce Greenstein where the feds are already actively investigating a questionable contract with Greenstein’s former employer.

In that case, Attorney General intervention made good press.

In fact, since the 1974 State Constitution was adopted over the objections of then-Attorney General Billy Guste, the Attorney General’s duties are primarily restricted to defending state agencies, not investigating them and can generally enter a local matter at the express invitation of the local district attorney. In fact, the Attorney General has even begged off certain investigative matters, citing a potential conflict of interest should his office be called to defend or represent the agency.

Hammond attorney and state government watchdog C.B. Forgotston, former chief counsel for the House Appropriations Committee disagreed with Harrison’s contention that the OIG is “pretty much redundant.”

Forgotston said the office might be redundant “if any other agency in the state was stopping waste and fraud within the executive branch. Nobody at the state level is pursuing corruption in Louisiana,” he said.

Street said he linked his office’s funding to the amount of money it uncovers through wrongdoing by state officials and contractors. OIG’s annual report in 2012 showed the office had uncovered $3.2 million in fraud and waste the previous fiscal year, nearly double the office’s $1.7 million budget appropriation.

The reaction to Harrison’s bill and to Jindal’s transparent ploy was immediate.

“Is it a bargain to spend $1 to root out nearly $2 in fraud in Louisiana?” the Lake Charles American Press asked in a May 15, 2012, editorial. http://www.americanpress.com/AP-Editorial-5-16-12

“Apparently, some members of the state Legislature don’t think so,” the editorial said, adding that Harrison had admitted that he did not agree with the OIG’s investigation of Browning. He said there should have been no investigation in the first place but Street said his office had received a complaint (from the New Orleans Metropolitan Crime Commission) about how Browning was doing his job and so he launched an investigation. “I was told if you do this (job) right, you’ll eventually have people trying to shut you down,” Street was quoted by the paper as saying.

The editorial disagreed with Harrison’s claim that State Police and the Attorney General’s Office could take up the slack. “The attorney general in Louisiana is too much of a political species to launch investigations into wrongdoing by other politicians or political agencies,” it said in something of an understatement. “An office that ferrets out nearly $2 in fraud for every $1 it costs is too valuable to Louisiana to eliminate.”

The non-partisan Public Affairs Research Council (PAR) agreed. “The state needs a self-motivated watchdog agency to stop waste, mismanagement, abuse and fraud in executive-branch government,” it said in a May 7, 2012, news release. http://www.parlouisiana.com/explore.cfm/parpublications/commentariesandletters/100092

“Stephen Street… is a former criminal staff lawyer with the Third Circuit Court of Appeal, a former public defender and a former Section Chief with the state Attorney General’s Insurance Fraud Support Unit who handled white-collar prosecutions. He has extensive experience teaching courses on white-collar crime investigation,” the PAR release said.

“A sudden halt in funding of the Inspector General would terminate ongoing investigations and send a message nationwide that Louisiana government is open for corrupt or wasteful business. Lawmakers who oppose continued funding of the office while also criticizing particular ongoing investigations are running the risk of deeply politicizing the state’s law enforcement systems. If these efforts at shutting down the Inspector General’s office are successful, their effect will be to strongly encourage further political interference in the law enforcement profession throughout the state,” the release said.

James Gill, then a columnist for the New Orleans Times-Picayune, wasn’t nearly as charitable. As only he can, Gill noted that Edmonson had exonerated and reinstated Browning even before Street’s investigation was complete. Then came Gill’s zinger: “Perhaps Edmonson forgot that he had claimed Browning’s resignation had nothing to do with the allegations against him.” http://www.nola.com/opinions/index.ssf/2012/05/battle_over_funding_for_louisi.html

Gill quoted Harrison as claiming that he had thought for two years that Louisiana did not need an inspector general. “Anyone but a politician would be carted off to the funny farm for saying that,” he wrote, adding that despite Harrison’s claim that his amendment had nothing to do with Browning, he launched into “a passionate denunciation of the inspector general’s office over its treatment of browning.” Gill quoted Harrison as saying no good investigator “would bring it (the investigation) to this point without verifying information.”

“Even a politician deserves a trip to the funny farm for spouting such nonsense,” said Gill at his derisive best.

But even more to the point, Gill observed that “Since Browning has already been returned to duty, it may not matter much what conclusions the inspector general reaches.”

May not indeed. This administration is, after all, the gold standard of ethics.

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The controversy surrounding the sweeping changes being proposed for the Office of Group Benefits just got a little dicier with new information obtained by LouisianaVoice about the departure of Division of Administration executive counsel Liz Murrill and the possibly illegal destruction of public records from the Office of Group Benefits (OGB) and the involvement of at least two other state agencies.

While it was not immediately clear which OGB records were involved, information obtained by LouisianaVoice indicate that Murrill refused to sign off on written authorization to destroy documents from OGB.

We first reported her departure on Oct. 14 and then on Oct. 22, we followed up with a report that Murrill had confided to associates that she could no longer legally carry out some of the duties assigned to her as the DOA attorney.

But now we learn that the issue has spilled over into two other agencies besides OGB and DOA because of a state statute dealing with the retention of public documents for eventual delivery to State Archives, a division of Secretary of State Tom Schedler’s office.

Reports indicate that Schedler became furious when he learned of the destruction or planned destruction of the records because records should, according to R.S. 44:36, be retained for three years and then delivered to the state archivist and director of the division of Archives, records management and history. https://www.legis.la.gov/legis/Law.aspx?d=99704

Schedler reportedly became so upset with the decision to destroy the records that he copied Attorney General Buddy Caldwell with a letter he wrote to Nichols directing that DOA comply with the statute but Caldwell for his part, refused to intervene, saying he did not want to become involved.

If that indeed is the case, then LouisianaVoice goes on record here and now as contending that Caldwell is unfit to serve in that capacity and should resign immediately.

We made every effort to allow Caldwell to respond. We called his office and asked to speak to Buddy Caldwell or his son, Assistant Attorney General David Caldwell. We were told, “We don’t put calls through to them; we take a message and they may call you back.” They never did. We also spoke with AG Press Secretary Laure Gerdes and explained the story we were working on and told her if we did not hear back from Caldwell, we would suggest that he was unfit to serve as AG. Again, we never heard back from either Caldwell.

The attorney general simply cannot cherry pick which laws he feels should be enforced and to allow the destruction of vital public documents, particularly at a time when so much raw emotion has erupted over changes to the OGB benefit structure. To sit idly back and allow the administration to flout the law in the faces of 230,000 OGB members, retirees and beneficiaries is unconscionable and if Caldwell allows such action without at least advising DOA of the consequences he is not worthy of calling himself a public servant. He should take his Elvis impersonation act back to Tallulah.

And if Caldwell is reluctant to give legal advice to DOA, then Hillar Moore, as District Attorney for the 19th Judicial District, has all the statutory authority required to prosecute state officials should he ever decide to exercise that authority. The state government, after all, is domiciled in East Baton Rouge Parish.

Too much is at stake and those records could hold the key to the motives behind the administration’s decision to dramatically increase co-pays and deductibles. LouisianaVoice made requests for certain OGB records on Oct. 14 and those records have yet to be produced by DOA. We have no way of knowing if the records we requested are part of those documents which were ordered destroyed but if so, we plan to initiate legal action against the state promptly.

DOA has been habitually reluctant to produce public records at our request in a timely manner and this action could be the proverbial straw that breaks the camel’s back. Without the support and backing of the state’s highest legal authority, we are powerless to force compliance other than through the courts.

But the question that should be uppermost in the minds of Louisiana’s citizens is this: If those records were important enough to fire an attorney over her refusal to sign off on their destruction or for that attorney to place her career in jeopardy over that same issue, we are more curious than ever to know the contents of those documents—and we have the right to know.

And even more significant in this entire affair, if Liz Murrill did in fact refuse to compromise herself and her reputation by refusing to sign off on an illegal act, then we can only say good for her! She has shown far more integrity than our attorney general.

 

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Liz Murrill, the texting attorney who advised Commissioner of Administration Kristy Nichols that the Administrative Procedure Act (APA) was not necessary because the changes in the state’s Office of Group Benefits (OGB) plans did not meet the legal definition of “rule,” is gone.

Murrill sparred verbally with legislators during the Sept. 25 hearing on the proposed changes to OGB coverage of state employees and retirees by the House Appropriations Committee, telling them the APA was unnecessary in order that the Division of Administration (DOA) might implement huge increases to co-pays and deductibles that OGB members would be required to pay.

Throughout emotional testimony by OGB members who said their health care expenses might exceed their monthly pensions and others who related problems experienced with MedImpact, the state’s $350 million pharmacy benefit manager, Murrill could be seen texting while seated immediately behind witnesses. One observer said virtually the entire DOA staff sitting in the audience was also texting during testimony but only Murrill was constantly visible on the video being streamed live via the Internet.

But as embarrassing as that should have been to the administration, it was probably her advice that the APA was legally unnecessary.

Even an attorney general’s opinion released on Sept. 23, two days before the Appropriations Committee hearing failed to convince Murrill of her shaky legal position.

The opinion said the Jindal administration simply ignored the APA which requires a certain amount of publicity, public comment and legislative review before policy changes can be adopted.

But Murrill was quick to voice her difference with Assistant Attorney General Emily Andrews who authored the opinion at the request of State Rep. John Bel Edwards (D-Amite).

“We fundamentally disagree that the schedule of benefits meets the legal definition of ‘rule’ in the APA,” she said, “because it does not apply to the general public or any subset of the regulated public.”

Both Nichols and Murrill were grilled by a procession of legislators at the hearing, many of whom were not members of the Appropriations Committee but nevertheless had questions they wanted to ask on behalf of constituents.

At the times the exchanges became tinged with poorly concealed animosity as Nichols and Murrill fielded questions from one legislator after another once OGB members were finished with their testimony. The pair allowed their contempt for legislators surface from time to time while Legislators let it be known that they were losing patience with Jindal and his minions.

Murrill, while at the witness table, adamantly refused to concede that APA was required to be adhered to but on Tuesday (Oct. 14), once DOA had been called out on the matter and Murrill was out of the picture, APA notices of intent began going out toe legislators.

Once away from the table and back in the audience, she resumed her texting.

Now she has all the time she needs for texting.

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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.

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Two audit reports released this week by Legislative Auditor Daryl Pupera’s office focus on documentation of expenses related to hurricane recovery and costs incurred by the state for vacant office space in downtown New Orleans as part of a costly incentive package to induce Saints owner Tom Benson to keep the NFL team in New Orleans

The first indicates that the Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) has invoices for more than $49 million in exceptions, or undocumented expenses by disaster recovery specialists in the perpetual recovery efforts of hurricanes Katrina, Rita, Gustav and Ike.

The other, which we first wrote about in February of 2013, smacks of the kind of political back scratching for which Louisiana has become famous: the state’s capitulation to New Orleans Saints owner Tom Benson as part of a costly incentive package to induce him to keep his team in New Orleans. Part of that package included the state’s leasing of office space in his Benson Towers office building at inflated rental rates, a deal that appears to border on financial irresponsibility.

The report says that auditors evaluated 4,476 expense reimbursements totaling $711 million submitted by disaster recovery “specialists,” and found 665 “exceptions” totaling nearly $49.6 million.

Pupera explained that the questioned expenses do not necessarily indicate fraud or mismanagement but rather a need for more thorough documentation and justification for the invoices. “The money has been allocated but because it’s federal money, we want to be sure that all invoices are adequately justified before they are paid so we won’t have the feds coming back later and asking for their money back,” he said.

He said the exceptions fall into five different categories: contract work ($42.56 million), force account labor ($3.8 million), force account equipment ($1.3 million), materials ($1.8 million) and rented equipment ($88,000).

Other questionable costs included:

Expense reimbursements of $6.6 million which exceeded cost estimates;

Expense reimbursements of $22.7 million not supported by invoices, receipts, lease agreements, contracts, time records, equipment logs, inventory records of other documentation;

Purchases and contracts totaling $11.6 million which did not comply with federal and state procurement requirements;

Expense reimbursements of $11.6 million which did not comply with federal and state procurement requirements;

Expenses of $2.1 million in work which did not comply with FEMA regulations and guidelines;

Duplicate, omitted and/or miscategorized expenses of $5.7 million.

Pupera said once issues raised by auditors are addressed by GOHSEP, most of the expenses will be properly documented for payment. “There may still be some exceptions at the end, but a large majority are expected to be justified,” he said.

Benson purchased the 26-story Dominion Tower in September of 2009 and re-named it Benson Tower. He made the purchase after entering into a generous—to Benson—agreement whereby the state gave away the store to keep the Saints from moving to San Antonio.

One of the stipulations, which expired a couple of years ago, called for visiting teams’ players, coaches, and support staff to pay state income taxes on one-sixteenth on their annual salaries (because they played one of their 16 regular season games in New Orleans, thus earning a 16th of their income in the state). Once that money was received by the Louisiana Department of Revenue, the department immediately issued a check for an identical amount payable to Benson.

Another obligates the state to pay Benson a cool $1 million whenever the NFL awards a Super Bowl to New Orleans.

Benson Tower is located across the street from the Mercedes-Benz Superdome. As part of the deal struck between Benson and the state, the Jindal administration agreed to a 20-year lease of some 325,000 square feet of office space at $24 a square foot for various state agencies, some of whom were paying as little as $12 a square foot before being forced to move to Benson Tower in 2011.

At the outset, the state’s obligation was about $7 million a year, $2.4 million more than the $4.6 million the state was paying before the move.

Included in the Benson Tower purchase was a 60,000-square-foot plot encompassing a one-block section of LaSalle Street and part of what once was the New Orleans Centre shopping mall. That facility is now known as Champions Square where Saints tailgate parties are held. Anheuser Busch, makers of Budweiser Beer, has exclusive rights for beer concessions at Champions Square after striking a deal with the Louisiana Stadium and Exposition District (LSED), also known as the Superdome Commission.

Benson, the seven LSED members (each of whom is appointed by the governor) and their families, businesses and business associates, the Mercedes-Benz Superdome management firm, and Anheuser-Busch distributor Southern Eagle Sales & Service combined to contribute more than $203,000 to Jindal campaigns between 2003 and 2012.

Prior to the Benson Tower deal, the average cost per square foot for state agencies leasing office space in New Orleans was $17.66. In 2012, the first full lease year in Benson Tower, the cost per square foot was $23.78. Rent at the building is tied to the consumer price index and today the cost per square foot is $25.10.

The Louisiana Attorney General’s offices were never relocated to Benson Tower because of a lack of 24-hour access to parking facilities.

The $7.4 million now being paid does not include $625,000 being paid by the state for 24,900 square feet of vacant office space in the building. That amount bumps the state’s annual rent up to $8 million per year.

The audit report said a survey of current listing information on available office space in New Orleans, the range for lease rates is $16 to $22 per square foot, including parking, or an average of $19 per square foot.

Accordingly, for the 347,849 square feet of Benson Tower, including the 24,872 of vacant office space, the state is paying an average of almost $2.1 million per year in excess rent to Benson.

And the state is locked in until 2025—an additional payment in excessive rent of at least $23 million during the remaining life of the agreement, although the lease agreement could be extended beyond 2025, according to Mark Moses, director of the State Office of Facility Planning and Control.

In his response to the audit, Moses said the Saints were “an import part of Louisiana’s culture as well as an economic driver for New Orleans and the rest of the state.”

He said the incentive package delivered to Benson with appropriate wrapping and bows “saved the state more than $280 million in addition to adding nearly $400 million in revenue expected to be generated over the life of the agreement.”

Moses also said the number of parking spaces included in the lease rate should be included with comparing Benson Tower rental rates with market rates in New Orleans.

“Commercial Class A buildings typically include one to two parking spaces per 1,000 square feet under lease,” he said. “Based on the approximate 323,000 square feet of space under lease (the auditor’s office gives the area as 348,000), the standard commercial lease rate would include between 323 and 646 parking spaces. The rental rate for Benson Tower, however, includes 900 parking spaces in the Superdome garages.”

He added that additional parking is also available for $50 per month in the state-owned Health Education Authority of Louisiana (HEAL) garage a block from Benson Tower.

Moses also pointed out that the audit report’s comparisons of market rates failed to mention that most commercial leases of Class A buildings including “pass through language,” which requires tenants to pay a proportionate share of operations and maintenance expenses that exceed base year expenses established in the lease. Pass through rates, he said, can vary depending on operating and maintenance expenses for individual buildings and according to occupancy rates. Benson Tower, he said , does not include pass through language in its lease with the state.

 

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