Archive for the ‘LSU’ Category

“It is essential to the maintenance of a democratic society that public officials and employees perform the public business in a manner which serves to promote and maintain in the general citizenry a high level of confidence and trust in public officials, public employees, and governmental decisions. The attainment of this end is impaired when a public official or employee holds two or more public offices or public jobs which by their particular nature conflict with the duties and interests of each other. The attainment of a high level of confidence and trust by the general citizenry in public officials, employees, and governmental decisions is further impaired by the excessive accumulation of governmental power which may result from public officials or employees holding two or more public offices or public jobs.”* (Emphasis added.)

*[Louisiana R.S. 42:61 Part III. Dual Officeholding and Dual Employment]

“Except as otherwise provided by the Louisiana constitution, no person holding office or employment in one branch of the state government shall at the same time hold another office or employment in any other branch of the state government.”**

**[Louisiana R.S. 42:63(B) Prohibitions]

“The governor or his designee, when serving as a member of a state agency, commission, or other state entity in accordance with a provision of the constitution, laws, resolutions, or executive order of this state.”***

***[Louisiana R.S. 42:63(F. Exemptions)]

So there you have it. Scott Angelle, former Secretary of Natural Resources under Gov. Bobby Jindal who resigned when the heat got a little too intense over the issue of the ever-expanding Bayou Corne sinkhole in Assumption Parish to run for the Public Service Commission in hopes of becoming the fifth PSC member to use that office as a springboard to the governor’s office is able to serve concurrently as a member of the LSU Board of Stuporvisors by virtue of a generous loophole in the state law which allows Jindal to consolidate his power even more.

Why else would he leave a $129,000-a-year post for one that pays about a third of that—$45,000—other than the mounting pressure of the Bayou Corne sinkhole on his office?

Angelle was elected on Nov. 7, 2012 to succeed Jimmy Fields in representing the 3rd Congressional District. Exactly three months earlier, on Aug. 7, 2012, Jindal appointed Angelle to the LSU Board. If voters expected him to relinquish his LSU Board seat after joining the PSC, they were sadly mistaken.

Legally, he is fully within his rights; state law clearly makes exceptions for the simultaneous holding of part-time elective and appointive positions, a full-time elective and a part-time appointive or vice-versa in different agencies so long as they do not conflict.

In this case, both the LSU Board of Stuporvisors and the Public Service Commission offices are considered part time.

But apparently, that one obscure disclaimer about “the excessive accumulation of governmental power which may result from public officials or employees holding two or more public offices or public jobs” means little to this administration.

Jindal and Angelle can always claim (correctly) that the two part time positions he holds in state government do not conflict with each other. Even by employing the greatest scenario stretch imaginable, it is impossible to see an occasion where the two positions could conflict.

And Jindal and Angelle can always claim (again, correctly) that they are in full compliance with the dual officeholding/dual employment law. No one is arguing that point. The law, like the state’s ethics laws, is full of loopholes and exemptions.

But does that make it right? Not, in our opinion, when Jindal’s actions are compared to his self-serving utterances.

In the spirit of Jindal’s oft-expressed ad nauseam claim (in speeches in other states but never in Louisiana) of presiding over the most ethical administration in Louisiana history and of having the most transparent and accountable administration ever, one might think he would be loath to skirt the spirit of the law just for the sake of building onto his power base. One might even think he would go to great lengths to make sure there could be no questions as to his motives or his political ambitions. One might think he would insist that his administration be above reproach.

One would be wrong on all three counts.

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The latter part of January 2014 should probably be remembered when the policies of Gov. Bobby Jindal began to unravel in rapid succession and as a time when he was finally exposed as far more goobernatoral than gubernatorial.

If that seems harsh and disrespectful of the man and the office, then so be it; it’s only because he has earned it—in spades.

He has submitted executive budget after executive budget crafted around one-time funding for recurring expenditures—something he vowed never to do when he was running for office. He has sold off state property and entire agencies to finance those budgets. He has gone on a privatization rampage that is now coming home to bite him in the posterior, to the surprise of few observers. He has stacked board after commission with campaign lackeys who possess few, if any, qualifications for their positions of responsibility for running such things as the state’s flagship university. He has embarked on an ambitious quest for the Republic presidential nomination that is doomed to failure and disappointment.

That said, let’s examine the developments of the past few days that have converged to upset the house of cards upon which his administration has been built over the past six years:

  • The Office of Group Benefits (OGB) was privatized only a year ago. In that time, some 100 state employees lost their jobs, a $500 million reserve fund has dwindled to half that because of an ill-advised decision by Jindal to reduce premiums to some 250,000 state employees, dependents and retirees by 7 percent to make the privatization more palatable—and to reduce the state’s share of premium payments thereby helping Jindal balance his budget. Meanwhile, Blue Cross Blue Shield of Louisiana, the third party administrator who assumed management of OGB as a “cost savings plan” was forced to draw down that cash reserve to pay claims.

The folly of that ploy, of course, manifested itself this week when it was learned that double digit (some say as much as 25 percent) premium increases are imminent in order to keep what was once arguably the best-run agency in state government afloat. Meanwhile, yet another CEO has departed and the fourth in less than three years has been ushered in.

  • The crash and burn disaster of the administration’s privatization of the LSU hospital system is even more dramatic. The Biomedical Research Foundation of Northwest Louisiana (BRF) took over the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Shreveport last October because Jindal assured us that it would save taxpayer dollars. Yet, less than four months after BRF assumed operation of the two facilities, it is asking the state to bankroll more than $120 million in hospital improvements and expansions.

And don’t forget this privatization deal was approved by the LSU Board of Stuporvisors. One of the board members who voted for the deal which at the time, included a contract with more than 50 blank pages, just also happens to be the CEO of BRF but Jindal pooh-poohed the very idea that there could be a conflict of interests.

  • Another hospital privatization, that of the Interim Louisiana Hospital which replaced the old Big Charity that was heavily damaged by Hurricane Katrina, is also proving to be a tad more costly than we had been told by Jindal, thanks to the scrapping of a $46.5 million medical records system that is less than two years old.

On Friday, Jan. 24, ILH CEO Cindy Nuesslein notified employees of the one-time LSU Medical Center now jointly run by Children’s Hospital of New Orleans and Touro Infirmary that the electronic health record system installed by Epic Systems Corp. was being scrapped in favor of something called the Soarian Clinicals Siemens platform. No cost estimate was provided for the changeover, but it’s a good bet that the cost will be borne by the state.

The Epic system only went live in July of 2012 and the Epic contract, which began on May 18, 2010, expired on May 17, 2013.

  • When Jindal privatized the University Medical Center in Lafayette, he also closed the medical center’s First Step Detox, a “first step” treatment center for those suffering from chemical dependency—typically chronic alcoholics, IV heroin and/or other opiate abusers, including polysubstance abusers. When First Step Detox reopened, it sublet the center to Compass, a private entity that accepts only private pay and insured patients.

The news release announcing the reopening of First Step made no mention of the new admission policy, nor did it mention the ever-shrinking number of options for treatment for indigent patients. Now former patients are referred to the overburdened Baton Rouge Detox where they are instructed to fax their paperwork in order that they may be placed on a long waiting list.

  • Another private contractor with four contracts worth more than $385.5 million has been the subject of two critical audits by the Legislative Auditor’s Office. Moreover, a north Louisiana doctor claims that physicians are refusing to accept patients with Magellan insurance.

The first state audit, released in mid-December, says that the Department of Health and Hospitals provided no external evaluation of the performance of Magellan under its $361.4 million contract to handle paperwork and connect Medicaid 151,000 patients with mental health care providers.

Last August, the legislative auditor’s office said claims payments have been problematic for four state agencies and blamed Magellan for failing to meet significant technical requirements.

DHH Secretary Kathy Kliebert disputed that claim, saying that the privatization is working. She said the number of health care providers has expanded from 800 to 1,700—a claim hotly disputed by Scott Zentner, a Monroe neuropsychiatric doctor.

“I wish I could get to the bottom of Kliebert’s phony numbers regarding the supposed increase in providers since the Magellan takeover because the evidence is clearly to the contrary,” Zentner said. “I would bet my medical license that people are being counted now (that) weren’t before.”

Zentner said Magellan’s contract extends to private and public providers in a number of treatment settings. “Previously, they (providers) were reimbursed by fee for contracted services through DHH and some were not billing Medicaid at all, such as employees with the Office of Family Support.” Now, though, providers who were already delivering services before Magellan are now being included in the count who were not before, he said.

“I find it despicable that the head of DHH is twisting the numbers to cover up for a dramatic decline in services,” he said.

Zentner retired in 2012 after 20 years that included work as a medical director and staff psychiatrist for DHH and as a clinical associate professor of psychiatry at LSU. He said he returned to private practice after being “unable to further tolerate Jindal’s dismantling of our mental health system.”

He said he accepts all private insurances now except Magellan after “having been burned by them in the past for unpaid claims. They are the ultimate master in the use of passive-aggressive stall tactics in denying payments to providers, typically for silly technicalities; eg, misspellings resulting from typos.”

“In the northeast region of the state, with Monroe as the center of a 12-parish district, 75 percent of the physician/psychiatrist coverage has abandoned the community mental health system since Jindal took office,” he said. “Several Medicaid rehab agencies have shuttered their doors, one mental health clinic has closed in Rayville and others, including those in Winnsboro and Jonesboro, have been reduced to part-time outreach clinics operated by skeleton crews. Other outreach clinics, providing the most basic of mental health services, have closed in Tensas and East Carroll parishes,” he said.

“Other regions in the state have experienced even greater cuts than ours, but I doubt any of the regional administrators who are still employed would admit this publicly lest they be fired by Jindal.

“I’m highly skeptical of their (DHH) claims that provider rolls have increased, as (their figures) grossly contrast with reality,” he said.

The second audit was of the Office of Juvenile Justice (OJJ) and cited the office for its failure to develop a plan to monitor OJJ contracts managed by Magellan.

Magellan has a $22.4 million two-year contract with the Department of Children and Family Services also scheduled to expire on Feb. 28.

That contract calls on Magellan to provide an array of coordinated community-based services “for children and youth with behavioral health disorders and their families that risk out of home placement.”

Magellan’s contract calls for it to take over management beginning Jan. 1, 2013, at Harmony Center-Camellia Group Home in Baton Rouge, Boys and Girls Villages in Lake Charles, Boys Town of Louisiana (two facilities, in New Orleans and Baton Rouge), Harmony Center-Harmony III Group Home in Baton Rouge, and Allen’s Consultation, Inc., in Baton Rouge.

The contract requires that Magellan submit a written report detailing its progress to OJJ every six months but as of December 2013, OJJ had not received any such report documenting use of contract funds or of meeting specific goals of the contract.

  • Finally, in what is probably the most heartless, most ungrateful act yet by this administration, Jindal last week ordered the Louisiana National Guard (LNG) not to process any benefits for gay veterans on state property—in open defiance of the U.S. Supreme Court’s ruling that the 1996 Defense of Marriage Act (DOMA) is unconstitutional. Apparently Jindal based his position on some state’s rights legal opinion which he feels gave him the leverage needed to deny benefits on state property. It looks to us like more work for Jimmy Faircloth to try and defend another administration policy of questionable legal merit.

What makes this order so egregious is the blatant flag waving hypocrisy in which Jindal envelopes himself.

This is the same governor who, in a great show of his patriotism for the benefit of newspaper photographers and television cameras, traveled all over this state to hand out those appreciation medals to military veterans. The bill to award the medals was passed in the belief that legislators would benefit from the goodwill but Jindal stole that opportunity from under their collective noses with his shameless traveling awards show, denying lawmakers the chance to get in on the act. (Just for the record, as a matter of principle, I chose not to stand in line to have him present my medal nor did I apply for it to be mailed to me even though I served.)

Moreover, as thousands of Louisiana guardsmen were deployed to Iraq and Afghanistan over the past decade or so, never once do I remember anyone in this administration inquiring if anyone being placed in harm’s way for his or her country was gay. Apparently it’s perfectly okay to get shot or blown up by a roadside IED if you’re gay but if you’re lucky enough to survive, don’t bother coming home and applying for benefits.

Never, in my 70 years, have I witnessed an act so gutless, so callused. To hide behind the flag and to call oneself a Christian and a patriot while at the same time issuing such a cowardly order is beneath contempt.

It is the act of a petulant little ingrate who would defend the senseless and insensitive comments of a Phil Robertson while pretending to support the men and women who wear the uniform that he never had the courage to wear.

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Just in time for the college football bowl season, Forbes magazine has rated the LSU football program as the fourth most valuable in the country, prompting an announcement by the Jindal administration to capitalize on the latest data.

With an estimated value of $105 million, the LSU programs ranks behind only the University of Texas ($139 million), Notre Dame ($117 million) and Alabama ($110 million) and ranks ahead of such traditional football powerhouses as Michigan, Florida, Oklahoma, Georgia, Ohio State, Nebraska, Auburn, Arkansas, Southern Cal, Texas A&M, and Penn State—5th through 15th, respectively.


Upon learning of the ranking, Gov. Bobby Jindal, always the political opportunist, immediately pressured the LSU Board of Stuporvisors to approve a request for proposals (RFP) aimed at the privatization of the LSU football program in time for the start of the 2014 season.

The board approved the plan without discussion or objection.

“We actually have been considering this opportunity for some time,” Jindal said. “The latest story by Forbes simply provides us with the opportunity to negotiate the most favorable contract for the people of Louisiana.”

Jindal said the timing is such that it will be impossible to issue the RFP before the Feb. 5 LSU Bayou Bash recruiting party but he said he felt logistical problems of dealing with new signees could be overcome with assistance from legal counsel Jimmy Faircloth.

“The fact of the matter is, long story short, at the end of the day, there are two things: the LSU football team is overloaded with unproductive players. Applying my well-known ‘do more with less’ mantra, the new team owners will drastically cut the excess fat from the program. All players who do not make the first team on either offense or defense will be dismissed from the team. The kickers and punters will come from the remaining 22 starters.”

He said that move alone would save the program millions of dollars in housing and meal costs as well as costs for extra uniforms, equipment, game tickets and tutors. Other cost saving measures to be initiated by the privatization move include the termination of medical treatment for injured players and suspension of any athletic department financial contributions to academics. “We have already seen that academics can do more with less; now they will have the opportunity to do even more,” he said.

Jindal said in his prepared statement that the 22 players will each be paid on a sliding scale beginning at $100,000 per year. “That should allow LSU to attract the very best starting players in the nation and prevent the raiding of the top two or three high school players that Louisiana produces each year by other colleges—especially by Nick Saban and Alabama,” he said.

“This move will represent a new gold standard of athletic competition,” he said.

He said that a player who is injured and unable to continue in a game will be replaced from a pool of about a dozen standby contract players who will be employed in administrative positions within the Department of Education. In some cases, players will be asked to play on both offense and defense as an example of his “do more with less” crusade.

“The fact that the new owners will schedule only home games also should help us move forward with all due speed,” he said.

Jindal said his latest plan represents a “bold new move” for LSU football. “This should allow us to win the BCS championship virtually every year,” he said. “That fact alone should dispel all arguments that privatization doesn’t work.”

Confidential sources confirmed that one unidentified administration official who raised questions about possible NCAA sanctions for paying players was summarily teagued, a claim that was immediately denied. “That person left on his own accord,” an administration spokesman said. “We had nothing to do with his decision to leave.”

“There is a reason the NCAA would take issue with our proposal,” Jindal said. “I don’t believe it’s a coincidence that the head of the NCAA is a former president of LSU and that he is envious of LSU’s success since his departure. If you recall, when Dr. Mark Emmert was at LSU he was the one who hired Nick Saban and because of that, he has a vested interest in the continued success of Coach Saban. So it’s understandable that he would be opposed to this move.”

Jindal then proceeded to verbally attack Emmert and the NCAA over the anticipated encroachment. “Dr. Emmert and the NCAA want to deny a voice to the very people who will be harmed by such ridiculous sanctions,” he said. “They are trying to muzzle fans who simply want to express their support for what will be the most successful football program in the history of intercollegiate athletics. The only thing our fans want is for the finest athletes in the nation to have the opportunity to escape failing programs.

“Dr. Emmert is attempting to tell our fans to sit down and shut up. That’s never going to happen. Despite whatever evolving legal argument the NCAA comes up with, the voices of hundreds of thousands of fans will be heard,” he said.

“I have already indicated that the NCAA’s effort to deny these kids the right to equal opportunity in football is both cynical and immoral,” Jindal continued. “They (the NCAA and Emmert) can’t have it both ways. Our fans know the real result of any NCAA action, should it be successful, would be to keep great football players in failing programs like those at Alabama, Auburn, Georgia and Florida.”

Key losses to Alabama “have pushed a significant number of players to go out of state,” Jindal said. “Threatened sanctions are another intrusion by the NCAA on players’ personal decisions. Players who wish to play for a premier program should not have to seek approval of Dr. Emmert or the NCAA. It is our moral obligation to ensure that every top player who we recruit has access to the best program available.

“America is a nation of opportunity and a quality football program opens the door to opportunity, no matter the social background of the player.

“We in Louisiana are rejecting the status quo because we believe every player should have the opportunity to succeed.”

He said the Tiger Athletic Foundation (TAF) has been contracted to help draft the RFP for the administration.

Insiders have intimated that TAF is likely to be the sole bidder on the project, although Spectacor Management Group (SMG), which operates the Mercedes Benz Superdome, the New Orleans Arena, Zephyr Field in Metairie and the Baton Rouge River Center, has not been ruled out.

Economic Development Secretary Stephen Moret said whoever wins the contract will receive generous tax incentives and exemptions “for bringing new jobs to Louisiana.”

Jindal said the privatization should save the state “approximately $500 million a year, give or take a few hundred million.”

(We wanted to hold off on this story until April 1, but we just couldn’t wait.)

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If public humility is your thing, all you have to do is appear before a state legislative committee or state commission unprepared to provide answers to even the most basic of questions.

That’s what happened last Friday in two separate legislative committee rooms during meetings of the State Bond Commission and the Joint Legislative Committee on the Budget (JLCB) during discussions of capital outlay projects and BA-7 requests, respectively.

BA-7s are budget request forms used to make changes in revenues and/or expenditure line items during the year. Agencies submit them to the Division of Administration (DOA) Budget Office and if approved there, they are placed on the monthly agenda of the JLCB for consideration.

Bond Commission Chairman State Treasurer John Kennedy was particularly rankled over the shifting of construction projects to be replaced by $5 million in capital improvements to the LSU Health Sciences Building in Shreveport which is being taken over by Biomedical Research Foundation of Northwest Louisiana (BRF).

After Mark Moses of State Facility Planning and Control submitted changes to the commission, Kennedy said, “In July, you said the list was top priority and shovel ready. Now you’re saying they are not. What changed?”

“Cash flow needs have changed,” Moses said. “We’re shifting money. Eighteen projects are complete and on 76 others, there has been no activity and if the need is not there, we shift the dollars.”

“Why did you say in July that they were top priority?” Kennedy asked again. “The problem is if we replace them with something else, the original projects go to the back of the line. We’re shutting 90 projects down even though we have already spent money on some of them and now we’re sending those projects to the back of the line.”

Kennedy then launched into his ongoing criticism of the privatization of the Louisiana Medical Center at Shreveport and E.A. Conway Medical Center in Monroe. “We’re making $5 million in capital improvements to the Health Science Center. Who’s going to own that?”

Liz Murrill, DOA chief legal counsel, said, “We own the building. They (BRF) are leasing it.”

“We’re spending $4.8 million on scanner clinical and research imaging equipment for Biomedical Research Foundation…”

“This is a non-state entity. The dollars are being used for a public purpose,” Murrill said.

“Like an NGO (non-government organization)? We’re just giving it to them?”

“We’re providing money for this piece of equipment,” she said.

“Do we require them to file quarterly reports?”

“It’s contemplated it will be used for a public purpose,” she said, failing to answer his question.

Kennedy then asked if the legislative auditor would be able to audit the expenditure of the funds to which Murrill said, “I assume so, just as with any capital outlay projects.”

“One of the conditions of the agreement is there would be no public record,” Kennedy said, referring to a clause in the certificate of agreement between the LSU Board of Stuporvisors and BRF which says, “Financial and other records created by, for or otherwise belonging to BRF or BRFHH (BRF Hospital Holdings) shall remain in the possession, custody and control of BRF and BRFHH, respectively,” and that “such records shall be clearly marked as confidential and/or proprietary,” and thus protected from Louisiana public records laws.

“A public record is a public record,” Murrill said somewhat tentatively. “We have procedures to decide what is public record.”

“Who decides what’s public?” Kennedy asked.

“It depends on who gets the request.”

“Do you have a problem adding a condition to these purchases on the legislative auditor’s being able to audit the purchases?”

“I think that’s the case now,” Murrill said.

“Why are we buying this for the Biomedical Center instead of LSU?” Kennedy asked.

Mimi Hedgecock of the LSU School of Medicine—and formerly Jindal’s policy advisor—said the purchase was part of the partnership with BRF prior to the certificate of agreement between LSU and BRF.

“Is it accurate to say we have not picked an operator of the hospital yet?” Kennedy asked. “The testimony before the Louisiana Joint Budget Committee was they (BRF) were going to pick an operator. We’re entering a 99-year lease and don’t know who is even going to run the facility. The legislature has no say. How can we audit if we don’t know who’s running it? We can’t audit HCA (Hospital Corp. of America).

“This makes a mockery of the capital outlay procedure,” Kennedy said. “You’re supposed to be building a priority of projects. In July, you cam to us and said these projects were absolutely top priority and (were) shovel ready. Now they’re not shovel ready or top priority. Now we have new projects and these projects are going to the back of the line. I don’t think this is a good way to do business.”

Joint Budget Committee

Things got even testier at the Joint Budget Committee, thanks to the amateurish performance of witnesses appearing on behalf of the Recovery School District (RSD), just another ongoing embarrassment for the Louisiana Department of Education (DOE).

The fun began when committee member Jim Fannin (R-Jonesboro), who also serves as House Appropriations Committee chairman, questioned RSD’s claim to having $34 million in self-generated funds for the projects it was submitting.

“Explain how you self-generated $34 million,” he said. “It’s unusual for RSD to self-generate that many dollars.

The breakdown given was $27.13 million in new market tax credits, $3.37 million from insurance proceeds and $4.05 million from Harris Capital funding for construction of Wheatly and McDonough 42 schools.

Fannin responded that the way the budget was presented was “confusing.” He said he was seeing too many “other” expenditures on the BA-7 submitted by RSD. “You have legal expenses of $800,000,” he said. “I never saw legal expenses of $800,000 to rebuild two schools.”

“Those legal fees pay for 82 schools—the entire master plan,” said RSD spokesperson Annie Cambre.

But it was Sen. Ed Murray (D-New Orleans) who peppered the RSD types with a barrage of withering questions—withering because the RSD representatives were woefully ill-prepared with answers much as State Superintendent John White has been since his appointment in January of 2012.

Murray asked about the expenditure of $375,000 in funds for engineering and architectural costs before RSD had authority to spend the money. “Are we using any of this $375,000 to pay them already?” he asked.

“Most were paid from multiple fund sources,” responded a young, unidentified red-headed RSD representative who more resembled a high school FBLA member than a public education professional.

“Let me ask my question again,” Murray said. “Are we using any of this $375,000 to pay them already?”

“For some of them, yes. Some are eligible from FEMA, some not,” said Red.

“Then why are we just now getting this request if we’re already using the money?”

“We already had some authority but we just realized we need additional authority.”

Murray, beginning to show his exasperation, then asked, “How much of the $375,000 have we spent so far?”

“I don’t know,” said Red. “I can get that for you.”

“It disturbs me that we’re spending money without authority to do so,” Murray said. “Let’s go to the legal expense of $800,000. How much of that have we spent?”

“Again, I don’t have that exact number,” said Red. “I can get that for you.”

“Mr. Chairman,” Murray said to committee Chairman Jack Donahue (R-Mandeville), “can we get them to come back next month when they have answers?”

“That would seem appropriate,” said Donahue. “There’re a lot more questions than answers.”

Bordelon, in a last-ditch effort to salvage the request said, “It’s important that everyone understand the timing of the Wheatly-McDonough projects. There will be several thousand students affected by any delay. The New Market tax programs and closing times are specific. Timing is of the essence.”

“We’d like to help you guys,” Donahue said, “but when you come here you don’t have sufficient information to answer questions. I don’t know how you think we can approve something when you can’t answer questions about the money you’re asking for that you’ve already spent and how many dollars are involved.”

“We were utilizing previously granted authority,” Bordelon said.

“I appreciate that,” Bordelon said, “but on the other hand, you’re already spending it and didn’t come for authority to do that until you started spending the money. And when members ask how many dollars have already been spent, and you can’t answer, that’s a problem.”

“It was my understanding we were operating under previously granted authority,” Bordelon persisted.

“That’s not what was said,” Bordelon said. “That was not the testimony. The testimony was you were already spending that money but you don’t know how many dollars were spent.”

Murray’s motion to defer action until next month passed unanimously and Murray then had one last word of advice to Bordelon.

“You say this is going to affect ‘several thousand students.’ I’m pretty familiar with Wheatly and McDonough 42. You don’t have several thousand students in those two schools. We want you, when you come before this committee, to tell us accurate information.”

Sen. Dan Claitor (R-Baton Rouge) added, “When you come back, be prepared to discuss the oddly round legal expenses and issues related to that.”

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The following is a press release by State Treasurer John Kenney. LouisianaVoice presents it here as a guest column that we feel underscores the concerns expressed in our Sept. 29 post entitled False prophets, false profits—and false reasons to privatize LSU Hospital System (or trolling for more Medicaid dollars)

The reason advanced by the Jindal Administration for privatizing Louisiana’s charity hospitals is that a private hospital like Lafayette General or Ochsner, for example, can manage a hospital more efficiently, and therefore cheaper, than the state.

That’s why I was taken aback when the chairman of the private entity taking over the Shreveport state hospital testified before the Joint Legislative Committee on the Budget that the private contractor’s costs to run the Shreveport facility will be the same as the state’s. Where, then, will the Jindal Administration’s promised annual savings of $150 million come from if not from achieving operational efficiencies?

Dig deeper into the details and it becomes apparent that the planned “savings” won’t result from lower costs but from getting more money from the federal government through an accounting change. This won’t make the charity hospitals or Louisiana’s Medicaid program, which pays for the hospitals, more efficient. It will just make them more expensive, fueled by additional federal (American taxpayer) money.

Here’s how the new financial strategy will work: Medicaid, which is government health insurance for the poor, is a federal-state program. The states run it but the feds put up most of the money. In Louisiana, for every $1 in state taxpayer money we contribute, the feds contribute $2. The more money we put up, the more money the federal government contributes.

Under the Charity Hospital privatization, the state will “lease” the charity hospitals to private hospitals, which then will be responsible for treating our low-income and uninsured citizens. The state will pay the private hospitals to do this with large amounts of federal money from our Medicaid program. The private hospitals will then return some of those federal dollars to the state as “lease payments.” The federal dollars paid to the state as “lease payments” now become new state dollars, which the state can use to draw down even more federal money.

This accounting maneuver is undeniably clever. The question is whether it is legal. It must be approved by the federal Centers for Medicare and Medicaid Services (CMS).

Louisiana’s track record with CMS is not good. CMS has previously rejected similar financing strategies designed to leverage federal money. In the early 1990s, for example, Louisiana and other states adopted financing strategies such as “provider taxes,” “provider donations,” and “intergovernmental transfers,” designed to launder federal Medicaid funds into state funds in order to draw down more federal funds. CMS and Congress spurned them all. (The Medicaid Disproportionate Share Hospital Payment Program: Background and Issues, The Urban Institute, No. A-14, October 1997). http://www.urban.org/publications/307025.html

In fact, Louisiana was more aggressive than most states in trying to leverage federal dollars. Our health care budget grew from $1.6 billion in 1988 to $4.48 billion in 1993, of which 90% was federal funds. The amount of money actually contributed by the state during this period declined from $595 million to $462 million. (Washington Post, Jan. 31, 1994, page A9).

When CMS and Congress stepped in to stop what then-Congressman Bob Livingston called Louisiana’s “abuse” of Medicaid financing, and, in Livingston’s words, the “unjustified and unwarranted benefits” came to an end (The Advocate, Feb. 6, 1997, page 1A). Newly-elected Gov. Mike Foster was faced with a $1 billion deficit in the health care budget. To clean up the mess, Foster appointed Bobby Jindal as DHH Secretary, who sought special relief from Congress. As The Advocate newspaper editorialized, “Louisiana pleaded guilty as charged, threw itself on the mercy of the court and got off easy,” because “the state for years ran a scam using ‘loopholes and accounting gimmicks’ to justify fantastic increases in federal payments.” (The Advocate, April 29, 1996).

Perhaps this time is different. Perhaps CMS will view the new “lease payments” being used to obtain additional federal money more favorably han the strategies CMS has rejected in the past.

One thing’s for certain, though. We need to find out. The state should seek CMS review of its new strategy immediately—not “soon” as DHH has promised—but now. Until then, our entire state health care delivery system for more than two million of our people is at financial risk.

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The Jindal administration two years ago attempted to influence parole officers and district judges throughout the state to refer violators to a private facility operated by a major Republican campaign contributor whom Gov. Bobby Jindal subsequently appointed to the LSU Board of Supervisors.

LouisianaVoice obtained a four-page memorandum through a public records request of the Louisiana Department of Corrections (DOC) which indicates that state probation and parole officers were directed to funnel offenders into the Academy of Training Skills (ATS) in Lacassine.

ATS, owned and operated by Chester Lee Mallett of Iowa, LA. in Calcasieu Parish, is a 200-bed transitional work program ostensibly set up to provide employment and training in various industrial trades in order to return offenders to the work force. http://www.aattss.com/

On July 13, 2012, Jindal appointed Mallett to the LSU Board of Supervisors. He was previously appointed by Jindal to the State Licensing Board for Contractors in June of 2010. Mallett and companies controlled by him have contributed more than $30,000 to Jindal personally, $242,000 to the Louisiana Republican Party and $75,000 to the Republican Governors Association, of which Jindal is currently president.

The memorandum, from Barry Matheny, Assistant Director of Probation and Parole, to his boss, Probation and Parole Director Gerald Starks, was dated Oct. 3, 2011, and noted that DOC had amended its policy to include probation violators as eligible for the program. Forwarded to parole and probation officers throughout the state, it directed them to “get with your respective judges at your earliest convenience to make them aware of this alternative program.”

Matheny further said, “I would ask that you look at all technical violators…and see if (you) can get some offenders into this program.”

What followed was an outline of the ATS program which essentially was an endorsement of Mallett’s facility which does not accept state or federal funding but rather charges a housing fee to the residents, many of whom are said to work for Mallett’s construction companies.

ATS’s website says that salaries residents receive from job placements by ATS are kept in special accounts in residents’ names. Several former residents, however, have told LouisianaVoice that upon their release from the program, they actually owe ATS money. They said ATS “forgives” any outstanding rent balances owed. But when those who work for Mallett’s companies have to use their salaries to pay Mallett for lodging at ATS, Mallett is basically getting free labor in exchange for the lodging.

Moreover, the ATS website, which apparently has not been updated for some time, says it is certified by the Department of Public Safety and Corrections and the American Correctional Association (ACA).

The value of the ACA accreditation, however, is somewhat suspect in that the association has come under criticism that it routinely accredited facilities which experienced charges of abuse or poor conditions, according to a 2001 Boston Globe report. http://www.prisonpolicy.org/aca.html

One of ACA’s past presidents, Richard Stalder, while serving as Louisiana State Corrections Secretary in 1993, canceled spending on psychiatric counseling for troubled teens so that he could give out $2.7 million in raises to his staff.

By 1995, ACA had accredited all 12 prisons in Louisiana, passing the last two with 100 percent scores, all while the head of Louisiana’s prison system was serving as ACA’s national president—an arrangement some might consider a conflict of interests. That same year, however, more than 125 prisoners sued Stalder for mistreatment within the prisons and a month after it accredited the state prison at Angola, it was reported that about $32 million in repairs were needed for it to meet safety requirements. Prisoners with fractures were splinted and then not seen for months.

Stalder rejected all the claims, saying that he and his staff deserved “a pat on the back” but in June of 1995, Federal Judge Frank Polozola criticized Stalder for the way in which he ran the state prison system.

In 1998, the new Jena Juvenile Center came under fire for widespread problems, including a near-riot, poor teaching and security and physical abuse and in 1999 the juvenile facility in Tallulah was taken under state control after five years of repeated problems with private ownership despite its having received accreditation and a positive report only six months earlier from ACA and Stalder.


In 2010, Corrections Corporation of America (CCA) trumpeted the re-accreditation of five of its private prisons by ACA. But what CCA did not reveal was that it had paid ACA more than $22,000 for those five accreditations, that CCA employees serve as ACA auditors, that CCA is a major sponsor of ACA events or worse, and that accredited CCA facilities had experienced major security problems. http://www.privateci.org/private_pics/PCIACApr.htm

(CCA, it should be noted, is one of several private prison companies that have made major contributions to the campaigns of Gov. Jindal.)

Despite the memorandum from DOC, most judges and district attorneys have shied away from ACS. One judge said he threw the letter in the trash can “as soon as I received it,” and a district attorney told LouisianaVoice he wanted nothing to do with the facility.

Both Mallett and his son are major players in politics, having contributed $670,000 to assorted state and national candidates—mostly Republicans—and Jindal’s Believe in Louisiana “527” tax exempt political organization which is little more than a political slush fund used to push Jindal’s agenda such as his failed state income tax repeal last legislative session.

Lee Mallett contributed the yearly maximum of $30,800 to the Republican National Committee on three separate occasions between the summer of 2011 and the spring of 2012 and son Brad Mallett also contributed another $30,800, records show.

Following is a partial list of contributions by Lee Mallett and nine of his corporate entities:

Academy of Training Schools

• Billy Nungesser (lieutenant governor bid), $5,000, July and August of 2011;

• State Sen. John Alario Jr., $1,000, September of 2011;

• Republican Party of La., $12,000, September and November of 2011;

• Jane Smith (who lost her State Senate race but was subsequently appointed Assistant Secretary of Revenue by Jindal), $1,000, October of 2011;

Air Vac Inc.

• Bobby Jindal, $5,000, September of 2010;

• State Sen. Dan Morrish, $1,000, November 2010;

• Chuck Kleckley (La. House Dist. 36), $2,500, Feb. 8, 2011;

• State Sen. Jonathan Perry, $2,500, February 2011;

• State Sen. Ronnie Johns, $2,500, May 2011;

• Billy Nungesser, $2,500, August 2011;

• Republican Party of La., $27,000, September and November 2011;

Best Buy Industries

• Billy Nungesser, $2,500, August of 2011;

• Republican Party of La., $27,000, September and November 2011;

Caddy Shack Enterprises

• Bobby Jindal, $5,000, May 2007;

• Agriculture Commissioner Mike Strain, $2,500, August 2007;

• Republican Party of La., $15,000, May and September 2008;

Mallett Inc.

• Attorney General Buddy Caldwell, $2,500, November 2007;

Mallett Buildings

• Republican Party of La., $25,000, April 2011;

Nature’s Best Inc.

• Dan Morrish, $500, November 2010;

• Bobby Jindal, $1,500, March 2011;

• Republican Party of La., $12,000, September and November 2011;

Progressive Buildings

• Dan Morrish, $1,000, November 2010;

• Bobby Jindal, $3,500, March 2011;

• Bobby Jindal, $1,500, April 18, 2011;

• Sen. Ronnie Johns, $2,500, May 2011;

Progressive Merchants

• Republican Party of La., $107,000, May, October, February, 2007, December, 2009, September and November 2011, and April 2012;

• Mike Strain, $2,500, August 2007;

• Bobby Jindal, $5,000, December 2009;

• Louisiana Committee for a Republican Majority, $25,000, June 2011;

• Billy Nungesser, $2,500, August 2011;

Lee Mallett

• State Treasurer John Kennedy $2,500, February 2007;

• Republican Party of Louisiana, $1,000, April 2007;

• Dan Morrish, $2,500, November 2010;

• S.C. Gov. Nikki Haley, $3,500, April 2012;

Federal contributions

• Republican Party of Louisiana, $16,000, April 2007, June 2008, September and December 2010, and June 2011;

• Cong. Charles Boustany, $7,200, September 2007 and October 2011;

• U.S. Sen. Mary Landrieu, $4,600, September 2007;

• State Treasurer John Kennedy (U.S. Senate bid), $2,300, December 2007;

• Donald Cazayoux (La. 6th Congressional Dist.), $16,100, February and April 2008;

• Kennedy Majority Committee, $28,500, April 2008;

• National Republican Senatorial Committee, $28,500, April 2008;

• U.S. Sen. David Vitter, $1,200, June 2008;

• Republican presidential candidate Michele Bachman, $2,500, July 2011;

• Republican National Committee, $61,600, August 2011and March 2011;

• Republican presidential candidate Rick Perry, $2,500, October 2011;

• Republican presidential candidate Newt Gingrich, $2,000, November 2011;

• Republican National Committee Recount Fund, $30,800, December 2011;

• Cong. Bill Cassidy, $2,500, April 2012;

• Romney Victory Inc., $14,200, June 2012;

527 contributions

Lee Mallett

• American Solutions Winning the Future, $1,100, January and December 2009;

• Republican Governors Association, $50,000, October 2010 and February 2012;

Mallett Inc.

• Republican Governors Association, $25,000, June 2009;

Air Vac Inc.

• Believe in Louisiana, $1,000, March 2012;

Academy of Training Schools

• Believe in Louisiana, $6,000, March 2012;

Nature’s Best Inc.

• Believe in Louisiana, $1,000, March 2012;

Progressive Merchants

• Believe in Louisiana, $1,000, March 2012;

Progressive Buildings

• Believe in Louisiana, $1,000, March 2012;

Brad Mallett

• David Vitter, $3,100, June 2008;

• Republican National Committee, $30,800, August 2011.

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“That’s not a comment by the Supreme Court one way or another concerning who’s right or wrong on the lawsuit. That’s simply the court saying we’re not going to hear the case now.”

—Attorney Jimmy Faircloth, who is beginning to challenge boxer Peter Buckley’s stellar record of 32 wins against 256 losses, commenting on the Louisiana Supreme Court’s denial of state writs which upholds lower court orders that the LSU Board of Stuporvisors must relinquish the list of semifinalists and finalists for the LSU presidency.

“The Supreme Court said ‘Writ denied. Stay denied.’ As a result, records will have to be produced. As long as the board doesn’t produce those records, it is in contempt.”

—Attorney Lori Mince, who represented the Baton Rouge Advocate and the New Orleans Times-Picayune in the litigation to force the release of the records.

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Don Quixote, Jimmy Faircloth, Chicago Cubs, Bobby Jindal William Jennings Bryan, LSU Board of Stuporvisors, Minnesota Vikings, Jimmy Faircloth (again), Houston Astros, Bobby Jindal, Charlie Brown.

They all have one thing in common—the inability to grasp the brass ring. Yeah, we know, the Minnesota Vikings went to the Super Bowl four times, but how many of those did they win? The same number Jimmy Faircloth has won going to bat for Bobby Jindal in the state courts on various issues pushed by the governor.

Like Charlie Brown, Faircloth keeps trying to kick the football being held and suddenly pulled away by Lucy, aka Bobby Jindal only to fall flat time after time.

The futility of the Cubs and Astros should by now be familiar to Faircloth who this week was again shot down by the Louisiana Supreme Court, this time on the issue of turning over the list of semifinalists and finalists for the LSU presidency.

That list apparently is the equivalent to a closely guarded state secret and even now Faircloth refuses to capitulate to the state’s high court.

Writ denied. Stay denied” was the terse message in the Supreme Court’s ruling. During my 20 years with the Office of Risk Management where I worked with state attorneys to defend lawsuits against the state, that language meant one thing: we write a check to the plaintiff. Period.

Ah, but the ever-optimistic Faircloth proclaimed that those four words were “not a comment by the Supreme Court one way or another concerning who’s right or wrong on the lawsuit.”


“That’s simply the court saying we’re not going to hear the case now.”

Huh? Again.

Uh, Jimmy, loyalty to one’s boss is a fine attribute. But there comes a time when those of common sense must understand the finality of an issue and throw in the towel.

This is one of those times.

It is more than apparent by now that Faircloth/Jindal/LSU is not going to emerge victorious in this little showdown over the public’s right to know what its representatives are doing behind closed doors.

The continued resistance to the courts and the insistence that the records do not have to be produced only feeds an already growing suspicion about the forthrightness, honesty, and candor of this administration which has managed to operate in the dark shadows of obscurity, ambiguity and deceitfulness during Jindal’s nearly seven years in office.

Requests for public records by LouisianaVoice—records that are in no way protected—have been met time after time after time after time by delaying tactics, generally preceded by a cryptic email that reads, “Pursuant to your public records request, we are still searching for records and reviewing them for exemptions and privileges.  Once finished, we will contact you regarding delivery of the records.  At that time, all non-exempt records will be made available to you.

This was the message from Division of Administration (DOA) attorney David Boggs on Aug. 7 to a request we submitted on Aug. 1. The Boggs response was already three working days late by the time he sent his response. The state’s public records law stipulates that records must be made available immediately upon request unless they are unavailable in which case the custodian of the record must respond in writing as to when the records will be available within three working days.

LouisianaVoice is still waiting for the records we requested 29 days—20 working days—ago. At the minimum fine of $100 per day, that comes to $2,000 for each of the seven records we requested, or $14,000 total.

The LSU litigation, however, has inspired us. District Court Judge Janice Clark imposed a $500 per day fine for LSU’s non-compliance. That bill currently totals more than $50,000.

We will likewise request the $500 per day fine, plus court costs, attorney fees and damages. The $500 per day fine alone comes to $70,000—money we can certainly use but which the taxpayers of Louisiana would not be asked to pay if the administration had simply complied with the law as public servants are expected to—and should—do.

Jimmy Faircloth, David Boggs or whomever DOA designates may wish to prepare for another defense after we file suit.

Not that he minds. Whenever he is given one of these dogs to defend, he simply turns on the time clock and the meter begins ticking—at the expense of you, the taxpayer. And he has done quite well defending indefensible lawsuits from pension reform to vouchers to public records. He has been paid more than $1 million to date by the Jindal administration, enough to place him in the upper tier of state legal contractors.

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LouisianaVoice has obtained a copy of the minutes of a meeting in Baton Rouge a little over a year ago which led to the firing of the head of the LSU Hospital System and the CEO of Interim Louisiana Public Hospital in New Orleans by the Jindal administration.

LSU Health Care System head Dr. Fred Cerise and Interim Louisiana Public Hospital CEO Dr. Roxanne Townsend were fired just days apart last year—Cerise in late August and Townsend in early September—following a July 17 meeting at which former Secretary of Health and Hospitals (DHH) Alan Levine pitched a plan to privatize the state’s system of LSU medical centers.

Levine was at the meeting on behalf of is firm, Health Management Associates (HMA) but was recently hired as president and CEO of Mountain States Health Alliance.

Present at that meeting, besides Cerise, Townsend and Levine were then-LSU President William Jenkins, DHH then-Secretary Bruce Greenstein, LSU Medical Center Shreveport Director Dr. Robert Barish, HMA CFO Kerry Curry, LSU Health Science Center Shreveport Vice Chancellor Hugh Mighty and LSU Board of Supervisors members Rolfe McCollister, Bobby Yarborough, John George and Scott Ballard. LSU Health Science Center New Orleans Chancellor Larry Hollier and Vice Chancellor for Clinical Affairs at LSU Health Sciences Center New Orleans Frank Opelka also participated by teleconference.

Opelka was promoted to Cerise’s position when Cerise was replaced.

The meeting was held in the LSU president’s conference room.

Both Cerise and Townsend expressed reservations about Levine’s proposal but several members of the LSU Board of Supervisors who were present at the meeting “indicated they want LSU’s management to pursue this strategy,” according to a summary of the meeting prepared for Jenkins by Cerise prior to his being replaced by Opelka.

Along with his two-page summation of the meeting, Cerise also submitted a third page containing a list of five concerns he had with the privatization plan pitched by Levine. It was that list that list of concerns which most likely got Cerise removed as head of the LSU Health System via an email from Jenkins.

HMA, headquartered in Naples, Florida, was the subject of a scathing report by CBS news magazine 60 Minutes less than six months after Levine and Curry met with LSU officials in Baton Rouge and Levine has since moved on to become the CEO of Mountain States Health Alliance.

The thrust of the 60 Minutes story which aired last Dec. 2, was that profits, not patient care, was the driving force behind HMA’s emergency room decisions and that emergency room doctors were pressured to admit emergency room patients “regardless of medical need” to boost the company’s bottom line.

Some speculation had HMA squarely in the mix insofar as the proposed privatization of LSU’s 10-hospital system but the 60 Minutes story apparently thwarted those plans.

Levine denied that in an interview with the Baton Rouge Advocate last October. “I have had no conversations with LSU about taking over any of the existing LSU hospitals,” he told the paper. “I was there (in Baton Rouge) as a former (DHH) secretary. I was not there to pitch my company.”

Little more than a month later, following the 60 Minutes story by CBS correspondent Steve Kroft, Levine found himself trying to salvage the HMA image.

HMA, which owns 70 hospitals in 15 states, was accused on camera by several former employees of setting admission targets and that doctors were coerced into admitting more patients. The former employees said doctors who did not meet quotas were threatened with their jobs.

Despite Levine’s denials that HMA was interested in managing the LSU hospitals, Jenkins seemed to think otherwise. “I would say he would be interested in business,” Jenkins said in the same story containing Levine’s denial. “You would be surprised how many companies across the country are interested in these hospitals.

Levine, according to Cerise’s notes, recommended as an initial step that LSU sell its hospital in Shreveport (LSU Medical Center) and use the proceeds to “offset budget cuts for the rest of the LSU system.”

He suggested that the buyers would form a joint venture with LSU, invest capital into the facility and develop a strategy for LSU “to more aggressively compete in the hospital market.”

“The LSU board members present indicated they want LSU’s management to pursue this strategy,” Cerise’s notes said. “Greenstein stated that LSU should look to generate two years of funding to address the state funds shortfall in the system through the sale of Shreveport’s hospital.”

It was at that point that Cerise indicated his concern that such a strategy would take time to develop and that LSU would likely need to go through a competitive public procurement process and “likely legislative approvals.”

It was subsequently determined that legislative approval was not legally required; all that was required was for the legislature to be informed of the administration’s actions.

“There appeared to be agreement that LSU develop a plan that would not result in closure of hospitals,” Cerise’s notes said. “When the question was posed to the group, ‘Will LSU close hospitals,” George responded, ‘We hope not.’ The clear message was that the board members did not want LSU to proceed with any hospital closures at this point.”

Since that meeting, Earl K. Long Medical Center in Baton Rouge and W.O. Moss Medical Center in Lake Charles have each closed.

“Cerise asked Greenstein if he would allow LSU to draw federal funds to try to fix part of our problem and he replied, ‘Yes.’”

Among the concerns expressed by Cerise in an addendum to the meeting meetings which he addressed to Jenkins:

  • There is no commitment by DHH to mitigate the budget reduction while we work on the very complex Shreveport deal. Therefore, if later in the year, we realize that w cannot close a Shreveport sale by year end, we will run a deficit which is against the law and grounds for removal of those causing the deficit;
  • There will be a significant community/political reaction to LSU assuming a competitive posture with a profit partner while receiving favorable Medicaid and uninsured financing from the state;
  • We could see a significant negative community reaction to a plan that sells the Shreveport hospital and spends a large amount of the proceeds on hospitals in south Louisiana. There are also local contractual relationships which might be adversely affected and objected to;
  • We need to be transparent with the legislature. If our plan is to spend as if we will complete a “joint venture” and secure funding later in the year, the board and the legislature need to realize that wer have no alternative solution if the plan fails later in this fiscal year. This will put Shreveport and New Orleans at risk as well as put LSU at risk of running a deficit;
  • The only certain way for LSU is to live within its newly assigned budget is to close multiple facilities now. If we do not do this, we are running the risk of delaying and creating an unmanageable budget crisis later in the year that will put Shreveport and New Orleans at risk. That risk includes others blaming LSU for not taking actions earlier.

“I am asking that you share this memo or at least the substance of it with the full board to ensure they are informed and that their direction to us that we delay definitive budgetary action until the end of August to better assess the likelihood of a Shreveport sale with a statewide distribution of the proceeds is clear and unambiguous,” Cerise said in his memorandum to Jenkins.

At the conclusion of the meeting, Jenkins called for the creation of a task force to include then-Commissioner of Administration Paul Rainwater, Greenstein, George, Yarborough, McCollister, Ballard, Mighty, Barish, Hollier, Cerise and Townsend.

But in a matter of weeks, Cerise and Townsend were gone.

And a year later, a blank contract was agreed to which allows Biomedical Research Foundation of Northwest Louisiana (BRF), an organization with no appreciable cash flow and no experience in running a hospital, to assume control of LSU Medical Center in Shreveport and E.A. Conway Medical in Monroe—facilities with combined revenues of about $400,000.

Moreover, BRF will receive all the facilities’ assets with the state getting the liabilities.

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Those blank pages in the LSU Medical Center/E.A. Conway Medical Center contract for the takeover of the two facilities by a Shreveport research foundation have finally been filled in but questions nevertheless remain as to the validity of the document.

The one thing it does do with near certainty is to guarantee lots of legal work for attorneys down the road when the disagreements begin—as they almost assuredly will because of both the wording and issues over whether there even is a contract.

It also would appear to transfer both hospitals’ accounts receivable—potentially tens of millions of dollars—to BRF, as the agreement stipulates that LSU shall transfer “all assets” to lessee.

The contract, officially entitled Cooperative Endeavor Agreement (CEA) by and among Biomedical Research Foundation of Northwest Louisiana (BRF), BRF Hospital Holdings (BRFHH), Board of Supervisors of Louisiana State university, the State of Louisiana through the Division of Administration (DOA) and the Louisiana Department of Health and Hospitals (DHH), was provided to LouisianaVoice by LSU on Friday (Aug. 16) pursuant to LouisianaVoice’s public records request earlier in the week.

A companion document, the Master Hospital Lease Agreement, provided along with the CEA, calls for the lessee, BRFHH, to pay the state $38,763,891.38 per year in 12 monthly payments of just more than $3.23 million.

One caveat of the contract which would appear to leave the state on the hook financially is the provision that in the event the state’s required Medicaid per diem payments should appear to be inadequately funded, DHH “shall immediately notify BRFHH” and both the Commissioner of Administration and DHH would be required to seek additional appropriations from the Legislature.

There is no such provision for increased state Medicaid payments to any other medical facility in Louisiana and in fact, many hospitals across the state are in the midst of wholesale layoffs of medical personnel because of Medicaid cutbacks by the Jindal administration. Such cutbacks are placing a heavy strain on already overworked nurses, technicians and other medical employees and many doctors are refusing to accept new Medicaid patients as a result of the state cutbacks.

But even more questionable is the legality of the CEA itself.

The LSU Board of Supervisors on May 28 approved the private takeover of four LSU hospitals—LSU Medical Center (LSUMC) in Shreveport, E.A. Conway Medical Center in Monroe, W.O. Moss Medical Center in Lake Charles and Leonard J. Chabert Medical Center in Houma.

The only problem with that approval was the board approved contracts for each of the four hospitals which contained nearly 50 blank pages, omitting financial terms, the length of the leases involved and a termination clause.

All contracts, to have any legal standing whatsoever, must plainly state an offer and an acceptance (financial terms), dates (length of leases in this case) and a termination clause. None of those were contained in the approved documents.

Even more questionable, it would seem, is a stipulation under “Representations and Warranties of the State,” which says in part:

  • This agreement and any and all agreements, documents or instruments to which the State, through DOA and DHH, is a party and which are executed and delivered by the State pursuant to this agreement constitute the legal, valid and binding obligations of the State, through DOA and DHH, enforceable against the state in accordance with its terms.
  • DOA and DHH have the absolute and unrestricted right, power and authority to execute and deliver this agreement and such other agreement, documents or instruments to which it is a party on behalf of the State and to perform obligations on behalf of the state under this agreement and such other agreements (and) documents.
  • Neither the execution and delivery of this agreement nor the consummation or performance of any of the contemplated transactions hereby will, directly or indirectly, with or without notice or lapse of time…give any governmental body or other person the right to validly challenge any of the contemplated transactions, or to exercise any remedy or obtain any relief under any legal requirement to which the State, DHH or DOA may be subject.

In other words, the contract claims that no governmental entity or individual has any legal rights insofar as mounting any challenge to the agreement by lawsuit or otherwise.

That would appear to be a particularly difficult stipulation to enforce given the fact that the contract may well not be a legal document in light of those nearly 50 blank pages.

Another curious section of the contract which addresses Medicare and Medicaid Certification, the CEA says, “With respect to the hospitals, LSU has met and does meet, without material exception, the conditions for the participation in the Medicare and Medicaid programs, and LSU does not have knowledge of any pending or threatened proceeding or investigation under such programs involving the hospitals or any basis for the revocation or limitation on such participation.”

A June 26 letter from the Center for Medicare & Medicaid Services, however, said the state has not submitted the required state plan amendments (SPA) proposing to fund Medicaid payments through the agreements “and CMS cannot offer former determination as to whether the arrangements would conflict with the requirements described in the Social Security Act. Once the state submits the SPAs, CMS will request necessary supporting documentation and explanations from the state to demonstrate compliance with these provisions of the statute and regulations,” the letter said.

As recently as Tuesday of this week (Aug. 13) a CMS spokesman told LouisianaVoice by email there were “no updates at this time.”

The CEA said that LSU and BRFHH would, after the Oct. 1 execution date of the agreement, jointly submit the proper forms to CMS.

But Bill Brooks, associate regional administrator for the CMS Division of Medicaid and Children’s Health Operations in Dallas, said last January that whenever documents are submitted to CMS, the process starts a “90-day clock,” during which time his office may pose additional questions. A new 90-day clock would begin when his office receives satisfactory responses to his requests.

Thusly, so long as the state fails to satisfactorily answer all questions and provide adequate documentation, the 90-day clock could conceivably run indefinitely. And that would be bad because if CMS disapproved an amendment submitted by the state, “there would be no federal dollars provided for the changes proposed” in the agreement.

Another provision in the agreement says that the Department of Corrections (DOC) is responsible for paying BRFHH for medical care provided state prisoners should DOC suspend payments for any reason, the state would have to find “alternative sources of medically necessary health care” for prisoners.

Though the agreement requires that all LSU Hospital employees shall be offered employment by BRFHH, the agreement says they “shall be employed subject to terms and conditions established by BRFHH”—meaning potentially lower wages and fewer benefits. At the same time the agreement also holds LSU liable for state employee expenses such as unemployment benefits, wages and benefits for “past, present and future employees of LSU.”

One other clause, this one contained in the lease agreement, warrants particular attention because of the failure to enforce an identical clause in another state agency privatization contract in 2010:

“Lessee (BRFHH) shall not assign this lease or any interest therein without the prior written consent of lessor” and “may not sublease all or any portion of the leased premises without the prior written consent of lessor.”

In 2010, the state contracted with F.A. Richard and Associates (FARA) to take over operations of the Louisiana Office of Risk Management (ORM) at a cost to the state of just over $68 million. Less than eight months later, ORM and DOA agreed to a 10 percent amendment to that contract, bumping the state’s cost to $75 million. Within weeks, FARA sold its interests to an Ohio company which in turn sold out to a New York firm—all within the first year of the contract.

A similar “prior written approval” clause was contained in the contract with FARA but when LouisianaVoice made a public records request for the written approval, DOA responded that no such document existed.

That, naturally, would raise the question of whether or not DOA would enforce that stipulation in this contract or not.

The lease agreement does give BRF the authority to lease to a “non-profit corporation, a limited liability company, limited liability partnership or other non-profit legal entity wholly owned or controlled by lessee or Biomedical Research Foundation of Northwest Louisiana.” That, of course, would be BRFHH, a non-profit entity “wholly owned” by BRF.

Finally, a clause in the CEA which might otherwise be overlooked, takes on significant importance in that “financial and other records created by, for or otherwise belonging to BRF or BRFHH shall remain in the possession, custody and control of BRF and BRFHH, respectively,” and such records would be considered “proprietary to BRF and BRFHH” and “such records shall be clearly marked as confidential and/or proprietary,” and thus protected from the Louisiana public records laws.

This could be crucial inasmuch as questions have arisen as to the financial viability of BRF, a non-profit organization that depends heavily on grant money, much of it from the state, for its operations. BRF has no experience in operating a facility like the two medical centers it is being contracted to run and skeptics feel it also does not have the financial resources to be successful in that endeavor.

Adding to the aura of mystique is the reported sighting of former DHH Secretary Bruce Greenstein having lunch in a Shreveport restaurant with BRF Board Chairman Stephen Skrivanos recently. BRF CEO/President Dr. John George was also reported to have been in that meeting but he has publicly denied he was present and has threatened Shreveport political consultant Elliott Stonecipher with a libel lawsuit over the reports of his attendance.

George, in addition to being the CEO and President of BRF, is also a member of the LSU Board of Supervisors which approved the agreement with BRF but Jindal has claimed there was no conflict of interests in George’s serving in the two capacities.

What makes all this so intriguing is that Greenstein resigned in the wake of an ongoing federal investigation into a $187 million DHH contract with CNSI, his former employer. Greenstein assured legislators at his confirmation hearings in 2012 that he had erected a “firewall” between him and CNSI to ensure there would be no contact with his old company during the contractor selection process. Emails and phone records subpoenaed by the committee, however, revealed Greenstein was in constant contact with CNSI officials throughout the selection process.

Even though he quickly announced his “resignation” following news of the FBI probe, he was allowed to remain on the job a month before vacating his office. He subsequently moved back to Seattle but recently showed up in Shreveport with Skrivanos.

Adding fuel to the fires of speculation was the appearance at the State Capitol a few months ago by Alan Levine, Greenstein’s predecessor at DHH.

With the blank contract, questionable financial abilities of BRF (in some minds), the mysterious appearances of Greenstein and Levine, the defensive reaction of George to the report of meeting with Greenstein even to the point of a threatened lawsuit, and potential conflict of interest of George serving as head of BRF which was approved to take over two major hospitals by an LSU board on which he sits, there is plenty of room for speculation and conspiracy theories.

Had the federal investigation into the CNSI contract not surfaced, who knows what direction this plot may have taken?

That’s especially true given the lack of transparency and openess in this administration.

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