New claims of possible bid rigging and unfair trade practices within the Office of Group Benefits (OGB) and the Division of Administration (DOA), have surfaced in a two-page letter sent to the U.S. Attorney’s office and to LouisianaVoice this week.
OGB is a multi-billion dollar agency which administers health benefit claims for state employees, retirees and their dependents.
If true, it would be the third time in less than two years that insider negotiations have been conducted between a potential bidder, OGB and DOA preparatory to DOA’s issuing a request for proposals (RFP).
A copy of the unsigned, undated letter also was addressed to State Rep. Katrina Jackson (D-Monroe) and to Louisiana Inspector General (IG) Stephen Street, though the writer expressed skepticism over any anticipated action by the IG’s office.
“I am writing as a concerned citizen who has had enough,” the letter said. “I write out of concern that there is something fundamentally wrong with the operations of the Division of Administration. I included the Inspector General out of protocol, but not with the expectation that he will act.”
The letter accused DOA, through OGB of engaging “in a pattern of behavior that has to be, at the very least, unethical” in its dealings with a South Carolina company.
“Within the past few months, the staff of the Office of Group Benefits has been instructed to conduct multiple meetings with a business called BenefitFocus (which is in the business of group health eligibility activity).
“The problem with these meetings is that the blatantly expressed reason for the meetings is the preparation of an RFP on which the company will then bid.
“In fact, in the last meeting,” the writer said, “there was an open discussion on how to either construct an RFP that will yield the company an insurmountable advantage or (that would) make the company a ‘sole source’ vendor that will eliminate competition.”
BenefitFocus is headquartered in Charleston, S.C. and its web page describes it as “the country’s leading provider of benefits technology.” It claims more than 18 million members and 300,000 employers who manage “all types of benefits” through the company which “provides employers, insurance carriers, consumers and government entities with cloud-based technology to shop, enroll, manage and exchange benefits information.
“BenefitFocus clients include small, medium and large employers from all industries, as well as the nation’s top insurance companies,” the website says.
Among the clients listed were Blue Cross/Blue Shield in several states, including Louisiana.
The anonymous writer described the activity between OGB and BenefitFocus as a “pattern,” saying such events have occurred at least twice before.
“The first instance was when OGB (by order of DOA) was looking for a financial advisor. The eventual successful vendor was Goldman Sachs, who had participated in multiple OGB meetings before the bid process and who even had the audacity to help write the RFP,” the letter said.
On April 13, 2011, CNS learned that Goldman Sachs had been active in discussions about the planned privatization of OGB as far back as October or November of 2010. That was about the same time that the idea of privatizing OGB was first floated to then-OGB CEO Tommy Teague in a meeting between then-Deputy Commissioner of Administration Mark Brady, Teague and four representatives of Goldman Sachs.
Teague was fired two days after LouisianaVoice published that story.
When it came time to open the proposals for the project, Goldman Sachs was the only bidder and stood to receive $6 million in fees for its services, whether it was successful in finding a buyer for OGB or not.
Gov. Bobby Jindal eventually rejected the Goldman Sachs bid after details of the Wall Street banking firm’s involvement were made public and Blue Cross/Blue Shield of Louisiana was ultimately awarded the contract to serve as a third party administrator over OGB’s preferred provider (PPO) organization. BCBS also administers other claims for OGB under a separate contract.
“Earlier in 2012, the letter said, “OGB staff was directed to have multiple meetings with Extend Health, a company in the Medicare Advantage exchange business. The staff attended the meetings and helped answer background questions.
“In later activity with the company, an RFP was drafted (a very narrow drafting) that gave Extend Health a nearly sickening advantage in the bidding,” the writer said. “Of course, Extend Health won.”
Extend Health, the largest private Medicare exchange in the U.S., offers access to multiple Medicare plans for 2013. Retirees who enroll in a Medicare plan through the Extend Health exchange are enrolled in a health reimbursement arrangement (HRA) and received HRA credits of $200 to $300 per month from the state up to a maximum of $2,400 per year for single coverage and $3,600 for family coverage.
The credits may be used to pay premiums for Medicare Advantage plans, Medicare Part B. Medicare Part D prescription drug plans, Medigap plans and dental and vision plans.
LouisianaVoice has made public records requests for copies of all correspondence between OGB, DOA and BenefitFocus.
Let’s see how long it takes DOA to invoke the ol’ “deliberative process” exemption.
Louisiana Voice 
These bastards aren’t even subtle in the subterfuge. The whole lot of them should go to jail.
I miss Governor Blanco…hell I even miss Mike Foster.
I draw the line at Foster…he opened Pandora’s box.
And Foster was also the one responsible for the start of firing people just because their opinion did not agree with his!!!!!!
Mr. Aswell,
This is certainly immoral. Is it also illegal?
Well let’s hope the U.S. Attorney at least looks at this. Gawd, these people need to go now!
In my opinion, it is illegal. It negates the competitive bidding process, and gives the favorable company an unfair advantage. Granting “sole source” means they are the only company that can receive the bid, for the needs of the state agency requesting this status, thus eliminating other competitors. Is there no violation of the “closed door” public meeting policy? Should not the public be invited to participate in this bidding/sole source process or does the state OBG feel the public is not capable to make decisions on their own, only the state with the citizens tax dollars at stake? Explain. Why S Carolina? Is there not another insurance agency/investment firm within the state that can represent? Why export LA tax dollars ($6M) to an out of state entity? LA politics at its best!
To bring the general public in on the decision-making process would invite chaos. We elect and appoint our officials and entrust in them the ability to conduct state business ethically and legally. When that trust is violated, it is up to the legal system to remedy the situation.
As for why an out-of-state firm, there are rumors that Blue Crose/Blue Shield of Louisiana is experiencing problems processing the medical claims once handled quickly and efficiently by OGB staff. Perhaps there is a need to hire yet another firm to assist BCBS in what it was contracted to do.
there are rumors that Blue Crose/Blue Shield of Louisiana is experiencing problems processing the medical claims once handled quickly and efficiently by OGB staff.
Oh the irony in that.
Are you really espousing to “In Louisiana We Trust” banner? Someone has to file a complaint for any investigation to begin. Just saying.
If The IG does not look into this and act we should march to the office. Also The US attorney General had better have their noses in there as well.
I was being facetious about Foster 🙂 All I heard when I moved back was about how he was a successful ” businessman”. Instead of “tax and spend” he just spent, and spent, and spent.
Unsigned letters have no value. There is no credibility to them. If you want to make an accusation then have the intestinal fortitude to stand behind that accusation. The last several times I received such letters I filed them appropriately- in the garbage.
Normally we’d agree with you and not write a story. We don’t usually give credence to unsigned letters. But given this administrations oft-demonstrated penchant for firing anyone who dares have an independent thought and given the obvious fact that this person possesses inside knowledge, we made an exception. There is no question that this person could not afford to give his/her name for fear of reprisals.
Also, given the history of DOA in working closely with Goldman Sachs to develop an RFP for a financial advisor—an RFP on which Goldman Sachs was the only bidder—we felt the letter had merit.
I agree about one having the intestinal fortitude and signing the accusation. What concerns me is the retribution one might encounter in doing so. I think that is why this stuff never really comes out. If this person is reporting something that is wrong, then why risk a livelihood by putting it out with your name? At lease anonymous will get a ball rolling. Keeping silent will perpetuate the wrongdoing. This type of thinking is why things are as corrupt and will remain corrupt in this state. Thank God I didn’t vote for Jindal either time he ran, but it seems he is making Edwin Edwards look like a saint. Jindal is in it for himself. I will vote to get him the hell out of Lousianan as fast as I can.
Signred or unsigned, this information cannot be ignored !
Someone who works for OGB told me a couple weeks ago about how a North Carolina company was about to take over the department and how many jobs had already been eliminated. Now Jindal is not only trading good government jobs for poorly paying, lower quality privatized jobs that will do a less efficient job, he is also increasing the unemployment in Louisiana by giving the work to residents of another state while also trying to force the poor and middle class to pay higher taxes.
I really hope the Attorney General picks up on this. It could maybe be the blow that impeaches Jindal. The fact that the letter is unsigned makes it ALL THE MORE IMPORTANT. It means that an OGB employee needs his or her job too much to engage in his constitutional right to freedom of speech. This is very sad, but it is Jindal’s way.
Just like in the movies, the script is followed to perfection; they only give us what we clamor for, repeatedly so our due.
But what’s missed is that BCBS can’t perform the same task that OGB state workers were doing better without gwtting outside help. So counting this help how much did the state save? ZERO
why would the Governor take a department that has gone from operating in the red to a $500 million surplus and lay off the state workers and give a contract to a outside company? I’m scratching my head !! Sounds to me like at the very least there is some mighty heavy back scratching going on. If not, some wallets getting a little fat. No telling how much behind the doors deals are being made with the DHH privatization!!! I just wonder what would happen to this HOSPITIAL takeover deal if all the health care workers that are being laid of and then rehired with the new company just deceided to just go ahead and take their layoffs, draw unemployment benefits and not go to work for the new company as is expected of them. I wonder where they would get 6500 or so health care workers overnight. just some food for thought!!
AHH ! They catch one with their pants down and no way one can run .