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Archive for September, 2014

84-year-old Widow Files Pro Se Lawsuit Against Auctioneer Licensing Board over sale of her residence, rental property

Posted in Boards, Corruption, Courts, Ethics, Governor's Office, Lawsuits on September 27, 2014| 16 Comments »

By ROBERT BURNS

Everyone by now is aware that Gov. Jindal has been concerned with little else since he became Governor of Louisiana beyond self-promotion and his own political advancement to the White House.  What isn’t so obvious to most Louisiana citizens is that many of his appointees to Louisiana boards and commissions are equally ego-driven with little or no regard for the citizens they are supposed to serve and protect.  Prime examples are Gov. Jindal’s appointees to a little-known board overseeing auction regulation in Louisiana, the Louisiana Auctioneer Licensing Board (LALB).

Now, if it were only that such ego-driven appointees have included a past chairman who was “demoted” to mere member while another “consumer” member simultaneously resigned as evidence of travel voucher irregularities on the parts of both members surfaced, that would be one thing.  If just the mere fact that certain LALB members believe that they have a right to freely engage in racist roll calls, that would be one thing.  It would also be one thing that, despite the fact that LouisianaVoice readers may revel in hearing a lambasting of Gov. Jindal, it nevertheless is an act of unprofessionalism in a public meeting (anger over Jindal’s stripping of LALB per diem payments notwithstanding).  The member doing so, LALB Vice Chairman James Sims, is the same one who made the first “I’s here,” roll call response at the first link above.  Sims went further on the preceding audio clip to relay on November 5, 2012 (the day before the Presidential election) that “it ain’t gone happen” regarding Republican presidential nominee Mitt Romney (had he prevailed) appointing Gov. Jindal to a cabinet position.

It would be yet one more thing that these members felt they had the right to permit its sole employee to vacation all over the country and routinely conduct personal business while declaring herself to be “on the clock,” thus prompting Louisiana Legislative Auditor Daryl Purpera to release this damning report.  That report, in turn, was subsequently followed by this report by the Louisiana Inspector General’s Office (OIG) in which the sole employee lied to investigators about taking vacations while being “on the clock.”  The OIG likely figured there was no chance LALB members would accede to their recommendation of “appropriate disciplinary action up to and including termination,” and, in fact, OIG officials would have been right as LALB members unanimously approved a third pay raise for its executive director four months after the release of the report.  Also, two of those three pay raises transpired, as noted in Mr. Purpera’s report, during a period of salary freezes for rank-and-file Louisiana state workers.   Further proof that Jindal facilitates his LALB appointees who, in turn, facilitate irresponsible payroll practices is evidenced by board members and legal counsel relaying Jindal has said “all is fine and you cannot recover any funds.”

No, all of the preceding egregious acts entail general ego-centered individuals who feel as though they have “power from on high” vested in them through their appointments by Gov. Jindal.  Essentially, they merely entail their beliefs that they have little or no fiduciary duty regarding auctioneer licensee funds with which they have been entrusted.  While being oblivious to their fiduciary duties certainly affects auctioneers, the public, because of a lack of coverage by the media, is understandably unconcerned by the practices.  The general public’s concern is (or at least should be) heightened, however, when Gov. Jindal’s LALB appointees are so brazen and arrogant and dismissive of their core duties and function that they literally force an 84-year-old widow to file a pro se lawsuit to compensate her for the LALB’s overly-protective stances regarding auctioneers.  Such stances have routinely transpired in the six (6) years I’ve observed the LALB, very much to the detriment of the general public whom they ostensibly serve to protect.  Thus far, auction victims have just “licked their wounds” and left disappointed at what they often correctly perceived as a very corrupt industry.

That was all, however, before a lady named Ms. Betty Story entered the LALB’s den of foxes.  In a mere five-page pro se lawsuit filed in 19th JDC in Baton Rouge on August 27, 2014, Ms. Story alleges that she encountered a “nightmare” regarding her November 17, 2012 auction.  She relays that her auctioneer, Marlo Schmidt, at a time when she was 82 years old, failed to explain to her that she could place reserves on certain of her items being auctioned.  She outlined the items which she specifically wanted to set reserves upon:  a mirror ($300), an Ethan Allen wetbar ($4,000), a set of sterling silverware ($5,000), and an antique saddle ($5,000).  She further averred that Schmidt didn’t inform her that she would owe 40% of the final bid prices as commissions, in addition to a 10% buyer’s premium assessed against buyers (which itself lowers bid amounts).  Additionally, Ms. Story avers that Schmidt pleaded with her to cancel two real estate listings with ReMax (including her personal residence) so that they could be included in her auction.  In fact, Ms. Story avers that, as an incentive for her to do so, Schmidt “promised” her $42,500 for a rental home she owned and $120,000 for her personal residence.  Based on his “promises,” Ms. Story relayed she appealed to ReMax to cancel her listings, and ReMax reluctantly agreed as a favor to her for her past business. Accordingly, the two real estate properties were included in the auction with Ms. Story anticipating $162,500 minimum for the two houses based on Mr. Schmidt’s “promises.”  The only way any auctioneer can “promise” a result is if he or she is willing to buy the properties personally if the bids fail to reach that pre-set amounts at auction.

Ms. Story further averred in her lawsuit against the LALB that Schmidt went so far as to buy her rental property prior to her auction, and he advanced her $25,000 ($17,500 short of the “promised” amount) so that she could move into an assisted living facility ahead of the auction and thereby be exempt from having to pay a deposit on her room.  The subsequent auction was an unmitigated disaster, with Schmidt’s nephew ending up high bidder on the rental home.  His nephew then adamantly refused to honor his bid (likely because his nephew was a shill bidder, which is illegal in Louisiana but many auctioneers, as well as the LALB, ignore that illegality and actively encourage the practice).  In fact, LALB Vice Chairman James Sims, during the LALB hearing on the matter, said of that situation, “This board could easily think something else,” (of the fact Schmidt’s nephew dishonored his bid — clearly referencing shill bidding without saying the dirty words).  Although Ms. Story had to threaten to sue Mr. Schmidt for the balance of the $42,500 purchase price on the rental home, he did finally remit the balance for the home that he already had title to even prior to auction!  However, her personal residence auction was a flop, resulting in a “no sale” rather than the $120,000 he’d “promised” her.  Furthermore, because of the fact no reserves were set on her high-end items and Schmidt instead had Ms. Story bid (and pay commissions) on those items in order to retain possession of them, Schmidt submitted a final bill to Ms. Story for $201.11 as her “net proceeds” from the sale of her personal items!  In other words, Ms. Story’s commissions for retaining her treasured items exceeded the proceeds of the items Schmidt sold, which constituted the vast majority of her personal belongings!  So, Schmidt claimed Ms. Story owed him $201.11 for the “privilege” of having most of her personal belongings vacated from her home at what Ms. Story contended were below bargain basement prices.

As if all of the preceding events aren’t bad enough, Ms. Story had to leave the assisted living facility after only three nights because of the disastrous auction results, and she was charged $1,500 for her three-night stay.  Ms. Story filed a complaint with the LALB, and her LALB hearing transpired on September 10, 2013.  Like many other auction victims, Ms. Story naively believed the LALB would be sympathetic to her plight and work to remedy the wrong she’d endured.  Even though the LALB’s own attorney, Anna Dow, relayed there was “clear deception” and that “the auction should have been conducted in a very different manner,” and one of the board members, Darlene Jacobs-Levy, an attorney with 44 years of practicing law said, “Mr. Schmidt, you clearly owe Ms. Story more than the $1,300 you’ve offered her to settle this matter,” the LALB once again officially found auctioneer Schmidt not guilty of any auction violations.  After the hearing’s conclusion (as reflected on the video), Ms. Jacobs-Levy instructed Schmidt to “go out in the hallway and work this out with Ms. Story.” She also informed Schmidt that she felt the 40% commission he charged Ms. Story was “usurious.” Instead of “working it out with Ms. Story in the hallway,” Schmidt, with the hammer gone from over his head, proceeded straight to his vehicle and back to DeRidder and refused to have subsequent negotiations with Ms. Story.  Consequently, Ms. Story had to sue Mr. Schmidt in small claims court in DeRidder to try and recover at least some of her damages.  More importantly, however, is the fact that, by officially finding him “not guilty,” the LALB effectively blocked Ms. Story from being able to pursue Schmidt’s $10,000 bond which is a requirement for auction licensure in Louisiana.  No bonding company is going to pay a claim when the regulatory body of a state has failed to find an auctioneer guilty of an auction violation.  Hence, Ms. Story’s lawsuit seeks to recover the $10,000 from the LALB that she would have otherwise been able to recover from Mr. Schmidt’s bond had the LALB found him guilty.  Of course, to find him guilty, LALB members would need to have shelved their self-centered, steadfast resolves to stay popular among auctioneers irrespective of the consequences to victims like 84-year-old widow Betty Story.  In failing to do so, they exhibited many of the same traits of the gentleman who appointed them:  Gov. Bobby Jindal!

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2010 RFP for OGB contract for NE Louisiana may have been crafted to give advantage to favored vendor over competitors

Posted in Campaign Contributions, Contract, Contracts, DOA, Ethics, Fraud, Governor's Office, Health Care, Office of Group Benefits, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals, State Agencies, Teague on September 25, 2014| 22 Comments »

A directive to craft a request for proposals (RFP) in such a way as to favor a specific vendor during a meeting of top administrative officials in 2010 may have violated the state’s bid laws and opened the door to charges of bid-rigging, according to a former State Senator who spoke with LouisianaVoice on Wednesday.

That meeting may also have been instrumental in the decision by then-Commissioner of Administration Angéle Davis to resign her position in early August of 2010.

Former State Sen. Butch Gautreaux (D-Morgan City), who was the State Senate’s representative on the Office of Group Benefits (OGB) Board of Directors, told LouisianaVoice that the meeting was held to discuss an RFP from vendors to provide health care coverage to state workers in northeast Louisiana.

Gautreaux said he was told by then-OGB Executive Director Tommy Teague that he (Teague) was directed by Timmy Teepell to “write a tightly-written RFP” so that only one company could meet the bidding criteria.

Teepell was Gov. Bobby Jindal’s Chief of Staff at the time of that meeting. Besides Teague and Teepell, also in attendance at that meeting were Jindal’s Executive Counsel Steve Waguespack who would succeed Teepell as Chief of Staff, and Davis.

Teague, contacted Wednesday by LouisianaVoice, confirmed the substance of Gautreaux’s story, though he said he was by now somewhat vague as to who was in attendance. “That happened so long ago,” he said, “but the gist of what he says is correct.”

Davis announced her resignation on June 24, 2010, though she stayed on until Aug. 8 when she was succeeded by Paul Rainwater. Teepell resigned in October of 2011.

The vendor that Teepell was most likely referring to was Vantage Health Plan of Monroe which currently holds two separate contracts with OGM worth a combined $53 million.

One of those contracts, for $45 million, is a one-year contract to provide a health maintenance organization (HMO) and hospitalization provider network plan and runs from Jan. 1, 2013 through Dec. 31 of this year. The second, for the same time period, is for $8 million to provide a Medicare Advantage plan for eligible OGB retirees. That plan, similar to ones offered by Peoples Health and Humana in South Louisiana, would be available only to those retirees eligible for Medicare. Retirees hired prior to 1986 and who have never worked in the private sector long enough to qualify for Social Security would not be eligible for the latter plan.

Vantage Health Plan has held 11 state contracts in all, totaling nearly $325 million at least as far back as former Gov. Mike Foster’s second term. The first, for $6.7 million, was for three years, from July 1, 2000, to June 30, 2003, to provide medical services for active and retired plan members.

Under Foster and into former Gov. Kathleen Blanco’s term, Vantage held two contracts: one for $46 million that ran three years, from July 1, 2003, to June 30, 2006 to provide an HMO program, physician and hospital provider network, and a one-year contract, from July 1, 2006 to June 30, 2007, was for $30 million to provide HMO services for state employees.

In Jindal’s first year in office, 2008, OGB issued a $9.925 million contract that ran for 30 months, from July 1, 2008, through Dec. 31, 2010, for Vantage to provide a Medicare Advantage plan for eligible retirees.

The following year, a $20 million contract for only 10 months—from Sept. 1, 2009, to June 30, 2010—was awarded to Vantage to provide an HMO plan to OGB members.

In 2010, Vantage received its biggest contract for $70 million for only 22 months, to run from July 1, 2010 to Aug. 31, 2012 for an HMO plan. That contract was one of four contracts with Vantage totaling $161 million that overlapped between July 1, 2010 and June 30, 2013.

Other contracts included:

  • One running from Jan. 1, 2011 to Dec. 31, 2012 for $14 million for Medicare Advantage plan for eligible retirees;
  • One for $10 million for only three months, from Sept. 1, 2012 to Dec. 31, 2012 for a medical home HMO plan for members;
  • One for $65 million for two years, from July 1, 2011 to June 30, 2013 for an HMO plan.

The obvious question is: Why Vantage?

For openers, Vantage and its officers have been active in writing checks for state politicians.

Gary Jones, president of Vantage, has personally contributed at least $20,000 to state politicians since 2003, including $10,000 to Jindal and $5,000 to former Gov. Blanco.

Michael Ferguson, a director of Vantage Holdings, Vantage Health Plan’s predecessor, gave $4,000 to state office holders, including $1,500 to Rep. Frank Hoffman (R-West Monroe) who serves as vice chairman of the House Health and Welfare Committee; Matthew Debnam, also a director of Vantage Holdings, $1,000 to Hoffman, and Terri Odom, also a Vantage Holdings director, $500 to Hoffman.

But it is Vantage Health Plan itself that is the biggest player in lining the pockets of state politicians.

Vantage, since Jan. 1, 2003, has kicked in no less than $61,900 to candidates. These include $1,000 to Jindal, $2,000 to former legislator Troy Hebert who now serves as director of the Office of Alcohol and Tobacco Control (AGC), $1,500 to House Speaker Chuck Kleckley (R-Lake Charles), $16,000 to Insurance Commissioner Jim Donelon and $5,000 to Sen. Mike Walsworth (R-West Monroe), among others.

While these contributions are all legal, they do raise the recurring issue of influence buying at all levels of government. And it is the $70 million contract in 2010 that raises the issue of possible bid-rigging. And while there may well have been no such attempt, if Teepell did indeed issue instructions to Teague to craft the RFP in such a way that only Vantage would meet the bid criteria, then the administration crossed a serious legal line for which it must be held accountable.

It was subsequent to that 2010 meeting and only weeks before the contract was awarded that Davis submitted her resignation and Teague was gone the following year on April 15, 2011.

This claim should spark investigations by the Inspector General’s office, the Attorney General, the East Baton Rouge District Attorney’s office and the U.S. Attorney’s office—the latter because federal Medicare funds were involved in several other Vantage contracts.

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State’s three major enforcement agencies exhibiting common swaggering attitude of smugness; accountability non-existent

Posted in ATC, Lawsuits, State Fire Marshal, State Police on September 24, 2014| 12 Comments »

  • The Louisiana Office of Alcohol and Tobacco Control (ATC).
  • The Louisiana Department of Public Safety (DPS).
  • The Louisiana Fire Marshal’s Office.

From liquor permit rejections, wholesale firings of agents that may have been racially motivated and amateurish investigative tactics at ATC to a multitude of questionable activities at the State Fire Marshal’s Office to attempts to sneak a hefty retirement benefit through the legislature for the state’s top cop, Louisiana’s three major enforcement agencies appear to be riddled with procedural matters bordering on federal EEO violations, investigative cover-ups and back door politics which sometimes blur ethical and legal lines and which reach all the way into the governor’s office.

The latest incident involves an ATC agent who apparently sent a teenage undercover operative into Hook’d Up Bar and Grill in Hammond in an attempt to purchase alcohol. The girl, age 17, was accompanied by a 21-year-old female. The older woman purchased a drink but waitress Ashleigh Burdett refused to comply with the 17-year-old’s repeated requests for another cup so the drink could be divided.

Burdette said she refused the requests, telling the girl, “I can’t do that because you’re a minor.”

Fortunately for Burdette and the establishment’s owners, a video camera captured the entire sequence of events, including the older customer leaving the table to go the restroom just after 10 p.m., whereupon the 17-year-old picked up the older woman’s drink and walked outside with it.

ATC agent Jeff Barthelemy then entered the establishment and wrote a warning to the business and a $500 citation to Burdette, both for serving a minor.

“The fact of watching my staff carding her, telling her no, going as far as to give two checks to each individual showing that the underage person was not served, it’s kind of disheartening,” said Jennifer Mier who co-owns the business with husband Mark Mier.

Mark Mier, interviewed by LouisianaVoice, said he was scheduled to meet with ATC Commissioner Troy Hebert on Wednesday in an attempt to get the matter ironed out but Mier was still upset at the idea of sending a 17-year-old undercover operative in an attempt to purchase alcohol.

“The legal age for purchasing alcohol is 21 so why couldn’t they have sent a 19- or 20-year-old in instead of a 17-year-old. That was a very ill-advised thing to do with someone that young. I would never have done that.”

Hebert, who has been the subject of several stories by LouisianaVoice for the manner in which he arbitrarily fires employees, particularly African-American agents and for his insistence that all employees rise from their desk and offer a cheer “Good morning” when he enters a room, defended the practice of using operatives that young. “We use 16- and 17-year-old operatives to make sure that we’re only catching the worst violators out there.”

Huh? Did he really say that?

“I appreciate people that are there to keep us safe,” Jennifer Mier said, “but when the line gets crossed, when someone with authority chooses to use it just because they decide they’re going to, that’s not acceptable.

As strange as Hebert’s comment about “catching the worst offenders” was, the most curious comment by him was when he said, “ATC goes above and beyond to make sure we don’t use trickery. At ATC, we’d actually like to not write any violations across the state.”

That is odd indeed, given the fact that Hebert keeps a log of how many citations and how much in fines each agent issues and writes up agents who do not produce the number and amounts expected.

By established procedure, two agents are supposed to be involved in each case when underage operatives are used to attempt to purchase alcohol and at least one agent has to witness the sale.

But Hebert has fired so many agents that there are not enough to go around for each bust so ATC contracts with civilians such as the 21-year-old woman who accompanied the teenager into Hook’d Up. The contractors are paid an hourly rate but they are expected to produce an illegal sale or ATC will cease using them for undercover operations. Accordingly, the contractor is under pressure and has the incentive to ensure that an illegal sale will be made in order to continue collecting the hourly fee.

But what Hebert did to the owners and waitress at Hook’d Up pales in comparison to what he has done to a decorated retired Army Reserve major who has been attempting to open a restaurant and bar in the New Orleans French Quarter.

Tracy Riley, you see, is black and as LouisianaVoice has previously reported, Hebert has lost racial discrimination lawsuits and currently has others pending after vowing and then making good on that promise to rid his department of blacks.

So intent on carrying out his denial of her license was he that he even went so far as to file an official complaint with her commander when prior to her retirement that she had the audacity to show up at ATC headquarters to check on her permit—in uniform. In a Sept. 30, 2013, letter to Maj. Gen. Peter Lennon in Belle Chasse, Hebert cited what he called “unbecoming conduct” demonstrated by Riley for appearing at Hebert’s offices in full military uniform.

In a meeting at ATC headquarters, Barthelemy told Riley that being granted a permit was a privilege, not a right. He then admonished Riley and her son, saying that when they were in the ATC building, they were to conduct themselves “respectfully.”

As Riley and her son were leaving, Barthelemy asked Riley if she was on active duty and the name of her commanding officer.

This from an enforcement agent whose agency which works closely with State Fire Marshal Butch Browning who drew criticism and even resigned temporarily only to be cleared of wrongdoing over reports that he was wearing military ribbons and medals from World War II and the Korean Conflict on his dress uniform—and Browning never even served in the military.

Something’s a little out of kilter here, folks, and LouisianaVoice will be delving into the Browning Ribbongate issue in the coming days.

“I trust that the unbecoming conduct demonstrated by this military member will be handled accordingly and respectfully request to be notified of any corrective action taken,” Hebert wrote.

Riley was subsequently reprimanded for wearing her uniform while on personal business but the violation certainly didn’t equate to the war crimes offense Hebert made it out to be—especially given the timing of his Sept. 30 letter to Gen. Lennon.

Less than three weeks earlier, on Sept. 12, 2013, the French Quarter Business Association (FQBA) sent its own letter to Hebert complaining about Riley’s establishment, the Rouge House Supper Club, located at 300 Decatur Street.

Jeremy DeBlieux, president of FQBA, said in his letter to Hebert that he understood that a special event permit was granted to Riley to operate during the annual Essence Festival in July of 2013 but that the Rouge House “did not adhere” to provisos set forth in the temporary permit.

“We believe the owner’s blatant disregard to the city’s special event provisos and the unpermitted operations to date has indicated their intent,” DeBlieux said. “The business has clearly operated as a nightclub, rather than a supper club. Nightclub is not a permitted use at this specified location. We believe, with good reason, as a business association in the French Quarter, we should formally oppose the granting of alcoholic beverage permit to The Rouge House.”

So there you have it. Alcohol is strictly taboo in the New Orleans French Quarter.

On Dec. 5, Hebert denied Riley’s permit in a letter that gave as the reasons for denial as:

  • Operating without a valid state alcoholic beverage permit;
  • Misstatement or suppression of fact in application by failing to report managers and provide verification of suitability, failure to report owner Dale Riley (Riley’s husband) and provide affidavit showing that he meets the qualifications and conditions as set out in statute and failure to provide information on landlord as required.
  • Failure to submit fingerprints of members (of) the company.

“If the aforementioned reasons(s) for denial is corrected within 60 days, you may request rescission of this decision,” Hebert wrote.

Riley said she has repeatedly requested meetings with Hebert to discuss her plight and to request a probationary permit but he has refused to meet with her. Moreover, she says she overheard an employee tell an agent that Hebert did not want to talk to her.

She did meet with Barthelemy who told her his only reason for meeting with her was to inform her that when she was in the ATC building she was to be respectful, Riley said. “He would not even discuss my application.”

ATC did conduct surprise inspections of The Rouge House but found the establishment either closed with no activity. In one undated report, agents noted they had conducted “surveillance” for 36 minutes and found the business closed. It is somehow difficult to imagine it taking 36 minutes to determine an establishment is closed. The report said the ATC agent “spoke with owner of Star Steak and Lobster in reference to the target location. Pictures attached.” A sticky note was attached to the report which said, “Pictures show no activity.” The sticky note contained the initials “TAR.”

On another occasion, a “full walk-through” was conducted by the agent from 12:45 a.m. to 1:00 a.m. Again, the report, like all the others, was not dated. “Upon arriving at the location I found it open for business,” the agent’s report said. “I completed a full walk-thru of the location and found no alcohol on the premises. There were no customers in the location either. The kitchen was open and food was available to be purchased.”

Despite receiving only two complaints (actually four separate statements from individuals relative to the two complaints) that The Rouge House was operating, ATC spent considerable man-hours and expense in conducting at least 21 separate surveillance and investigative assignments only to find the business closed on each occasion.

One of the complaints was from an individual claiming to be a graduate of Xavier University who also appeared to be not only an authority on permits and licenses but clairvoyant as well in saying the club “will be serving alcohol on Friday, Aug. 16 (2013) with NO alcohol permit or license.”

Riley, unaware of the close association between Gov. Jindal and Hebert (Hebert’s wife is the Jindal children’s pediatrician) and of the fact that Jindal appointed Hebert after his ill-fated attempt to frame former Commissioner Murphy Painter, attempted to obtain help from the governor’s office but we all know how that went.

Now she is seeking justice through the courts. She filed a formal appeal in June in Civil District Court in New Orleans.

And if history is any indication, the administration is well on the way toward yet another in a long line of legal defeats.

LouisianaVoice, in the coming days and weeks, will be taking closer looks at the state’s three major enforcement agencies.

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Former DHH Secretary Greenstein indicted on nine counts of perjury over $183M CNSI contract; can prosecutors flip him?

Posted in Contract, Contracts, Corruption, Courts, DHH, DOA, Governor's Office, Legislature, Legislators, RFP, Request for Proposals, Senate, State Agencies on September 23, 2014| 16 Comments »

Former Department of Health and Hospitals (DHH) Secretary Bruce Greenstein has been indicted by the Louisiana Attorney General’s Office on nine counts of perjury stemming from a lengthy investigation of his involvement in the awarding of a $183 million contract to a company for which he once worked.

Greenstein is accused in four counts of lying under oath to the Senate and Governmental Affairs Committee during his confirmation hearings of June 8 and June 17, 2011 and five counts of lying to an East Baton Rouge Parish Grand Jury on June 3 of this year.

Greenstein was appointed head of DHH in September of 2010 and was terminated by the governor’s office on May 1, 2013 when it was learned that the FBI had begun an investigation of the state’s contract with Client Network Services, Inc. (CNSI) as far back as January, 2013 when records of the state’s contract with the company were subpoenaed.

When the FBI probe became known in late March, Jindal immediately cancelled the CNSI contract and Greenstein announced his “resignation” a short time later, though he was allowed to remain on the job until May 1.

The indictment that came down on Tuesday (Sept. 23) is the first time that it was revealed that Greenstein did not resign, but was terminated and apparently allowed to announced that he had resigned.

There was no immediate word of the status of the federal investigation of CNSI and Greenstein but legal observers said Tuesday that pressure will most likely be applied to Greenstein to cooperate with the investigation.

Assistant Attorney General David Caldwell said that while the indictment is for perjury, “it really stems from the entirety of the activity in the awarding of this contract” and the grand jury will remain empaneled to do additional work on the case.

At his confirmation hearings, Greenstein first refused to tell legislators who had won the contract to provide Medicaid billing services for the state but under unrelenting pressure and scolding from legislators, as well as threats of his not being confirmed, he finally admitted that CNSI, his old employer from Washington State, was awarded the contract.

Greenstein, however, insisted that he had built a “firewall” between himself and the selection process and had not intervened in the deliberations, nor had he had any contact with CNSI officials.

It was subsequently learned from emails and text messages subpoenaed by the committee that he had had thousands of text messages and hundreds of phone calls from CNSI officials during the bidding and selection processes.

It was also learned that Greenstein had learned that CNSI was initially not qualified to bid on the contract and that he had added addendums to the bid requirements that made the company eligible.

Counts 1and 2 of the indictment cited his testimony under oath in a response to a question from Sen. Rob Marionneaux that he did not know if CNSI was unqualified under the original request for proposals and became eligible only after the addendum was added to the bid specifications.

Counts 3 and 4 involved his responses to Sen. Karen Carter Peterson about his emails to and from CNSI founder Adnan Ahmed relative to the addendum that made CNSI bid eligible.

The remaining five counts, all for lying to the grand jury, involved charges that he lied about email communications with CNSI, about a directive to DHH personnel forbidding contact with bidders and whether or not the directive applied to Greenstein himself, about his false testimony regarding legal advice he said he received from DHH staff attorney Stephen Russo, and his false testimony regarding his confrontation with DHH and administration officials prior to his June 17 Senate testimony and their efforts to learn the truth about his contacts with CNSI.

Interestingly, none of the counts was for bid-rigging or public corruption, leaving observers to speculate while waiting to see what other charges might be forthcoming as the grand jury continues its investigation.

For the full text of the indictment, go here: INDICTMENT

Of course, he has not been convicted of any of the charges as yet but if prosecutors are able to flip Greenstein, things are going to get pretty interesting around the State Capitol and in Washington State in the coming weeks and months.

And it’s not very likely that he will take the full brunt of the charges if he has committed any wrongdoing. That is, if he can implicate others further up the line.

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Smackdown! Attorney General opinion on OGB proposals hands Jindal administration another stinging legal setback

Posted in ALEC, American Legislative Exchange Council, Attorney General, DOA, Ethics, Governor's Office, Office of Group Benefits on September 23, 2014| 47 Comments »

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.

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