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Archive for the ‘OGB, Office of Group Benefits’ Category

And the hits just keep coming.

Bobby Jindal, a little distracted in his presidential campaign by his pesky job back home in Louisiana, has yet more legal problems piling up on his desk.

Meanwhile, Jindal, laser focused on becoming the leader laughingstock of the free world, offered up one of his most confusing diatribes yet while on his 99-county tour of Iowa, offering conflicting comments that any reporter worth his press credentials should be salivating over about now.

As the infamous north Louisiana hospital deals, complete with a contract containing 50 blank pages, begins its inevitable collapse (predicted by just about anyone with an IQ higher than a cluster of wet Spanish moss), complete with litigation and a backdoor public relations campaign by the current operator of the LSU Medical Center in Shreveport and E.A. Conway in Monroe, yet another lawsuit has been slipped under the door.

The first court hearing for a lawsuit against the state Office of Group Benefits (OGB), the Office of the Governor and the state Division of Administration will be conducted July 27 in Baton Rouge District Court before Judge Janice Clark. The hearing is scheduled for 1 p.m.

And guess who the state’s defense attorney will be? Yep, you got it. Jimmy Faircloth who has enjoyed about as much courtroom success as Wiley E. Coyote in pursuit of the elusive roadrunner. The only thing missing from Faircloth’s courtroom misadventures are anvils and dynamite. In representing the state in the OGB litigation, Faircloth will be adding to more than the $1.5 million he has already received in other representations. It’s not all Faircloth’s fault of course; he has been given some dogs to defend by this hapless administration.

The lawsuit was brought by a group of state employees, teachers and retirees, who are asking the court to overturn changes to OGB’s health plans that took effect March 1—premium increases and reduced coverage that were predicted by LouisianaVoice way back when the privatization of OGB was first proposed by the Jindal administration.

Representing the plaintiffs is J. Arthur Smith III of the Smith Law Firm of Baton Rouge.

The plaintiffs are claiming that changes forced on them by OGB were not enacted legally and they were denied a reasonable opportunity, as required by the Louisiana Administrative Procedure Act, to comment on the proposed changes. The plaintiffs further maintain that the OGB and the administration violated due process, the contracts clause of the Louisiana Constitution and their fiduciary duties to plan participants. The plaintiffs also say that increased costs and decreased benefits pose a financial hardship that limits their access to healthcare services and needed medicines.

An association formed to fund the lawsuit, LA VERITE’ 2015, is registered with the Louisiana Secretary of State. LA VERITE’ is French for TRUTH, and stands for Louisiana Voices of Employees and Retirees for Insurance Truth and Equity. There are no dues and membership is open to any active or retired state employee, teacher, or other interested individual.

Plaintiff Marilee Cash, a retiree, said the goal of the lawsuit is to protect approximately 230,000 state employees, teachers, retirees and their dependents who have health insurance through the Office of Group Benefits. “Large increases in out-of-pocket expenses, combined with withheld pay increases for active employees and cost-of-living adjustments for retirees, pose a financial hardship for many people covered by OGB,” she said. “Our compensation has not kept up with inflation during Gov. Jindal’s administration, due to mismanagement of state funds and poor fiscal decisions. Before March 1, our healthcare costs and insurance premiums were manageable. Now these increased costs have put healthcare services out of reach for many dedicated public servants and retirees.”

The administration claims the changes were made to preserve the Group Benefits reserve, which has been drastically reduced as OGB reduced premium revenue while paying out increasing medical claims expenses. The fund, created by the premiums paid by those who are insured, stood at about $500 million just two years ago. Less than half that amount remains. The Jindal administration drew down the reserve by reducing employer contributions in order to balance the state budget and then using money saved from reduced employer contributions to patch holes in the state budget.

In Iowa, Jindal took what might be considered an ill-advised swipe at President Obama and the U.S. Supreme Court (you know, the court he said several days ago should be abolished) at the Family Leadership Summit over the weekend.

At issue was the court’s ruling on the court’s recent same-sex marriage decision that prohibits discrimination against gays by businesses.

“The next president should do what we did in Louisiana,” he said: “issue an executive order saying the federal government will not discriminate or take action against any individual or business that has a traditional view of marriage.”

But wait. Isn’t the ACLU suing Jindal over his May 19 executive order that he issued after the legislature shot down a bill by Rep. Mike Johnson (R-Bossier City) to pass the Marriage and Conscience Act?

And wait again. Didn’t Jindal recently go a little ballistic over executive orders issued by President Obama?

Yep. As a matter of fact, after calling on the next president to issue an executive order like his, he turned right around and said…Wait. We want to make that a separate paragraph:

            “We’ve got a president who has made it a consistent practice to ignore the Constitution, ignore the laws, issue executive orders,” Jindal said as he promised that if he is elected president, he would immediately rescind Obama’s “illegal” executive orders.

So, on the one hand, he wants to rescind Obama’s “illegal” executive orders while proposing that the next president (presumably himself) to issue an illegal executive order identical to his own “Marriage and Conscience” order—illegal because the governor may issue executive orders pertaining to the executive branch of government only and not on matters that affect private sector action of any kind, according to ACLU executive director Marjorie Esman.

But hey. Once again LouisianaVoice implores you to remember that it was a Jindal operative who told Division of Administration employees in a meeting, “Let’s not be bound by the law.” If that’s not downright Nixonian, then up is down, down is up, and Brenda Lee was acid rock.

Any bets as to who will be representing the state on the ACLU litigation?

We’re reminded of the joke that (and we’re paraphrasing to fit the situation here) Jindal is a lot like a slinky: Not really good for anything but they still bring a smile when you push them down a flight of stairs.

Except Jindal’s not a slinky. He’s more like a train wreck and the damage inflicted when he went off the rails was widespread and massive—and it impacted every one of us.

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State Treasurer John Kennedy on Tuesday told the House Appropriations Committee that the Division of Administration exerts extortion-like tactics against legislators and takes the approach that it should not be questioned about the manner in which it hands out state contracts and that the legislature should, in effect, keep its nose out of the administration’s business.

Kennedy was testifying on behalf of House Bill 30 by State Rep. Jerome Richard (I-Thibodaux) which provides for reporting, review and approval by the Joint Legislative Committee on the Budget (JLCB) of all contracts for professional, personal and consulting services totaling $40,000 or more per year which are funded exclusively with state general fund (SGF) or the Overcollections Fund. HB 30

HB 30 FISCAL NOTES

Kennedy, in a matter of only a few minutes’ testimony, attacked figures provided by three representatives of the Division of Administration (DOA) who objected to the bill because of what they termed additional delays that would be incurred in contract approval and because of claimed infringement upon the separation of powers between the legislative and administrative branches of government.

Here is the link to the committee hearing. While Kennedy spoke at length on the bill, the gist of his remarks about DOA begin at about one hour and 13 minutes into his testimony. You can move your cursor to that point and pick up his attacks on DOA. http://house.louisiana.gov/H_Video/VideoArchivePlayer.aspx?v=house/2015/may/0526_15_AP

That argument appeared to be a reach at best considering it is the legislature that appropriates funding for the contracts. It also appeared more of a smokescreen for the real objections: DOA’s, and by extension, Bobby Jindal’s wish that the administration be allowed to continue to operate behind closed doors and without any oversight, unanswerable to anyone.

DOA representatives tried to minimize the effect of the bill by downplaying the number and dollar amount of the contracts affected (which raises the obvious question of why the opposition to the bill if its impact would be so minimal). The administration said only 164 contracts totaling some $29 million would be affected by the bill.

Kennedy, however, was quick to jump on those figures. “The numbers the division provided you are inaccurate,” he said flatly. “The Legislative Auditor, who works for you,” he told committee members, “just released a report that says there are 14,000 consulting contracts, plus another 4600 ‘off the books.’

“The fiscal notes of 2014 by the Legislative Fiscal Office—not the Division (DOA)—said the number of contracts approved in 2013 by the Office of Contractual Review was 2,001—not 160—professional, personal and consulting service contracts with a total value of $3.1 billion,” he said. “I don’t know where DOA is getting its numbers.

“To sum up their objections,” he said, “it appears to me that DOA and more to the point, the bureaucracy, is smarter than you and knows how to spend taxpayer dollars better than you. That’s the bottom line. They don’t want you to know. This bill will not be overly burdensome to you. Thirty days before the JLCB hearing, you will get a list of contracts. If there are no questions, they fly through. If there are questions, you can ask.”

Kennedy tossed a grenade at DOA on the issue of separation of powers when he accused the administration of blackmailing legislators who might be reluctant to go along with its programs.

“Let’s talk about how the division’s advice on contracts has worked out,” he said. “The Division advised you to spend all the $800 million in the Medicaid Trust Fund for the Elderly. Now they have zero in that account. In fact, they pushed you to do that. Some of you were told if you didn’t do that, you’d lose your Capital Outlay projects. How’s that for separation of powers? How’d that work out for you?

“My colleagues from Division who just testified against the bill are the same ones who told you to take $400 million out of the (Office of Group Benefits) savings account set aside to pay retirees’ and state employees’ health claims. How’d that work out?”

Kennedy didn’t stop there. He came prepared with an entire laundry list of accusations against the administration.

“My colleagues from Division are the ones who told you, ‘Look, we need to privatize our health care delivery system,’ which I support in concept. They sat at this table and I heard them say we would only have to spend $600 million per year on our public-private partnership and (that it would be) a great deal ‘because right now we’re spending $900 million.’ I thought we’d be saving $300 million a year. Except we’re not spending $600 million; we’re spending $1.3 billion and we don’t have the slightest idea whether it’s (the partnerships) working. How’d that work out for you?

“I sat right here at this table and I heard my friends from Division say we need to do Bayou Health managed care. You now appropriate $2.8 billion a year for four health insurance companies to treat 900,000 of our people—not their people, our people,” he said. “There’s just one problem: when the Legislative Auditor goes to DHH (the Department of Health and Hospitals) to audit it (the program), they tell him no.”

Kennedy said that pursuant to orders from DOA, “the only way they can audit is if they take the numbers given him (Legislative Auditor Daryl Purpera) by the insurance companies.

“This is a good bill,” he said. “It’s not my bill. My preference is to tell Division to cut 10 percent on all contracts and if you can’t do it, you will be unemployed. But this bill allows you to see where the taxpayer money is being spent.

“I have more confidence in you than I do in the people who’re doing things right now,” he said.

Kennedy said he was somewhat reluctant to testify about the bill “but I’m not going to let this go—especially the part about separation of powers.

“You want to see a blatant example of separation of powers?” he asked rhetorically, returning to the issue of the administration’s heavy handedness. “How about if I have a bill but you don’t read it. You either vote for it or you lose your Capital Outlay projects. How’s that for separation of powers?”

That evoked memories from November of 2012 when Jindal removed two representatives from their committee assignments one day after they voted against the administration’s proposed contract between the Office of Group Benefits and Blue Cross/Blue Shield of Louisiana.

“Everything they (legislative committees) do is scripted,” said Rep. Joe Harrison (R-Gray), speaking to LouisianaVoice about his removal from the House Appropriations Committee. “I’ve seen the scripts. They hand out a list of questions we are allowed to ask and they tell us not to deviate from the list and not to ask questions that are not in the best interest of the administration.” http://louisianavoice.com/2012/11/02/notable-quotables-in-their-own-words-142/

Rep. John Schroder (R-Covington) asked Kennedy what his budget was to which Kennedy responded, “Less than last year and less that year than the year before and probably will be even less after this hearing. But you know what? I don’t care.

“There’s nothing you can say to get Division to support this bill,” he said. “They’re just not going to do it.

“You can’t find these contracts with a search party. But if you require them to come before you, you can get a feel for how money is being spent that people work hard for and you can provide a mechanism to shift some of that spending to higher priorities.

“Next year, you will spend $47 million on consulting contracts for coastal restoration. I’m not against coastal restoration; I’m all for it. But these consultants will not plant a blade of swamp grass. Don’t tell me they can’t do the job for 10 percent less. That $47 million is more than the entire state general fund appropriation for LSU-Shreveport, Southern University-Shreveport, McNeese and Nicholls State combined.

“Under the law, agencies are supposed to go before the Civil Service Board and show that the work being contracted cannot be done by state employees but that is perfunctory at best,” Kennedy said.

To the administration’s arguments of delays in contract approvals and infringements on the separation of powers, Rep. Brett Geymann (R-Lake Charles) dug in his heels. “This is not a bad thing,” he insisted. “We’re not going to go through every page of every contract unless someone calls it to our attention. It doesn’t matter if it’s 14,000 or 14 million contracts. The number is immaterial. If there’s an issue with a contract, we need to look at it.”

For once, the administration did not have its way with the legislature. The committee approved the bill unanimously and it will now move to the House floor for debate where Jindal’s forces are certain to lobby hard against its passage.

Should the bill ultimately pass both the House and Senate, Jindal will in all likelihood, veto the measure and at that point, we will learn how strong the legislature’s resolve really is.

But for Kennedy, the line has been drawn in the dust.

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It’s curious how a judge can look directly at a clear violation of a law, yet somehow concoct a ruling favorable to the violator and completely disregard the rights of more than 4 million citizens of Louisiana.

That, in our humble (but admittedly biased) opinion was what occurred in the Baton Rouge courtroom of 19th Judicial District Judge Mike Caldwell on Monday.

At the risk of sounding like Bobby Jindal in calling a ruling that went against him “wrong-headed,” we will at least attempt to lay out the details of the case along with the reasons for Caldwell’s ruling so you may decide for yourself if justice was done.

Our lawsuit against the Division of Administration (DOA) and Commissioner of Administration Kristy Nichols was based on four separate public records requests with which DOA took its sweet time in complying—and, in the case of the most egregious violation, did not comply for three full months and then only after we filed our lawsuit.

Caldwell did throw us a bone which, to our satisfaction, had a little meat on it. He held in our favor on one of the four requests, assessed $800 in fines plus court costs and (best of all) held Nichols personally liable.

So, unless there is an appeal, Nichols, and not the state, will be required to write a personal check and the money will not come out of the taxpayers’ pockets (of course the salary of DOA’s staff attorney is picked up by John Q. Public).

But back to the one that sticks in our craw and leaves us perplexed and angry at the manner in which Caldwell bent over backwards to let the state off the hook for the most flagrant violation, one that had he ruled differently, could have cost Nichols thousands more in fines.

In that case, we submitted a rather detailed request for public records on Oct. 14, 2014 relative to the state’s $500 million contract with a California outfit called MedImpact, which is contracted to administer the Office of Group Benefits’ pharmaceutical program.

At the same time, we had a legislator to make a nearly identical though somewhat less detailed request through the House Legislative Services Office (HLSO).

HLSO received an email at 3:15 p.m. on Oct 23 to the effect its records were already downloaded to a CD and would be delivered by DOA. Here is the content of that email:

“You requested the MedImpact contract, Notice of Intent to Contract, ratings, and recommendations for awarding the contract. Please note the contract contains some proprietary and/or confidential information that has been redacted under La. R.S. 44:3.1. We have scanned these records. They are too large to email, so I can bring a CD over. I heard you’re out of the office. Do you want me to drop it off for you or wait until you get back?”

The records were actually delivered to the House offices on Oct. 24, 2014.

For our part, we found it necessary to send a second request on Oct. 19 because DOA had failed to respond to our initial request as required by law. Here is that section of the law, courtesy of the Public Affairs Research Council (PAR):

  • “If not in “active use” when requested, the record must be “immediately presented.” The custodian is required to delete the confidential portion of a record and make the remainder available. If it is unreasonably burdensome or expensive for the custodian to separate the public portion of the record from the confidential portion, the custodian must provide a written statement explaining why. If the record is in “active use,” the agency must “promptly certify this in writing” and set a day and an hour within three working days from receipt of the request when the record will be available.” http://www.parlouisiana.com/citizensrightscard.cfm#exempted

 

Remember that part about “unreasonably burdensome and the requirement for a written statement from the custodian of the record. We will be referring back to that part because Judge Caldwell took it upon himself to determine the unreasonableness of our request even though the state never made that argument. Thus, Judge Caldwell made the state’s argument for them.

When I made my second request, I received a response on Oct. 21 estimating the records would be available “on or before October 31, 2014.” Here is a copy of that email:

  • From: Tameika Richard
  • Sent: Tuesday, October 21, 2014 12:21 PM To: ‘azspeak@cox.net’
  • Subject: PRR re: Pharmacy Benefit Management RFP

“Mr. Aswell,

Pursuant to your public records request, we are still searching for records and/or reviewing them for exemptions and privileges. Once finished with the review process, all non-exempt records will be made available to you. It is estimated the records will be available on or before October 31, 2014.

Public Records Requests

Division of Administration

State of Louisiana

Email: doapublicrecords@la.gov

 

We still had not received the records by the time we filed our lawsuit on Jan. 16, 2015, but almost miraculously, they were delivered to our attorney’s office on Jan. 23, precisely one week after the lawsuit was filed.

So, taking DOA’s promised delivery date of Oct. 31, 2014, and projecting it out to Jan. 23, 2015, discounting about 10 holidays and several weekends (which don’t count), DOA still should have been looking at penalties of upwards of $5,000 on just that one request.

But, Caldwell mused, our request was “broad,” making it difficult for DOA to comply in a timely manner. “I’ve had experience in other cases involving voluminous requests for information where much redaction had to be done (nothing was redacted from the records we received), so I know how difficult it can be for the state to drop everything and meet your demand,” he volunteered. Accordingly, he disallowed our request for damages—again, despite the state’s never having put forward the burdensome argument. But then, why should they when an obliging judge will do it for them?

Moreover, the $800 fine he did assess against Nichols was far less than it should have been for that one violation. The records in that case (travel records for OGB personnel) were first made on October 4, 2014, and we were told the records did not exist. We re-submitted our request in December, but the records were not made available until Feb. 18, 2015.

That fine should have been in excess of $3,000, not $800.

There are several conclusion we can draw from this:

  • Judge Caldwell completely missed—or ignored—the part where DOA promised the records “on or before October 31, 2014;”
  • His honor overrated the difficulty in producing records that already existed and were in the possession of DOA;
  • The judge has little concern for the public’s right to know what its government does, nor he have any sympathy for those who work to report those actions;
  • He simply could not bring himself to impose such a heavy fine against Nichols personally despite the clear intent of the law—so he arbitrarily set a low fine for the one request and simply denied the others.

At this point, we don’t know if the state will appeal Caldwell’s judgment. We can’t imagine Nichols rolling over so easily and writing a check for $800, plus costs and attorney fees. After all, the attorneys work for the state, not her, so what does she have to lose with an appeal?

As for us, we still must meet with our attorneys to decide how to proceed with a partial victory coupled with a stinging loss.

But the question here is just what will it take to get the courts to pay attention to what the state is doing and use the power of the bench to force compliance with the law? How long will the courts simply look the other way to the detriment of the citizenry’s right to know?

We’re told that Judge Caldwell is a good judge and a fair man but we certainly don’t feel as though we received fair treatment before him.

No, we didn’t go to law school and we don’t hold a law license. But we can read and the law is quite clear on the demands placed on governmental agencies to comply with public records laws. There is no ambiguity on that point.

And one other thing: If Kristy Nichols thinks we’re going to fold our tent and skulk away, she’s in for a rude awakening. We’re not going anywhere. There will be other requests and in cases of non-compliance, there will be more litigation.

That’s a solemn promise.

 

 

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One might think the Jindal administration and the Office of Group Benefits (OGB) might have learned something from the Bruce Greenstein fiasco over at the Department of Health and Hospitals (DHH).

Greenstein, you will remember, was the DHH secretary when that $280 million contract was awarded by his agency to his former employer, CNSI.

That scenario could be repeated at OGB.

Even though Greenstein insisted he had established a “firewall” between himself and CNSI, it was subsequently revealed that Greenstein had hundreds of email and text message exchanges with his old bosses during the contract selection process.

That eventually led to Greenstein’s forced resignation and criminal indictment and a civil suit by CNSI the entire messy episodes are slowly making their way through the Baton Rouge District Court system.

Which brings us to OGB and its $35 million-a-year contract with Blue Cross/Blue Shield of Louisiana (BCBS) to administer OGB’s Preferred Provider Organization—a task that apparently proved somewhat daunting to BCBS during the first year of its contract, costing the contractor more than $3.1 million in performance penalties.

One of five contracts with the state totaling $1.2 billion, that three-year contract will end on Jan. 1, and OGB is currently accepting proposals for a new three-year contract.

OGB issued its request for proposals (RFP) on March 13, giving an April 20 deadline for proposals but that deadline was extended to April 30 in an addendum issued on Wednesday (April 22). OGB RFP

LouisianaVoice, however, has learned that OGB Administrator Elise Cazes has been put in charge of the evaluation committee which will make recommendations on awarding a winner of the new contract.

The problem? Cazes was appointed Group Benefits Administrator on June 23, 2014.

Cazes was previously employed by BCBS of Louisiana, raising the possibility of a conflict of interests. http://louisianavoice.com/2014/07/26/ogb-laying-of-24-more-blow-softened-when-ceo-assures-affected-employees-losing-their-jobs-not-like-losing-a-child/

She earns $106,000 per year in her current position.

Not only does she head up the evaluation committee, but she also was given the responsibility of naming other members of the committee. To date, the name of only one other evaluation committee member, OGB Interim Deputy Director Bill Guerra, has been revealed.

At the same time, LouisianaVoice has learned that BCBS in 2013 was fined more than $3.1 million for performance deficiencies in connection with its contract with OGB. BLUE CROSS PENALTIES

BCBS was paid slightly more than $32.2 million to administer the PPO plan for calendar year 2013, the first year of its current contract.

Under terms of its contract with OGB, BCBS could be fined up to $9.7 million for failure to meet a variety of standards. Those include:

  • General Standards (10 percent of total medical administrative fees): $3.52 million;
  • Data Submission Standards: $10,000 per day, or a maximum of $20,000;
  • Mental Health & Substance Abuse (MH&SA) Standards (17.5 percent of total medical administrative fees): $6.2 million.

The actual penalties imposed for 2013, according to OGB’s own report, and the breakdown included:

  • Average speed to answer phones (39 seconds against an industry standard of less than three seconds): $352,325;
  • Claims Accuracy: $352,325
  • Membership Identification Cards Timeliness: $352,325;
  • Data Submission Timeliness: $20,000 (the maximum amount allowed);
  • MH&SA Appeals: $528,487;
  • MH&SA Ambulatory Follow-Up: $528,487;
  • MH&SA Medical Integration: $528,487;
  • MH&SA Member Satisfaction Survey Score: $528,487

TOTAL: $3.19 million.

In explaining the deficiency report, OGB noted that the contract between BCBS and OGB “contains 26 performance goals (called service level agreements, or SLAs) related to customer service and claims processing. During 2013 Blue Cross experienced challenges in meeting a handful of these goals.”

The report indicated that “all issues” had been resolved and that OGB and BCBS were “fully prepared for excellent performance during the 2014 calendar year.”

But LouisianaVoice recently received the following email from a retiree which would seem to indicate otherwise:

“Here’s a laugh; Look at the insurance health cards my wife and I received thus far:

  • Received 3/6/15:  deductible—$300
  • Received 03/09/15: insured deductible—$600
  • Received (date unknown): insured deductible—$600
  • Received 03/20/15: insured deductible—$1800
  • Received 03/20/15: spouse deductible—$600
  • Received 03/27/15: spouse deductible—$600
  • Received 03/27/15: insured deductible—$1800
  • Received 04/04/15: insured deductible—$600. 

“Do I get to pick our deductible from these cards?  You can tell that BCBSLA and OGB are on top of this matter, right? I plan to make a personal visit to the OGB office probably next week and show them this trash and find out what our deductible(s) really are. Do you think they know? I will ask while I am (at the OGB office) for the real executive director at OGB (to) please stand up.

“Our online monthly premium is a different figure from the letter received in the mail today from OGB. I am ready for someone to figure out what’s going on, and do something logically and correctly.  Health insurance is a serious matter for people and they are playing with us. Everything needs to be corrected and cleaned up for all state employees (retirees and actives).

“OGB use to be correct on these technical matters and they had in the past straightened out BCBSLA for me several times on what was to be paid, etc. Now OGB has gone crazy too! I guess it’s from all the new executives at the top.” 

 

 

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The absentee Jindal administration, already under fire for its fiscal train wreck that has legislators scrambling in attempts to cover a projected $1.6 billion budgetary shortfall, had a grenade dropped into its lap on Wednesday in the form of a LAWSUIT against the administration and the Office of Group Benefits (OGB) over the method in which OGB attempted to implement adverse changes in benefits and premiums for 230,000 state employees, retirees and dependents.

Baton Rouge attorney J. Arthur Smith filed the petition for declaratory and injunctive relief in Baton Rouge District Court on behalf of six plaintiffs who are either current state employees or state retirees.

At issue is the way that OGB attempted to increase premiums and reduce benefits for members of OGB last August without complying with the state’s Administrative Procedures Act (APA) which requires promulgation (a formal declaration of intent and public hearings) of any rule changes.

Listed as plaintiffs are Marilee Cash and Aileen Hendricks of East Baton Rouge Parish, Nancy Dickie and Debra Thornton of Lafourche Parish, Rebecca McCarter of Ascension Parish and Dayne Sherman of Tangipahoa Parish. Named as defendants were the State of Louisiana, the Office of the Governor, the Division of Administration (DOA), and OGB.

They claim to be members of an organization called Louisiana Voices of Employees and Retirees for Insurance Truth and Equity, (LA VERITE). They say they chose the name because La verite is French for Truth.

The petition tracks the record of the Jindal administration and chronicles the manner in which the plaintiffs claim that the administration, abetted by the legislature, frittered away a surplus of nearly $2 million at the time Jindal took office, repeatedly used one-time revenue to cover recurring expenses, repealed the popular Stelly tax plan, passed numerous business tax breaks totaling some $367 million, approved $20 million in private school tuition and home schooling tax credits and scrapped the sales tax that businesses previously paid on utility bills.

The rollback of the Stelly plan took place despite warnings from the Institute on Taxation and Economic Policy (ITEP) that the move would cost the state more than $1.8 billion in lost revenue over a three-year period from fiscal year 2010 through fiscal year 2012, the petition says.

The lawsuit says that the repeal of the Stelly plan provided a “substantial tax savings for upper income Louisiana” and accounted for about 75 percent of the state’s budget shortfall during those three years. “This does not take into account the billions of dollars the State of Louisiana hands out in business tax exemptions and incentives ever year that have gone unexamined by lawmakers to determine if they serve legitimate public objectives or are simply wasteful luxuries that the state can no longer afford,” it says.

Citing further examples of what it describes as fiscal mismanagement, the petition notes that from July 1, 2009 through June 30, 2010, the administration spent $2.4 billion in private consulting contracts. The following year, it said, that amount increased to $4 billion. The suit cited the Office of Contractual Review’s annual reports for 2009-2010 and 2010-2011 as its source.

Plaintiffs, in their petition, say that the administration announced in January of 2011 its intention to explore the privatization of OGB’s Preferred Provider Organization (PPO) even though a Legislative Auditor’s report predicted that premiums would increase because of marketing costs for a private provider, the necessity of a private provider’s turning a profit, the requirement that private health insurance companies pay premium taxes and the requirement that private companies must purchase reinsurance.

Despite that, the lawsuit says, then-Commissioner of Administration Paul Rainwater promised that in the event of privatization, benefits would remain the same and premiums would not be increased.

Blue Cross/Blue Shield of Louisiana won the contract to administer the PPO and the new plan went into effect on Jan. 1, 2013. That same year, the administration actually reduced rates by 7.11 percent and the next year another reduction of 1.77 percent went into effect.

“While this saved money for the employees,” the plaintiffs said, “it reduced the state’s required premium (matching) payments by about twice as much, thereby reducing the state’s obligation to pay into the system even though medical expenses were increasing by about 6 percent. The rate reductions, while saving the state money it could then apply to the budgetary shortfall, it meant that OGB could no longer cover expenses from current revenue and had to dip into its reserve fund, which was about $500 million when BCBS took over operations.

OGB has been spending millions per month more than it has been taking in in premiums and the Legislative Fiscal Office has said there is a risk that the reserve fund balance could be zero by the end of the current fiscal year (June 30).

“Gov. Jindal adamantly opposed every attempt on the part of legislators to deal with the financial crisis through tax increases,” the petition says, and he “capitalized on the financial crisis of the state to advance an ideological agenda that called into question the rationale for government to perform basic services on a wide range of issues.”

In listing three causes of action, Smith said the state and OGB violated the state’s APA by attempting to make “substantial unilateral modifications to both benefits and costs under the OGB health plan.”

Some of the changes included:

  • Significantly increasing out-of-pocket maximums for all health plan options;
  • Increasing deductibles for all health plan options;
  • Increased co-pays 100 percent for plans with co-pays;
  • Increasing the out-of-pocket maximums for prescription drug benefits by $300 (from $1,200 to $1,500, a 20 percent increase);
  • Eliminating out-of-network benefits for some plan options;
  • Requiring prior authorizations for certain medical procedures;
  • Removing all vision coverage from health plan options.

The plaintiffs point out that on Sept. 30, 2014, only seven days after an attorney general’s opinion said OGB had violated the APA with its unilateral modifications of benefits, OGB issued a press release “stating its intention to publish an emergency rule reinstating the legally insufficient Aug. 1 changes.”

OGB’s emergency rule, the petition says, “was an apparent effort to retroactively ‘cure’ the illegalities found by the Attorney General in his Sept. 23 opinion. Moreover, the fact (that) the changes would not become effective until March 1, 2015, belies the claim that (there) was an ‘emergency’ which necessitated less than full compliance with the APA.”

OGB did finally comply with the APA by conducting a public hearing on Dec. 29, 2014, in the middle of the Christmas and New Year’s holiday season and after the enrollment period had already been closed, causing the plaintiffs to call the hearing a “sham.”

“With all of the proposed changes, including significant changes (made) during the enrollment period, the haste in which they were handled, and the timing of the Dec. 29, 2014, public hearing, it was very difficult for state employees and retirees to intelligently evaluate their options under these proposed plans and (to) make informed choices,” the plaintiffs said.

The petition also claims the state violated due process and contract clauses.

It claims that state agencies can only change promulgated regulations by the process of the promulgation of a new rule or regulation and that if a change is not properly promulgated in accordance with the APA, “it is not a legally effective pronouncement by the agency (not a law), and therefore, none of the abortive attempts in August, September, October and thereafter should be viewed as having changed the existing law.

“Since the contracts clauses prohibit the state from passing a ‘law’ that retroactively impairs the obligations of contract, OGB can only legally change the benefits program when it adopts through proper procedure and final rule to that effect, and that final rule cannot constitutionally be given retroactive effect.”

The petition is seeking declaratory judgments that:

  • OGB’s health care plans are in violation of the Louisiana APA;
  • Defendants have violated the Constitution of the State of Louisiana;
  • OGB has violated its fiduciary duties as prudent administrators.

It also seeks injunctive relief enjoining the applications of the OGB health care plan modifications.

The lawsuit was assigned to 19th JDC Judge Janice Clark.

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