As legal setbacks begin to mount for Gov. Bobby Jindal with the indictment of a former Jindal cabinet member coupled with an attorney general’s opinion that recently announced changes to state employee group health plans are most probably illegal, one political observer intimated to LouisianaVoice that Jindal’s political career “may be coming unraveled” even as he remains fixated on the White House.
The attorney general’s office on Tuesday (Sept. 23) released a legal opinion that could signal a devastating blow to the administration’s plans to overhaul health benefit plans offered through the Office of Group Benefits (OGB) to some 230,000 state employees, retirees and dependents.
The opinion was requested on Sept. 9 by State Rep. John Bel Edwards (D-Amite), who wrote, “…The Office of Group Benefits proposes to make major plan changes, effective Jan. 1, 2015, which changes conflict with existing provisions contained in the Louisiana Administrative Code.”
LouisianaVoice has learned that word of the request was leaked to the administration after seeking and receiving a copy of the request through a public records request and Jindal dispatched Executive Counsel Thomas Enright to Attorney General Buddy Caldwell’s office to lobby the state’s chief legal officer to issue an opinion favorable to the administration.
When it became evident that Caldwell’s opinion would not be favorable to the administration, Commissioner of Administration Kristy Kreme Nichols capitulated in advance when she said last Friday that the state would go through the rule-making process spelled out in the Administrative Procedure Act (APA).
“But they’ve already put the changes out there,” Edwards said. “They implemented changes in the prescription drug co-pay in August without observing the proper legal procedure and would be deemed null and void if challenged in court. It will be impossible to do this (the remaining proposed OGB changes) by Jan. 1. The process would have had to have been started as early as June and as late as July of this year in order to become effective by the time the new plans will go into place.
Edwards was not the only legislator to voice criticism of the administration just two days before the House Appropriations Committee is scheduled to meet on Thursday to hear comments on the proposed health care coverage changes.
State Rep. J. Rogers Pope (R-Denham Springs), a member of both the Appropriations Committee and the Joint Legislative Committee on the Budget, said he has consistently opposed the governor’s intervention into the operations of OGB both in committee and on the House floor.
“The heavy hand and somewhat sleight of hand of the Jindal administration to make such a drastic change to the health care benefit program that will impact some 230,000 people in Louisiana is a disgrace and a slap in the face for the many who have contributed to this health care program and expected it to provide basic healthcare coverage,” he said.
Pope urged those affected by the proposed changes to attend Thursday’s 10 a.m. meeting in the State Capitol to provide comments and to ask questions.
Former State Sen. Butch Gautreaux (D-Morgan City) also weighed in on the latest development. Gautreaux, who served on the OGB board of directors during his final term in the Senate, said he felt as though Jindal privatized the agency because he “couldn’t be embarrassed by the best managed and most cost effective health insurance department in all 50 states.”
Gautreaux said the OGB board began asking for answers as soon as Jindal indicated his desire to privatize the agency. “When the board couldn’t get the administration to a board meeting, I called a special meeting of the Senate Retirement Committee, again asking the governor to inform us of his intentions,” he said. “Paul Rainwater (then Commissioner of Administration) attended reluctantly but could only tell us that government had no business in running a health insurance agency. He couldn’t tell us why because the logical answer would be cost savings but the opposite was the truth. Our complaints fell on deaf ears because the business was already promised.”
Gautreaux said the “corruption began when Timmy Teepell (Jindal’s original Chief of Staff) instructed Tommy Teague (the OGB Executive Director until teagued by Jindal when he balked at the privatization of OGB) to write a tightly written RFP (request for proposal)…for northeast Louisiana so that only one company could meet the (bid) criteria.”
“Jindal’s OGB mess goes much deeper than we thought,” Edwards said. “The mismanagement of the $500 million OGB fund balance is just the beginning. Jindal’s mean-spirited solution to this self-created is being forced down the throats of state workers illegally.
“I believe this failure to comply with the APA speaks volumes about the quality of the plans. This administration knows that they are unfairly shifting the costs to state workers and teachers. Why else would they go to such great lengths, even breaking the law, to avoid public input and legislative oversight?”
Of the belated decision by the administration to comply with the law, Edwards said, “It’s too little, too late, from an administration that has consistently disregarded its legal obligations and fiscal duties to the people of our state.”
Under the APA, the procedure for the adoption of rules requires a minimum of 100 days which puts the administration under the gun to meet a tight deadline. Other requirements include:
- Notice of the intended action and a copy of the proposed rules at least 90 days prior to taking action on the rule;
- A statement, approved by the Legislative Fiscal Office, of the fiscal impact and the economic impact of the intended action;
- The name of the person within the agency who has responsibility for responding to inquiries (in this case, Ansafone temporary phone bank workers in California and Florida);
- The time when, the place where, and the manner in which interested persons may present their views;
- A statement that the intended action complies with statutory law, including a citation of the enabling legislation;
- A statement concerning the impact on family stability, on child, individual or family poverty;
- Publication of a notice at least once in the Louisiana Register containing the full text of the proposed rule at least 100 days prior to the date the agency will take action on the rule;
- Upon publication of the notice, copies of the full text of the proposed rule shall be made available upon written request within two working days;
- Notice of the intent to adopt, amend or repeal any rule and the approved fiscal and economic impact statements shall be mailed to all persons who make timely requests of the agency no later than 10 days after the date the proposed rule change is submitted to the Louisiana Register;
- All interested persons must be afforded a reasonable opportunity to submit data, views, comments or arguments—orally or in writing.
For a complete list of requirements of the APA, go here: apa
The attorney general opinion said the significant changes proposed by the administration “constitute a modification of the health care plans set forth in Title 32 and also has the effect of repealing and/or rendering many of the rules contained in Title 32 obsolete without following the required procedures established by the Louisiana Administrative Procedure Act.”
The APA “requires that agencies comply with the rulemaking procedures set forth in the act when adopting rules,” it said, adding if OGB failed to follow APA procedures which specify that no rules adopted on or after Jan. 1, 1975, is valid unless adopted on substantial compliance with APA, “then the validity of the plans becomes questionable.”
Additionally, the opinion said, “Louisiana jurisprudence has found that rules unlawfully adopted are invalid and unenforceable.”
The opinion noted that the Legislative Fiscal Office found that significant changes to the health plans include:
- Increasing out-of-pocket maximum for health plan options;
- Increasing deductibles for all health plan options;
- Increasing co-pays 100 percent for proposed health plans with co-pays;
- Increasing the out-of-pocket maximum for the prescription drug benefit by $300—from $1,200 to $1,500 (a 20 percent increase);
- Subjecting the prescription drug benefit to categories that will result in an increased cost for preferred and brand name drugs and a decreased cost for generic drugs;
- Implementing other various prescription drug benefit changes including high compound management, over utilization management and the exclusion of medical foods;
- Requiring prior authorizations for certain medical procedures;
- Eliminating the out-of-network benefit for some health plan options;
- Application of standard benefit limits for skilled nursing facilities, home health care services and hospice care services;
- Removing all vision coverage;
For a copy of the complete attorney general opinion, go here: ATTORNEY GENERAL OPINION
While we have not been in discussion with Gov. Jindal or Kristy Kreme regarding the latest legal setback, we feel we can safely predict that Jindal will call the opinion “Wrong-headed,” while Kristy Kreme will put on a happy face and assure us that everything is just fine and there’s nothing to worry about.
Louisiana Voice 
Can u say Titanic? LOL
Jindal’s war against reality does not seem to be going very well, with the legal double whammy he received today. If Greenstein makes like a canary, perhaps it will bring an even swifter end to the tyrant, whose political career is in its waning days in any case. Today is an encouraging day for Louisiana citizens. The icing on the cake is that a poll showed that David Vitter has slipped. If we can avoid that bozo things may really start looking up.
Amen, Veritas!
We can only hope!
+1
The irony of this latest fiasco is THE LOUISIANA REGISTER is under the DOA, so they knew these rules needed to be followed and blantantly disregarded them! I definitely believe that the changes to the insurance plans would be substantive changes! This administration never ceases to amaze and embarrass me! My thanks Tom for coming out with this info the day it made news.
Jindal will still get his way. The legislators are weak.
You may be right in the end, Frank, but at least Reps. John Bel Edwards and J. Rogers Pope, along with a few others, are TRYING to get all this underhanded, unethical, & illegal stuff out in the open so they can expose this for what it is and hopefully help State retirees & employees. I’ve wondered all along how Jindal and OGB were getting by with all these changes, particularly the ones that happened effective Aug. 1st, IN THE MIDDLE OF A PLAN YEAR AND CONTRACT! How can that possibly be legal? I’m no attorney, but even I knew that. I wasn’t aware of all these other factors that come into play which make these impending changes, which I hope and pray to God never happen, illegal either. Appointed by Jindal or not, it’s darned time for the Inspector General to get involved in this debacle and stop this HEINOUS LAWBREAKING AT THE EXPENSE OF STATE RETIREES & EMPLOYEES, not to mention the other debacles, i.e., the State Police fiasco, the contracts that have been awarded with no regard for the law whatsoever. THIS IS JUST LIKE THE OLD WILD WEST WHERE THE BAD GUYS JUST STEAL, ROB, AND DO WHATEVER THEY PLEASE AT THE EXPENSE OF THE INNOCENT WHILE THE “SHERIFF”, IN THIS CASE THE INSPECTOR GENERAL, JUST LOOKS THE OTHER WAY!
SOME legislators are weak but are discovering their backbones (and other body parts). But We The People are not cowed. Believe that and stay tuned.
If the legislators want votes from state employees and especially RETIREES, they should be strong and for once do the right thing!
I’m so sick of little booby trying to stick it to the state employees! Somebody needs to stick it to him! Take away his helicopter and make him sit in traffic! I don’t think he can be a better governor, he is what he is, a greedy politician! GOD help us all!
Amen to this!
So who is going to take legal action to force DoA/OGB to roll back the illegal August 1st changes and stop enrollment in the new illegally developed plans? AG Buddy? Jon Bel? The RSEA? Another attorney representing state worker(s) and retiree(s)?
Please don’t wait for the other one to file, compete to see who can be first or best to stop this sociopathic (rules don’t apply to us) farce of an administration from wasting any more of our money on malfeasance!!!!!
already on it, OSW.
I sincerely hope that’s true, earthmother. We definitely need a miracle and a savior at this point.
Glad to hear it, earthmother!
I wonder if this means they will back off on the sweeping changes and make an effort to go through the correct legal process prior to making changes, or will they keep on the current path and force someone to take them to court? Shall we call it the Edmonson Process? I’m going out on a limb here and guessing OGB will not be filing suit, just as the State Police Retirement Board did not jump on the Edmonson bill. State employees will fear being Teagued if they actually participate in the comment process. I mean, they already Teagued just about the whole OGB department. We have already figured out Mr. Ethical Transparncy thinks the rules don’t apply to him. Will this be another fiasco where the hearing is controlled by Jindal’s handlers, thus stacking the room with supporters while rank and file teachers, state employees, and retirees are locked out of the capital? Maybe they will just forget to bring any red comment cards to be filled out in opposition.
Jindal don’t care about anyone but his rat looking self . He’s the worst governor he will get his it’s a matter of time hurting his state employee some of them don’t make big bucks that’s the ones he’s going to hurt . Jindal got away !
Fascinating that two huge smackdowns against the piyush machine take place in one day thanks (and many, many thanks) to our (recently-minted Republican) Attorney General. Any possibility that The Empire Strikes Back at the mouth who branded them all stupid? And consistently polls about three percent in the GOP presidential sweepstakes? Maybe the train is being derailed and the baggage is being unloaded before the real journey towards a presidential nomination takes off.
This is great news, but keep sending those emails & go to the capital tomorrow morning if you can! 2015 IS an election year!!
Let’s hope the current process/cycle can somehow be broken as these things pile up:
1. Ignore the law and simply act.
2. When challenged, send the Commissioner of Administration out to be quoted in the press that this is the best of all possible times in the best of all possible worlds and nothing is wrong, ever was wrong, or ever will be wrong during this entire administration..
3. Get sued.
4. Send Faircloth into court.
5. Lose in court because of step 1
6. Repeat step 1
That pretty well sums it up!
Thanks, Tom for continuing to keep us informed on these developments. We sure can’t expect such reporting from the advocate (deliberately lower case as it does not live up to its name)
I’m sure we won’t hear anything about it in the Alexandria Town Talk. They very rarely, if ever, have Baton Rouge news.
Regarding this issue AND the Greenstein indictment: WHAT DID THE GOVERNOR KNOW AND WHEN DID HE KNOW IT?” These administration officials don’t make a move without the Governor’s Office knowing about it, especially if the move involves $200 million a pop!
Thanks to Tom for keeping us abreast of the actions of this rouge governor and his cronies.
The march goes on against Pi. Hope he does jail time, big time.
This literally makes me sick at my stomach.
Well, the latest is that Kristy et al are striking back, and they’re particularly ticked off at people like Tom and vocal public employees: “The reports were released to counter allegations in blogs and among some state workers that Gov. Bobby Jindal and his staff balanced the state budget by raiding state insurance program reserves.” http://theadvocate.com/news/10358242-123/group-benefits-reserve-hit-by
Keep up the pressure.
Note that there is practically nothing new in the article, Ben, other than this allegation (that bloggers alleged the OGB reserves were raided to balance the budget).
I only regularly read 4 blogs, but none of them, including this one, had statements from the owners of the blog to that effect. Some, including this one, quoted others making that allegation, but to my knowledge and recollection none of the bloggers, themselves, made the allegation that the reserve fund was directly raided to balance the budget. So, I view this as a case of making up an allegation and then providing a defense for it.
What was said on this and other blogs was exactly what Ms. Nichols admits – lowering premiums did help balance the budget She could not defend saying otherwise. Since the state pays 75% of the premiums, it saved 9% of what it was paying OGB and was able to use the difference in other parts of the budget. Her number was much smaller than LFO’s and it is not clear how much of that had to do with means of financing since her number is general fund only and we don’t know from the article about LFO’s.
It is hard to imagine how reducing premiums could not have caused a decline in the reserves since they are used to pay the increased claims to which Ms. Nichols attributes the decline, but the article doesn’t present information upon which we can assess this.
It is also hard to imagine that claims alone could have risen so dramatically and so quickly to have accounted for the bulk of the decrease. The only way I can reconcile such a dramatic increase in my mind is if BCBS operated with administrative costs no greater than OGB (with equal cost efficiency), but had richer and easier to access benefits and/or had to pay a huge backlog of claims being held by OGB – in other words that OGB was not paying claims as effectively and efficiently as BCBS is – I have seen no evidence to support such a position.
Once again, we have a newspaper article that leaves as many questions unanswered as answered and most of us in the dark.
Stephen – Thanks for teasing out the brass tacks of the situation. After reviewing some news stories, I’ve discovered that legislators–not bloggers or state workers–have been the most vocal on the depleted-surplus matter: http://www.nola.com/politics/index.ssf/2014/09/louisiana_legislators_have_a_h.html#incart_river. One inference to be drawn from the legislators’ observations is that they knew what the administration was doing, regardless of how it finessed the accounting side of things. As legislators worked on the last two annual budgets, they were apparently aware that some of the funds they were allocating had been squirreled away from OGB through the temporary premium decreases. That said, I would like the administration AND the legislature to answer formally for this mess. Nichols retroactively filing APA paperwork isn’t a remedy; it’s another illustration of how dysfunctional, if not corrupt, things are. And asked on Sept. 24 by Jim Engster whether he would pursue legal action on OGB, Rep. John Bel Edwards demurred, saying that any such action would have to be taken by OGB policyholders. Not very heartening.
Let me preface this by saying that Stephen will have a much better idea of how their funding is set up than I do, so this is just a thought and a shot in the dark. It would be useful to know how the money gets placed in the OGB fund to start with. The reason I am saying this is that my office was funded through a tax on insurance premiums. The law which established the funding said that the money would be collected and deposited in a fund in the State Treasurer’s Office. We didn’t get all the money, of course, just what OPB and the legislature let us have through the budget process. At the end of the year, the unused money in this fund would revert to the state general fund, just like any unspent money in our budgetary allocation. Obviously, the OGB funds were allowed to stay in their fund at the end of the year for them to build up a surplus. Several years ago, however, special legislation was passed that let the administration sweep that money out of our fund prior to the end of the fiscal year. The money over our budget allocation would be gone in October rather than June 30. It was very generically written, but applied to just about any statutorily dedicated money. Is there any way they could have been sweeping some of this money as it was put in under the guise of that legislation? The 500 million wasn’t a static number. It just stands to reason that each year some money was put in and some was taken out. The rapid depletion makes me think that maybe no money was going in, or was taken out as fast as it was put in. Somebody in the budget office might could answer this question. I have also been retired going on two years, so am not up on what is going on now, nor would I ever have been knowledgeable about OGB funding.
Maybe it’s the old pyramid scam they have been playing all along with money going in by state employees and papments slaking to pay health care parties since those of us retired and receiving Medicare and it pays primary, then there is a little longer pay time for OGB or BCBS to come up with a 20% or less payment. Time will tell we just need to continue to follow the money. I believe Jindal will throw kristy creme under the bus faster than you can get a switch. And maybe she needs throwing.
I would have to go back and look at the bills, but, remember that, while the general authority is broad, the funds being “swept” are listed in the bills sweeping them and the OGB fund would have been listed among them had it been “swept”. I don’t recall that being the case and, even if our policy makers are fond of bending facts to their advantages, I don’t think Ms. Nichols would have lied outright about this.
You are right, somebody in the budget office or somewhere can explain EXACTLY why the rapid decline in the reserves occurred and it is hard to figure why they haven’t. Maybe they will today.
@Ben: John Bel did demur, as you say, but remember his reason was that he does not have legal standing to sue since he is not an OGB member. I agree with your “Yes, indeed” below in response to No name please.
Stephen, I would have thought the funds would have been specifically listed as well, but I am pretty sure the last bill I am thinking about (would have been around 2013 or 2012) referred to the funds as those funds which are statutorily dedicated but which revert to SGF at the end of the year. Maybe it listed the statute numbers without naming the funds. I just know that even though we tracked legislation, we almost missed it. Now that I am thinking about it, that provision should have knocked out the use of OGB funds since they appeared to be able to keep their funds from year to year, although this administration has not set the bar very high on following the law. The reason I thought about that funding source is that the use of that “reverted” money always seemed to be a little shady to me, although I will be the first to admit that the accounting at that level was way over my head. There were many years they got around $100,000 from our fund, but the truth is, if you were an outsider wanting to follow the money, I’m not sure where you would look. Certainly not HB1 or our year end financial report. I am guessing there would be some sort of debit entry on behalf of the state treasurer’s office showing the funds set aside in our fund were removed, but who would be responsible for accounting for the use made of that money once it was removed? I would have thought that any use of that money mid-year would go through JLCB, but I really don’t know if it was.
There were separate bills listing the funds whose balances went into the Overcollections Fund. So, to track them you had to go to those separate bills – real transparency at work.
With regard to the Overcollections Fund, generally, I, and anybody with any sense about how things ought to be done, always opposed this concept as it has been used in recent years. Reversions are supposed to be just that – reversions to the general fund. If history shows more is being collected for specific purposes than can legitimately be used for the purposes. the dedications should be changed. This Overcollections thing not only “sweeps” money dedicated for specific purposes into a fund used for general purposes, but also muddies the financial waters for anybody attempting to understand the state finances and simply should not be a way of doing business. Doing it once and using the money for nonrecurring expenses might be justified in an emergency situation. Using it as a recurring source of revenue to fund the budget year after year is just plain stupid, in my humble opinion.
If Edwards says that action would have to be taken by OGB policy holders, the obvious solution is that the legislature needs to use the same health care plan we do.
Yes, indeed.
http://theadvocate.com/news/10365994-123/nichols-paints-dire-group-benefits
The morning report. Notice how Commissioner Nichols paints the picture of a disaster that has been in the making for 3 years while conveniently avoiding the acceptance of any responsibility for it. How does she explain the insolvency of something not only her responsibility as commissioner of administration, but under her direct control.
I loved Representative John Bel Edwards comment today at the appropriations meeting when he told Kristy Kreme that nothing she or Jindal does is legal unless it is challenged! He definitely has my vote for governor!
JBE has jumped right into this on behalf of state employees and retirees. Treasurer Kennedy has voiced his concerns. I wonder what Vitter, the weasel in waiting, has to say about this train wreck. Probably depends on who pays him the most.
God Bless both of them for their diligence! Somebody needs to look out for state employees and retiree’s because this administration is doing everything they can to put them in cardboard boxes under the interstate.
Wasn’t that just priceless? I’ll say one thing for Kristy Kreme. The lies roll off her tongue as quickly and easily as hot icing! And she’s great, when asked a question, at uttering meaningless sentences just to burn up the legislator’s allotted time since they only got 3 minutes to question her & the rest of the Jindal puppets. I had to leave the meeting early, so they might have had more time later to question her more in depth, but it really doesn’t matter because she just keeps repeating the same garbage over and over again.
To clarify the above post, I was referring to John Bel Edwards’ questions to her being priceless! And there were a few others, like J. Rogers Pope, Ken Havard, Katrina Jackson, Cameron Henry, Chris Broadwater, Greg Cromer, Jack Montoucet, Lance Harris, Jeff Thompson, & Joe Harrison who also posed some good questions. I noticed right before I left that Ms.Kristy was fooling with her cellphone & appeared to either be texting or reading a text. Probably her boss, wouldn’t you think?
“This is a self-manufactured crisis you are now saying is an emergency,” said state Rep. John Bel Edwards, D-Amite..”
A quote from the updated ADVOCATE article that sums the situation up to a T.
http://www.nola.com/opinions/index.ssf/2014/09/how_gullible_does_bobby_jindal.html
A great piece by Bob Mann.
I meant to cc you on this email.