Archive for the ‘House, Senate’ Category

Members of the Senate and Governmental Affairs Committee received copies of the report of Chaffe & Associates of New Orleans that the Division of Administration, through Commissioner of Administration Paul Rainwater, has attempted to withhold from release.

It was only a partial victory for the committee, particularly Sen. Ed Murray who had moved successfully on Wednesday for the committee to subpoena the report on the financial assets of the Office of Group Benefits (OGB).

Conflicting reports said Rainwater reportedly was served with the subpoena late Wednesday but still refused to turn the report over to the committee, maintaining that the subpoena was not signed by a judge. Another source said Rainwater gave the report to senators before actually being served with the subpoena.

One report said the report was provided by the Legislative Auditor’s office which had, after several attempts of its own, been provided with a copy of the report but that could not be confirmed. That same report said that because the report came from the auditor’s office which is conducting an investigation, senators were required to sign a confidentiality agreement not to divulge the contents of the report.

Rainwater, when turning over the report, reportedly asked that senators not to divulge the contents because of sensitive information contained in the report.

Another source said the report was released to the members of the committee for investigative purposes relative to committee confirmation hearings only.

Confirmation hearings for Rainwater and Deputy Commissioner of Administration Mark Brady were held by the committee last week.

Apparently, the only thing know for certain is that senators have the report in hand but won’t release it themselves.

LouisianaVoice has tried unsuccessfully on five separate occasions to get DOA to release the report but DOA first said the report had not been received, then said the report was not final but on May 29, said it had received the report on the 25th but because it was part of the “deliberative process,” was not public record.

DOA attorney Paul Holmes further cited two court cases in which the Public Service Commission and the Louisiana Department of Insurance each prevailed in efforts to keep records from being made public. Those cases, however, in no way pertained to LouisianaVoice’s request for the report.

Chaffe had been retained to produce the report by the March 19 deadline for Gov. Bobby Jindal to submit his executive budget but nothing from such report was included in the budget. That led to speculation—and actual reports—that Chaffe reported that the only advantage to privatizing OGB would be for the purchaser to retain the agency’s $500 million surplus.

The Senate and Governmental Affairs Committee elicited a promise from Rainwater during last week’s confirmation hearing that he would make the report available to Sen. Karen Peterson (D-New Orleans) vice-chairperson of the committee.

When Rainwater backed out on that promise and instructed OGB CEO Scott Kipper not to produce the report, Kipper tendered his resignation, effective June 24. It was the second time within six weeks that OGB had lost a CEO.

Last week’s confirmation hearing also included Kipper, who was named to replace former CEO Tommy Teague on April 15, the same day Teague was fired just six months short of his qualifying for retirement.

The committee peppered Kipper with a withering barrage of questions about his disavowal of any knowledge of the contents of the Chaffe report. That led to Murray’s motion on Wednesday to subpoena the report.

Brady received and read the latest request by LouisianaVoice for the public record on Thursday but did not respond.

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The Department of Health and Hospitals, after more than an hour and a half of back and forth bickering with the Senate and Governmental Affairs Committee, on Wednesday finally relented and admitted that the winning contractor on a 10-year, $34 million-per-year contract was CNSI the same company that formerly employed the DHH Secretary.

[LouisianaVoice missed the call on that one. Everyone in the know said it would be CNSI but we thought the contract would go to ACS, a subsidary of Xerox which already has six contracts totaling $148.3 million and which contributed $10,000 to the Jindal campaign. We didn't think that even this administration was brazen enough to give the contract to the department secretary's old employer. Guess we underestimated the stones of this administration.]

The committee was meeting to conduct confirmation hearings on DHH Secretary Bruce Greenstein who has been serving as secretary since his appointment last July. All cabinet members must be confirmed first through the committee hearing process and then by majority vote of the Senate.

Similar hearings were held last week for Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady and Office of Group Benefits CEO Scott Kipper. Kipper has since tendered his resignation, effective June 24, and his nomination withdrawn.

Just as last week with Kipper and to a lesser extent with Rainwater and Brady, Wednesday’s hearings quickly became contentious when Greenstein and Undersecretary Jerry Phillips became embroiled in a standoff with the committee over release of the name of the winning contractor pending formal approval by the joint House and Senate Health and Welfare Committees.

At stake is the contract to replace the 23-year-old computer system that adjudicates health care claims and case providers, Greenstein said. He said a state statute that requires the official awarding of the contract to be done by the joint health committees prevented him from divulging the name of the winning contractor.

Sen. Rob Marionneaux (D-Livonia) reminded Greenstein that the committee had run into refusals to release information by the Division of Administration (DOA) in the case of a report prepared by Chaffe & Associates of New Orleans on the financial assessment of the Office of Group Benefits (OGB).

Rainwater, at last week’s hearing, promised to make the report available but later backtracked and instructed Kipper to release the report to no one. Kipper subsequently resigned over that issue.

One of the first orders of business of the committee on Wednesday was to unanimously adopt a motion by Sen. Ed Murray (D-New Orleans) to subpoena the Chaffe report.

“On Monday, we picked up the paper and see where DHH refuses to release the name of the successful contractor,” Marionneaux said. “You cited a statute but the statute you cited does not say you shall not divulge, just that you shall not award the contract. We’re not here to award the contract, we just want to know who the contractor is. So, who is going to receive the contract?”

Greenstein answered that DHH had requested a joint committee meeting to hear its recommendation but Marionneaux interrupted him in mid-sentence. “One of the questions is about the company you used to work for (CNSI). Who is the company who is going to receive the contract?”

Again Greenstein tried to invoke the statute governing the awarding of the contract but was again interrupted by Marionneaux. “You said the administration of DHH, and that’s you as we stand here today. So you’ve made that decision not to divulge. Are you telling me right now, today, that you’re refusing to tell this committee who’s going to receive that $34 million contract?”

“We believe that the law states that we should call on the (joint) committee and then make the announcement to that committee,” Greenstein replied.

“I read the statute,” Marionneaux said, his patience beginning to wear thin. “Are you refusing to tell this committee who is going to be recommended by DHH to receive the award? Yes or no?”

“I’m not going to be able to say today.”

“We’re sitting here trying to decide if you, the leader of DHH, are going to be confirmed and we have a headline in Monday’s paper that you want to keep a secret and a direct question is being asked and you refuse to answer,” Marionneaux said.

“I just don’t understand why this administration does this,” said Murray. “You are, I suppose, just following directions. I just don’t understand it.”

It was Sen. Jody Amedee (R-Gonzales), however, who really laid the issue at the feet of Gov. Bobby Jindal when he asked Greenstein who made the decision “not to tell us this information under oath?”

“This was from my department….”

“You are the department,” Amedee interrupted. “Who is the person above you? Who is your boss?”

“The governor,” said Greenstein.

“Can you tell me if this company you used to work for….whether or not they got the contract?” Amedee asked.
“I can’t discuss the matter.”

“You can, you just choose not to,” Amedee said. “It’s not against the law. Can you tell me they didn’t get it (the contract)? That’s what everyone here wants to know. We want to know if the former employer of the Secretary of DHH got the contract for $34 million. If they didn’t get it, this will probably all go away. The more that this goes on, the more we think they got it.”

Greenstein did say that he erected a firewall between himself and the bidding process once the request for proposals (RFP) was issued so that he would not be involved in the selection process. He admitted that he not only had worked for CNSI, but also had past professional relationships with the other three bidders.

At one point after Greenstein and Phillips repeatedly alluded to the “process and procedure” employed by DHH in awarding contracts, Amedee, in apparent frustration, tossed his pencil over his shoulder and turned away from the witnesses.

Committee Vice-Chair Karen Carter Peterson said, “You don’t want me to know, but you know. Is this what we call transparency?”

Phillips said once the contractor’s name is made public, “it’s the equivalent of an announcement.”

“Do you make the law?” Peterson shot back.

“I interpret the law,” said Phillips, who is an attorney.

“Then you’re not doing a good job. Mr. Secretary (Greenstein), I hope you’re paying attention. How many lawyers do we have on this committee? We make law and yet you choose to follow this gentleman (Phillips).”

“It’s all part of the process,” Phillips said. “It’s (the selection process) done in conjunction with consultation and direction from the procurement folks.”

“In conjunction with whom?” asked Peterson.

“They’re part of the Division of Administration,” he said for the first time, implicating DOA in the controversy.

Committee Chairman Robert “Bob” Kostelka (R-Monroe) finally broke in to say, “I don’t know the difference between firewalling and stonewalling but this committee’s concern is whether or not to recommend to the full Senate that these people should be confirmed for the jobs for which they’ve been nominated.

“The much larger issue here is the integrity of the entire DHH. We don’t care about your procedures. We’ve got to determine if we trust the integrity of the people before us. We’re asking you to put aside your procedures and protocol and answer our questions. Knowing that, I don’t see why you cannot make this committee aware if a former employer of this man is going to win a multi-million dollar contract from the state.”

When Phillips again attempted to invoke “respect for the statute,” Kostelka interrupted. “Again, sir, this has nothing to do with making the award. We’re asking who got the contract. It’s pretty obvious to us that they’re (CNSI) the one getting the contract.”

At that point, Phillips asked if he could confer with Greenstein. The two left the room for 16 minutes and upon their return, Greenstein, after a few more questions, said, “It is CNSI.”

Marionneaux then asked about communications between Greenstein and CNSI. Greenstein admitted meeting with CNSI representatives as well as lobbyists for the other bidders and to speaking on the phone and exchanging emails with all four bidders but insisted all communications occurred prior to issuance of the RFP.

Marionneaux then offered a motion that was approved unanimously that the committee issue a subpoena for all written and oral communication records between Greenstein and the four bidders “as they relate to the contract for services with CNSI.”

As the committee wound down its questioning, Peterson said, “I hope the governor is listening because what has been happening is not in the best interest of the people nor is it consistent with his purported policy of transparency.

“This gives the appearance of your wanting to hide something, particularly since we now know the contractor is your former employer and you wanted to keep that from us. The behavior of you and Mr. Kipper (in last week’s confirmation hearing) is unacceptable. We need to do better.

“Do not let anyone or this administration do anything to taint you as a person or your integrity,” she said to Greenstein, whom she said she respected. “There are those who will attempt to do that to people. They’ll serve ‘em up and throw ‘em under the bus. Don’t let that happen to you.”

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When attorneys for the Louisiana Department of Health and Hospitals last week refused to disclose the name of the firm awarded a multi-million-dollar contract, it wasn’t the first time the Jindal administration has withheld key information normally considered to be public record.

There is, of course, the infamous Chaffe Report prepared by Chaffe and Associates of New Orleans in March under a $49,999.99 contract to conduct a quickie financial assessment of the Office of Group Benefits so that Gov. Bobby Jindal could factor the information into his executive budget submitted on March 19.

Contents of that report, however, were not included in the executive budget, leading many to believe the report did not provide data that the administration wanted to hear. Refusal by Commissioner of Administration Paul Rainwater to release the report to legislators after first promising he would do so also fueled speculation that the administration was not satisfied with the report’s recommendations.

But even before that, the administration which touts itself at every opportunity as the “most transparent” and “most ethical, most accountable” administration in Louisiana history, has shrouded its contractual and financial machinations in a cloak of secrecy.

In 2009, DHH entered into a contract with ACS State Healthcare, a subsidiary of Xerox. That contract was to have run from July 1, 2009 through Dec. 31, 2009. It called for ACS to provide information and eligibility screening to individuals seeking services through the DHH Office of Aging and Adult Services (OAAS). The contract also called for ACS to provide assessment and care planning to individuals seeking and receiving long term care and personal care services, and to operate a telephone hotline for the office.

A copy of the contract is contained on the DHH web page but the amount of the contract and monthly payment terms are redacted, or blacked out. No reason was provided for censoring the contract amount in the document. There certainly no legal basis for the action.

An online search turned up the same contract information in another document, however, and while the contract number (679532) was the same on each document, the dates of the contract were not.

What began as a six-month contract turned into two years (July 1, 2009 through June 30, 2011) and the contract amount is $20 million. It has since been renewed at a higher contract amount.

ACS is one of four firms that submitted proposals for the most recent (but anonymous) DHH contract, expected to go for something in the neighborhood of at least $34 million. That’s what it now costs the state to operate its Medicaid Management Information System. It’s one of the nicest neighborhoods in the state, contractually speaking.

Other firms submitting proposals were HP Enterprise Services, Molina Medicaid Solutions, and CNSI.

DHH Secretary Bruce Greenstein served as vice president of Health Care for CNSI from June 2005 to September 2006, leading some to believe that CNSI will be named as the contractor. Greenstein said he took himself out of the selection process because of his past connection to the company.

LouisianaVoice, however, isn’t buying into conventional wisdom. To choose CNSI would simply be too obvious. We’re going with ACS—for eight reasons. That’s eight as in six contracts totaling $148.3 million and two contributions of $5,000 each to Jindal from ACS.

Besides that $20 million contract already alluded to, there is another contract with OAAS (July 1, 2011through June 30, 2014), which is simply a renewal of the present contract, for $26.6 million.

Other contracts include:

• $74.5 million with the Division of Administration (DOA), Office of Community Development that runs from Mar. 27, 2009 through Mar. 26, 2012 to assist hurricane damaged parishes recover rental units;

• $14 million with the Department of Children and Family Services from July 1, 2010 through June 30, 2016 to prepare ad-hoc reports;

• $7.2 million to provide management services to several DHH programs, including Community CARE, KidMed, and long term personal care;

• $6 million with the Office for Coastal Restoration for environmental science consulting services.

The latter two contracts each ran from July 1, 2009 through June 30, 2010.

The decision by DHH to withhold the identity of the contractor who, in all probability, will be handling claims processing and information systems for the state’s $6.6 billion Medicaid health insurance program for the indigent, remains unclear.

Former DHH Secretary David Hood said the decision sounded like an administrative one to him. “I’m not aware of any provision in the law that prevents release of a name,” he said.

Likewise, Sen. Willie Mount, chairperson of the Senate Health Committee, calling the DHH interpretation “weird,” said the law cited by DHH attorneys does not indicate to her that the selection, once made, cannot be announced. “If you have already made the decision, why can’t you disclose it?” she asked.

She and Hood agreed that springing the name of the successful bidder on legislators at a public hearing would give committees no time for vetting the selection.

When F.A. Richard was chosen as the successful bidder to take over the state’s Office of Risk Management (ORM) in March 2010, not only was the announcement made before legislative approval, the announcement was actually made before (ORM) employees were told.

The refusal to divulge the identity of the contractor, the contents of the Chaffe report, and the amount of the ACS $20 million contract with DHH are consistent with the refusals by the Louisiana Office of Economic Development and DOA to provide information required by state statute to the Legislative Auditor.

If nothing else during his first term of office, the Jindal administration has shown beyond any doubt that it is unwavering in its resolve to flaunt its peculiar brand of transparency.

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“I’ll talk to my staff and she can have it. I have no problem with that.”

Commissioner of Administration Paul Rainwater to Sen. Jack Donahue (R-Mandeville) during confirmation hearing testimony before the Senate & Governmental Affairs Committee on May 31 on making a report by Chaffe & Associates of New Orleans available to Sen. Karen Carter Peterson (D-New Orleans). Two days later he had a change of heart and ordered the report withheld.

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BATON ROUGE (CNS)—Paul Rainwater is welshing on a promise, Scott Kipper is out as the CEO of the Office of Group Benefits (OGB), Goldman Sachs is back in the mix, the Chaffe report on the privatization of OGB doesn’t say what the administration wanted to hear, and OGB employees have been placed under a gag order.

LouisianaVoice learned that, in a nutshell, is what has transpired only days after Rainwater promised the Senate and Governmental Affairs Committee on Tuesday that committee member Sen. Karen Carter Peterson (D-New Orleans) would be provided a copy of a report done by Chaffe & Associates of New Orleans.

The most bizarre of a series of bizarre developments in the ongoing saga of Jindal’s efforts to privatize the agency that provides health coverage for more than 250,000 state employees, retirees and dependents is the apparent decision to take Kipper out of the decision-making loop until after adjournment of the current legislative session whereupon he will resign.

Deputy Commissioner of Administration Mark Brady and Kipper became involved in a standoff on Thursday after Kipper defied instructions to go back on Rainwater’s promise to make the Chaffe report available to legislators, according to sources.

The latest developments have prompted immediate reaction from State Sen. D.A. “Butch” Gautreaux (D-Morgan City), chairman of the Senate Retirement Committee.

“I intend to submit a joint resolution in the Senate on Monday or Tuesday urging Gov. Jindal not to privatize the Office of Group Benefits,” Gautreaux said Sunday. He said if the Senate approves his resolution it would go to the House for concurrence.

A resolution, as opposed to an actual bill, has no effect of law. Instead, its purpose would be to display a united front on a particular issue. But Gautreaux said he is also working on other action that might be legally binding.

He said the Senate legal staff is looking into a possible course of legislative action to block efforts by Jindal to sale or privatize OGB. He did not specify what type of action he is planning to block the administration.

Chaffe was awarded a $49,999.99 contract to do its report, apparently in an effort to develop figures in time for Jindal’s proposed state budget that was submitted on March 19. The contract amount was one penny less than the amount that would have required approval by the Office of Contractual Review, giving the appearance that Jindal was attempting to circumvent contract regulations.

Rainwater also assured the committee that the Chaffe report merely “validated” information that the Division of Administration (DOA) already had, thanks to Goldman Sachs, the Wall Street banking firm that assisted in the drafting of the original Request for Proposals (RFP) for a financial analyst to conduct a financial assessment of OGB and to help market the agency to potential buyers.

Rainwater may have fudged a bit in telling the committee during that same hearing that the report contained no significant information. It was learned Friday that the Chaffe report indicated the only advantage to privatizing OGB would be if the buyer retained the entire agency surplus of $500 million.

Some might consider that significant, especially in light that Rainwater first said the surplus would be attractive to a buyer but then denied the agency was for sale. Instead, he said the administration was simply seeking a third party administrator for the agency’s Preferred Provider Operation. He later added that the agency’s HMO, presently administered by Blue Cross/Blue Shield, might be included in the RFP.

Sen. Ed Murray (D-New Orleans) had posed the very scenario contained in the report last Tuesday when he asked why Kipper had not been provided a copy of the report. “What if that report says privatizing Group Benefits is not a good idea?” he asked. Kipper was provided a copy of the report following the hearing.

Rainwater, through Deputy Commissioner of Administration Mark Brady, instructed Kipper two days after Tuesday’s committee meeting to give the Chaffe report to no one, “not even legislators,” according to DOA sources.

Rainwater may have had his change of heart as a result of persistence on the part of LouisianaVoice, which had been refused access to the report on four separate occasions prior to Tuesday. The first three times, Rainwater’s office simply said there was no report. When it became known that DOA received the report on May 25, DOA attorney Paul Holmes responded to a fourth request that the report was exempt from the public records law.

When Rainwater promised the report would be made available to Peterson, however, LouisianaVoice immediately fired off a fifth request for the report under the state’s Public Records Statute.

When Brady instructed Kipper to hold the report back, Kipper balked, saying that Rainwater had made a promise in an open committee meeting. Kipper even offered to resign.

At that, Brady made a brief telephone call, and then informed Kipper that his nomination for confirmation as OGB CEO would be withdrawn and that Kipper would remain on the job until June 24, the day after the current legislative session adjourns at which time he would tender his resignation.

Kipper was appointed to the OGB position on April 15, the same day his predecessor, Tommy Teague, was fired for a “lack of leadership,” according to Rainwater. Teague, in five years at the helm of OGB, had taken the agency from a $60 million deficit to a $500 million surplus.

Rainwater now apparently has found Kipper lacking in leadership, or more accurately perhaps, followship. Kipper previously had worked for the Louisiana Department of Insurance and prior to that, worked for insurance regulatory agencies in several other states.

Kipper will be out of the office Wednesday, Thursday, and Friday on vacation, a fact that further irritated Gautreaux, who said he does not like the timing of Kipper’s trip. “I am concerned and upset about the lack of answers from the administration and I particularly don’t like the idea of Mr. Kipper leaving the state at such a critical time,” he said. The deadline for proposals from financial advisors to conduct a financial assessment of OGB is Monday with selection of the contractor scheduled for June 15.

“I will instruct my staff to attempt to contact Mr. Kipper and have him call me. I want him to answer questions and I will keep attempting to reach him every day,” Gautreaux said.

LouisianaVoice also has learned that Goldman Sachs is back in the picture and is one of four companies which have indicated an interest in submitting proposals on the financial assessment project. The deadline for proposals is Monday with selection and notification of a contract award scheduled for June 15.

When Goldman Sachs, which assisted in drafting the original RFP was subsequently the only one to submit a proposal, Goldman Sachs withdrew after an impasse was reached over the company’s insistence on indemnification against any future litigation.

The proposed privatization has met with opposition from several different fronts. The most significant objection came from the Louisiana District Judges Association which adopted a unanimous resolution in opposition to the privatization at its annual spring judges’ conference in Lafayette on April 7.

Legislators also have received hundreds of phone calls, emails and letters as well, virtually all in opposition to the OGB privatization.

All this comes at a time when the Senate and Governmental Affairs Committee still must make its recommendation on confirmation of Rainwater, Brady, and ostensibly, Kipper to the full Senate. The Senate would then have to approve each of the Jindal appointees by simple majority votes.

Anyone who watched the debacle unfold at the Senate and Governmental Affairs Committee confirmation hearings On May 31 saw the callous manner in which Rainwater allowed Kipper to be hammered by committee members for his evasive answers, most likely at the behest of Rainwater himself. Friday’s action by Rainwater was merely the crowning display of arrogance that seems to have permeated the Jindal administration from the top down.

As bad as that performance was, the beginning of the end for Kipper most probably occurred on May 10. Kipper, testifying before the Senate Insurance Committee, was asked by Sen. Eric LaFleur (D-Ville Platte) how many OGB employees he would cut if OGB was not privatized.

“Let’s assume this RFP doesn’t go anywhere and we’re right back where we are right now, who…how many people would you cut from OGB.”

“If we continue to operate as we do now, there would be no significant cuts,” Kipper responded, visibly upsetting Rainwater seated next to him. “There’s not a lot of excess now,” Kipper said. Rainwater has insisted that the agency needs to cut at least 149 positions.

Now the question must be whether or not Kipper will have the courage to step up to the plate on behalf of his OGB employees, half of whom could lose their jobs if the agency is privatized, and make the contents of the Chaffe report public.

Or will he choose instead to protect his career and sacrifice his integrity by going quietly into the night?

He could refuse to resign and force the administration’s hand. In that event, whatever course of action Rainwater would take almost certainly would prove embarrassing and leave Jindal with egg on his face. In the event Rainwater and Brady end up firing Kipper, what would that say about the administration’s vetting of its choices to run OGB?

Firing two CEOs of OGB within six weeks, all in the middle of attempts to privatize such a large agency would not look good under any circumstances.

It’s a call only Kipper can make.

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Members of the Senate and Governmental Affairs Committee, led by Sen. Ed Murray (D-New Orleans), grilled three of Gov. Bobby Jindal’s appointees in 40 minutes of tense confirmation hearings on Tuesday.

The committee will make its recommendations on the confirmations of Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady, and Office of Group Benefits (OGB) CEO Scott Kipper to the full Senate which will then vote on those recommendations.

It didn’t take long for Rainwater’s survival instincts to kick in at the expense of Kipper who, it seemed, had been instructed to say as little as possible but soon found himself in trouble as members of the committee quickly smelled blood and moved in for the kill.

The thrust of the questioning of Rainwater and Kipper (Brady, who spent the first few minutes of questioning fidgeting in his chair, was all but ignored) centered around administration efforts to privatize OGB and the existence and availability of a report generated by a New Orleans firm.

Chaffe and Associates was hired in March by the administration to generate a rush financial analysis of OGB preparatory to the receipt of proposals from financial analysts with experience in negotiating sales of insurance companies.

Committee staff members had received an email from Paul Holmes, an attorney with DOA, that was identical to one he sent LouisianaVoice on Friday (see May 31 posting) that denied access to the Chaffe report, a denial not well received by committee members.

During the questioning process, Rainwater threw his two subordinates under the bus by denying knowledge of conversations between Brady and Kipper relative to keeping the Chaffe report from the public. Rainwater seemed content to leave Kipper twisting in the wind while he busied himself with texting.

Requests by LouisianaVoice for a copy of the Chaffe report were sent directly to Rainwater which would seem to weaken his deniability of any knowledge of efforts by Brady and Kipper to keep the report confidential.

That comment came after Kipper, appearing to be taking directions from higher ups to reveal as little as possible to the committee, first said he had no knowledge that the Chaffe report existed and that he wouldn’t have wanted to see it at any rate because of an existing request for proposals (RFP) on the OGB privatization. He said he feared the Chaffe report might jade his decisions on the RFP if he knew its contents.

Rainwater spent much of the time Kipper was testifying taking notes and openly texting at the witness table, never once coming to the aid of his subordinate to clarify an answer or to assist Kipper when he faltered. Instead, he appeared perfectly willing to let Kipper suffer the wrath of the committee for actions perpetrated by his (Rainwater’s) office.

Murray was incredulous that Kipper, as CEO of OGB had not seen a report that potentially “could affect thousands of people.”

But that was not the most damaging part of Kipper’s testimony. Earlier, he bantered with Murray over the very existence of the report and quickly lost credibility with the committee.

When he asked Kipper if a third party had been brought in to conduct a financial analysis of OGB, Kipper replied, “Not that I’m aware of.” That answer set off a firestorm of questioning from several senators.

Murray later came back to say, “I’m told a report was done but the Legislative Auditor was denied access to that document because it was part of the ‘deliberative process.’ Now we have another report (Chaffe) that was requested by members of the Senate staff and you won’t turn it over. Are you telling this is not true?” he asked.

“I’ve not seen the report,” Kipper said.

“So it does not exist?”

“I have no knowledge that it exists.”

“You’re the CEO of OGB and you’re telling me you have not seen a report that would impact OGB? Other people have seen it. When will you see it?” Murray asked. “Have you asked for it?”

“I have not.”

“This is really disturbing to me that you, as CEO of OGB, have not seen a report that is out there that is so important to so many people,” Murray said. “The report might tell you there is no need to privatize OGB. Don’t you think you need the benefit of that information? Who suggested that Chaffe do the report?”

“I don’t know,” Kipper said.

“You don’t know that either? Who’s running OGB?”

In fairness to Kipper, the Chaffe contract was issued prior to the firing of Kipper’s predecessor, Tommy Teague, on April 15.

Sen. Karen Carter Peterson (D-New Orleans), vice chairman of the committee, raised the issue of transparency with Rainwater.

“Did you commission the Chaffe report?” she asked.

“Yes,” said Rainwater.

“Wouldn’t it be helpful for Mr. Kipper to have the report?”

“He will get the information, obviously,” Rainwater said.

“No, it’s not obvious,” she said. “Why would the CEO of the agency not have the information before making a major decision on the agency’s fate?”

“It (the Chaffe report) was more of a validation of what we already had,” Rainwater responded, not saying that the data validated had been compiled with the aid of Goldman Sachs which helped draft the original RFP on which Goldman Sachs was the lone bidder. “The numbers came back as we thought they would,” he said.

“We’re looking in this hearing at character and judgment. How can I have confidence in confirming anyone if I don’t have confidence in their character, judgment and integrity?” Peterson asked.

“Transparency is something touted by the administration but to withhold information from key department officials is significant.”

Sen. Jack Donahue (R-Mandeville), directing his remarks to Rainwater, noted that Kipper had testified that he did not want to review the Chaffe report.

“That was a conversation between Mr. Kipper and my deputy commissioner (Brady). I was not aware of those discussions.”

“If you spent money on this report, it would seem that everything should be on the table,” Donahue said. “I’m surprised by your answers to tell you the truth.”

“I’m surprised by the conversations my staff has had,” Rainwater countered, again revealing his willingness to deflect criticism onto his lieutenants for actions that, ultimately, were his responsibility.

Peterson returned to Kipper’s testimony about his lack of knowledge about the existence of the Chaffe report. “You testified you didn’t know if the report existed,” she said. “You raised your right hand and took an oath. Are you sure you don’t want to try again?

“The first element in these jobs is integrity. I don’t think that of you, Mr. Kipper. I think you’re fudging. I think you’re teetering and for someone in your position, there is a fundamental element of trust necessary. I don’t have that today. Do you want to try again on that report?”

“Senator, I’ve not seen the report,” Kipper said.

“Do you know the report exists?” she asked.

When Kipper hesitated, she again asked, “Do you know the report exists?”

“I think the report exists,” he responded.

At that point Murray said, “Even after the commissioner (Rainwater) told you the report exists, you still don’t know it exists?”

“I believe it exists,” Kipper said again.

“This is absolutely amazing to me that you can sit there and give answers like that,” Murray said.

“It disturbs me that the CEO of OGB sat there and I had to pull it out of him that the report even existed and even as I was asking Mr. Kipper those questions, his bosses (Rainwater and Brady) sat right next to him and said nothing,” he said.

“I hope you change your attitude,” he said to Kipper. “If you are confirmed, I hope you will take your job more seriously and treat us with more candor.”

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BATON ROUGE (CNS)—When is a tax not a tax?

When is the old bait and switch scam not a scam?

When is a sale not a sale?

When are public records not public?

The answer to all of the above: when Gov. Bobby Jindal or Commissioner of Administration Paul Rainwater says they’re not.
Got it?

Good. Discussion over. Let’s go home.

Hold up a minute, Guv, it ain’t quite that cut and dried. Sure you can rattle off statistics that tell us just how good your medicine is going to make us feel—after the nausea it induces passes. We’ve heard you do it in that non-stop staccato delivery of yours. But you know what they say: there’re lies, there’re damned lies, and there’re statistics.

Your statistics, figures, and projections amount to little more than what we called a blivet back in the day. We know you’re Ivy League-educated, so it’s pretty much a sure bet you don’t know what a blivet is, so we’ll tell you: a blivet is five pounds of excrement in a one-pound bag.

Let’s take the questions one at a time and examine them more closely.

When is a tax not a tax?

Jindal has repeated his “no tax” mantra so often that we hear it in our sleep. He killed the Stelly Plan and he has vowed to kill a renewal of the state’s tobacco tax, currently the second-lowest rate in the nation.

Yet he supports HB 479 that would require some 52,000 state employees to increase their contribution to the state pension system by an additional 3 percent, from 8 percent to 11 percent, beginning July 1.

It’s not a tax, it’s a fee increase. Any fool should be able to see that.

When is bait and switch not a scam?

Notwithstanding the fact that it wasn’t state employees who created the current fiscal crisis, that might make sense for employees to chip in a little more—if raises weren’t frozen and the money was to be used to put the retirement system on sounder financial footing—but it isn’t.

The 3 percent increase would mean employees would be paying an additional $70 million per year in premiums, which will result in roughly $25 million of state general fund savings. That $25 million, however, would not mean additional benefits or in a paydown of the pension’s unfunded liability. Instead, it would be used toward reducing the current $1.6 billion state budget shortfall. A classic example of robbing Peter to pay Paul.

That’s the same shell game that was used when $393.5 million was subtracted from the $3.3 billion Minimum Foundation Program for public education before the combined $393.5 million in 8(g) funds, state lottery proceeds and EduJobs funding were added back in. The net gain to education? Zero.

Both look an awful lot like looting and pillaging to us, but they’re not. They’re sound fiscal policy because Jindal, in amongst all his statistics, says so.

When is a sale not a sale?

Apparently when it involves the Office of Group Benefits (OGB).

Rainwater has testified before the Senate Retirement Committee that he does, doesn’t, does, doesn’t want to sell OGB, that he will, won’t will, won’t put the agency up for public auction.

Meanwhile, despite hostile hearings by the Senate Retirement Committee—three of which Rainwater simply boycotted—and ample evidence that OGB is a well-run agency that state employees would rather just leave alone, Jindal and Rainwater blithely plunge ahead hell-bent with their plans to privatize the agency despite a total lack of solid evidence that said privatization would result in any savings.

At stake in the meantime are the futures of about 150 OGB employees that Rainwater says must be cut. One of those employees, former OGB CEO Tommy Teague, who brought the agency from a $60 million deficit to its present-day $500 million surplus, was fired on April 15. No reason was given for his firing other than his “lack of leadership.”

What part of $60 million deficit to $500 million surplus in five years don’t you understand, Mr. Rainwater? Mark Brady? Bueller? Gov. Jindal? Anyone?

His latest pronouncement was that the state was seeking a third party administrator (TPA) for the state’s Preferred Provider Organization (PPO) and possibly for the state HMO, now administered by Blue Cross/Blue Shield (BCBS). Of course the state’s contract with BCBS is presently in litigation with Humana claiming it was outmaneuvered when the state allowed BCBS to submit a proposal that was not within the parameters set forth by the state’s request for proposals (RFP).

Thrown into the mix was the decision by the Division of Administration (DOA) to do a quickie financial assessment of OGB by issuing a contract to a New Orleans company even as the state was soliciting proposals through an RFP for a financial analyst with experience in negotiating sales of insurance companies. (There’s that word “sale” again; it just won’t go away like Rainwater now wishes it would.)

That contract, for $49,999.99, which just happens to be one penny less than the $50,000 that would require approval of the Office of Contractual Review, was issued to Chaffe and Associates of New Orleans back in March.

Repeated requests for a copy of Chaffe’s report have met with denials that any report had been received. Those denials were reminiscent of the lawyer who, when confronted by a man who said he’d been bitten by the barrister’s dog, responded in typically lawyer fashion, “My dog doesn’t bite. I keep my dog inside my house. Besides which, I don’t own a dog.” But then, at a recent Senate Retirement Committee hearing, a DOA spokesman let slip a mention of a preliminary report.

Aha! Time for LouisianaVoice to make its fourth request for the report.

When are public records not public?

A former request for the document was made to Rainwater under the State Public Records Law which stipulates that the custodian of a public record has three days in which to respond to any such request. Our request was made on May 24. On May 27, a gentle reminder was sent, along with a copy of the statute which laid out civil and criminal penalties for non-compliance. Those penalties include fines, payment of the requestor’s legal fees and court costs, and jail time.

At 4:52 p.m. on May 27 (last Friday), Paul Holmes, Attorney 4, Division of Administration, Office of the General Counsel, responded thusly:

“A report generated by Chaffe & Associates was received on May 25, 2011. The report is privileged as part of the deliberative process and is exempt from disclosure under R.S. 44:4.1 as well as pursuant to Kyle v. Public Service Commission, 878 So.2d 650 (La. App. 1st Cir. 2004) and Donelon v. Theriot, 2011 WL 1733548, (La. App. 1st Cir. 5/3/11).

Now we don’t pretend to know the law the way Mr. Holmes Esq. must (he’s an attorney 4, after all), but we do know the Public Records Law from more than a quarter-century of having to deal with unenthusiastic, recalcitrant bureaucrats.

Nowhere in the statute is a financial document on a taxpayer-supported agency exempted from compliance with the state public records statute.

Stand by. After all, a wise old sage named Yogi Berra once said, “It ain’t over ‘til it’s over.”

Jindal’s efforts to privatize OGB, cut OGB personnel by half, sell state prisons, increase employees’ pension contributions (while continuing to freeze state employee salaries), and to resist efforts to renew taxes that make sense (like tobacco taxes) while at the same time, protecting ludicrous and financially crippling tax breaks for the rich will continue unabated.

Moreover, remember last year when legislation was introduced to abolish Civil Service? That met with quite a bit of resistance and the effort sputtered. It wasn’t renewed this year. Want to know why? It’s an election year.

If Jindal is re-elected, and at this point, there’s no one on the horizon to take him on, you can expect those bills to pop up again and to be pushed by the administration with an intensity that will dwarf his privatization efforts.

Remember when that happens that you read it here first.

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“Because you all passed a statute making it that way.”

—Louisiana Supreme Court Chief Justice Kitty Kimball, responding to State Rep. Noble Ellington (R-Winnsboro) who questioned why Orleans is the only parish with a separate criminal court.

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The Jindal administration suffered a legislative setback in its efforts to privatize the Office of Group Benefits (OGB) Monday when the House Appropriations Committee voted unanimously to reinstate 149 positions the administration had cut from the OGB budget.

The move came as an amendment to HB 32 by bill author and Appropriations Committee Chairman Rep. Jim Fannin (D-Jonesboro).

At the same time the committee further amended the bill by deleting five lines that would have directed the state treasurer to transfer a portion of the OGB $500 million surplus into the general fund, thus guaranteeing that the administration may not use part of the surplus to help plug the $1.6 hole in the state budget.

In asking the committee to amend the bill to restore the jobs and to protect the agency surplus, Fannin said, “I have had no communication (from the administration) about any savings to be realized by eliminating these positions.”

Communication has become something of a problem lately as administration officials have refused to attend meetings of the Senate Retirement Committee. Retirement Committee Chairman Sen. Butch Gautreaux (D-Houma) has made no secret of his opposition to efforts to privatize OGB.

Gov. Bobby Jindal has run into considerable opposition to his efforts to privatize OGB although the administration has issued a request for proposals (RFP) for a financial adviser to evaluate the agency and to seek a third party administrator (TPA).

It is the second RFP issued by the administration after Wall Street banking firm Goldman Sachs was the lone bidder on the first and then only after taking part in drafting that RFP.

DOA representatives say that the current RFP was drafted completely in-house.

Former OGB CEO Tommy Teague, who was fired on April 15 after leading OGB from a $60 million deficit when he took over five years ago to its current $500 million surplus, testified before the Senate Retirement Committee that he could not understand the need for a financial adviser if the intent of the administration was only to obtain a TPA.

“It’s not necessary to know the financial situation of the agency just for a TPA,” he said. “The only rationale for a financial assessment would be that the administration plans to sell OGB.”

The original RFP did indeed make repeated references to the sale of the agency and Commissioner of Administration Paul Rainwater has consistently given conflicting testimony about whether the administration’s intent was to sell the agency or obtain a TPA for OGB’s Preferred Provider Organization (PPO).

Approval of Fannin’s amendment does not necessarily mean that Jindal has failed in his efforts toward privatization of the agency. It does mean, however, that he would have to come back before the legislature to obtain approval for cutting the positions, a move Rainwater claims would save the state $10 million a year.

Even that claim, however, is somewhat vague since the $10 million does not come from the state’s general fund. OGB is completely self-funded, deriving its revenue from premiums charged state employees for health care coverage.

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During the Watergate hearings nearly 40 years ago, U.S. Sen. Howard Baker (R-Tenn.) asked that now-famous question, “What did the President know and when did he know it?”

That question today could be addressed to Commissioner of Administration Paul Rainwater, Office of Risk Management (ORM) Director J.S. “Bud” Thompson, and F.A. Richard & Associates (FARA) CEO Todd Richard after revelations on Thursday that FARA had been sold to Avizent, a national claims and risk management company in Dublin, Ohio.

FARA last year was the winner of a bidding contest to take over ORM’s claims, loss prevention, and subrogation operations in the first of Gov. Bobby Jindal’s ambitious plan to privatize everything in state government that moved and to cut funding for those that remained stationary.

Under the contract, “not to exceed” $68.2 million, that went into effect on July 1, 2010, FARA was to phase in its takeover of ORM over a five-year period.

The Loss Prevention, Subrogation, and Worker’s Compensation units were the first to go over to FARA and General Liability was scheduled for the transfer later this year.

In the meantime, only eight months into its contract, FARA, with the blessings of Thompson, requested a contract amendment of $6,811,971, bringing the new contract to “a maximum amount of $74,930,868.

Under law, the Office of Contractual Review may approve contract amendments of up to 10 percent without legislative approval.

The contract amendment was conveniently requested—and approved by Contractual Review—for precisely 10 percent.

The Office of Contractual Review is under the direct supervision of Rainwater, also convenient.

Both facts were not lost on Rep. Jim Fannin (D-Jonesboro), who chairs the House Appropriations Committee. He was understandably miffed that neither ORM nor DOA requested approval of the amendment from his committee, choosing instead to circumvent the intent of the legislation by keeping the amendment to exactly 10 percent.

Adding insult to apparent injury, Patti Gonzales, assistant director of ORM and who works immediately under Thompson, calmly informed Fannin that the full $6.8 million amendment wasn’t even necessary because it was anticipated that only about $2 million of that would actually be spent.

That could have been because the 10 percent clause is a one-time Get Out of Jail Card. Any subsequent amendment requests, no matter the amount, must come before the Appropriations Committee. Gonzales knew that and admitted as much to Fannin and the committee at its May 12 hearing on the contract amendment. It was a classic case of ORM hedging its bets.

Thompson sat behind Gonzales at that hearing, choosing not to speak. That was probably advisable, considering the near disaster last year in allowing him to testify before the same committee when it was considering the privatization proposal.

Thompson was dressed down by Sen. Ed Murray (D-New Orleans) during the morning session of the committee when Thompson, with many of his soon to be out-of-work employees sitting behind him in the hearing room, quipped that once the privatization took place, he would remain in his job to oversee operations and would “probably need a raise.”

That comment came on the heels of a legislative decision to forego civil service merit salary increases beginning on July 1, 2010—a policy that has been carried over into 2011 because of the state’s fiscal crisis.

Murray delivered a withering reprimand to Thompson that the committee was considering a serious matter and that he should act accordingly. Thompson did not attend the afternoon committee session after that public relations fiasco.

He apparently learned his lesson because at last week’s hearing, he allowed only one ORM employee to attend, citing in an email to ORM employees the rising Mississippi River and preparations for the transfer of the General Liability section to FARA as his reasons.

In a Feb. 28 memorandum to Rainwater, Thompson requested Division of Administration (DOA) approval of the contract amendment.

“Since the implementation (of the FARA takeover) began, ORM has begun experiencing difficulty in retaining our experienced adjusters, as many are seeking employment elsewhere in state government,” the memo said. “We are currently utilizing contract adjusters to supplement our in-house staff for lines not yet transitioned to FARA, at considerable expense to the state and with a significant loss of efficiency.”

So, what did he expect “experienced adjusters” to do? Their jobs and benefits were being yanked from beneath them. Did he realistically expect them to quietly remain on their jobs until the final shoe fell? ORM, as of last July 1, was a sinking ship and rats, as the expression goes, are predisposed to leave. Did he not take that into account when ORM and DOA first issued the request for proposals (RFP) or later when the contract with FARA was negotiated?

All that would seem surreptitious enough but now comes word that FARA is selling out to Avizent, which presently has 35 offices in 25 states. Its Baton Rouge office has one employee.

One has to wonder, in retrospect, about that $6.8 million contract amendment. Was it truly essential for FARA to continue its takeover, which it now turns out, was fairly short-lived? Or was it necessary to bolster the revenue side of FARA’s ledger in order to make the firm more attractive to a buyer?

Did Rainwater know of the impending sale when he signed off on the amendment request? Most probably.

Was Thompson aware of what was taking place when he made the request for the amendment? If not, he should be fired. No one in the position of running a multi-million dollar agency should operate in a total vacuum and be allowed to remain.

If he did know, he should be fired. If he knew, he had an obligation to so inform Fannin and his committee last week. Instead, he sat quietly by and said nothing.

Did Richard know the formal announcement of the sale of his company was merely days away as he sat next to Gonzales at last week’s committee hearing? Of course he did.

These transactions don’t take place over a matter of a few days or weeks. It takes months, sometimes years, of poring over books, reviewing clients, debts, and staffing for such decisions to be made.

Of even greater importance, what does the sale mean to the remaining ORM employees? Or for that matter, what does it mean to those who have already gone over to FARA?

The original contract called for FARA to retain ORM employees for at least a year at salaries comparable to the industry standard.

Will that requirement be carried forward in a new contract with Avizent? Or will a new contract even be required? Most likely. Avizent, after all, now has only a one-person office in Baton Rouge. It will need to obtain employees from somewhere. As to salaries and benefits, those remain unanswered questions.

Rainwater, asked by email to address the sale, has instead chosen to ignore LouisianaVoice inquiries. FARA also has been strangely silent. Only Avizent, through a spokesperson for Avizent CEO Tom Watson even so much as acknowledged that company was “in the process” of acquiring FARA.

Of course, since FARA contributed $10,000 to Gov. Bobby Jindal’s 2003 gubernatorial campaign, all is quite likely to be forgiven.

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