If the Retired State Employees Association (RSEA) goes forward with filing a legal challenge to the proposed changes to health care coverage for state employees, retirees and their dependents, it may have a significant hook on which to hang its case in a report submitted by a company contracted by the Jindal administration which attempted to base its plan changes at least in part on that same report.
If you’re confused, you should be for Commissioner of Administration Kristy Nichols laid the decision to make the changes in the Office of Group Benefits (OGB) plan at the feet of Buck Consultants but the firm’s report is in direct contradiction to the testimony of Nichols at the Sept. 25 hearing of the House Appropriations Committee.
The proposed health benefit changes are so radical for some 230,000 OGB members that the RSEA has scheduled a meeting with a law firm which has tentatively agreed to take the case on a pro bono basis, says Frank Jobert, RSEA’s executive director. http://theadvocate.com/sports/southern/10465870-123/retirees-considering-legal-challenge
RSEA is looking at the failure to go through the necessary legal procedures for approval of changes in plan benefits and “diverting” money from the OGB fund balance which has dwindled from a high of more than $500 million to less than half that amount and which is projected to go broke next year if changes are not implemented.
Nichols has consistently blamed the financial condition of OGB on rising costs she attributed to the Affordable Care Act (Obamacare). Critics, however, point to three straight years of decreased premiums that allowed the state to commit fewer state funds to its 75 percent match which in turn allowed the administration to divert those monies to cover budget holes even as the reserve fund continued to shrink.
Nichols was consistently evasive when asked during last month’s hearings of the House Appropriations Committee, three times managing to evade the direct question of who the actuary was who recommended decreases in premiums over three consecutive years.
Finally, State Rep. John Bel Edwards (D-Amite), who had already asked the question once without getting an answer, observed, “In fiscal 2013, there was a 7.11 percent reduction in premiums followed by 1.8 percent even though health care costs were going up by 6 percent.”
In questioning Nichols during the Appropriations Committee hearing, Edwards had accused the administration of taking a “self-manufactured crisis” and turning it into an emergency “because we had a fund balance that was healthy.
“We had OGB members who were relatively happy with the plan and today we have an unhealthy fund balance and OGB members who are very unhappy.”
He then asked again, “What actuary told you these reductions were sound?”
Nichols, who was already halfway out the door—before the committee meeting adjourned—on her way to taking her daughter to a One Direction boy band concert in the New Orleans Smoothie King Arena where she watched from the luxury box assigned to Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana), replied, “Buck Consulting recommended a 2.25 percent decrease for calendar 2012.”
Well, not exactly. When one reads pages ii and iii of the summary report of the Buck Consultants Actuarial Valuation at 7/1/2013, a starkly different message is conveyed.
http://www.doa.louisiana.gov/osrap/library/afr%20packetts/2014OGB_OPEBValuationReport.pdf
On Page ii, under the CLAIMS AND PREMIUM EXPERIENCE heading, the report says:
- “Overall, the plan had favorable claims experience, resulting in a gain. The gain was offset by losses associated with premiums not increasing as expected. See Substantive Plan discussions below.”
Under SUBSTANTIVE PLAN on Page iii, the report says:
- “It is our understanding that the Plan premium rates, used both to determine contributions from the various employer agencies and to set contributions required from the retirees, were set artificially low to draw down the OGB’s reserve fund… (emphasis added.) As noted above, premium rates were again lower than expected for this year’s valuation.”
Moreover, an email from Buck Consultants representative Tom Tomczyk to OGB CEO Susan West dated Sept. 28 (three days after the Appropriations Committee hearing) says, “The 2.25percent (rate decrease) was not a recommendation for January 1, 2012, but only used to validate our projections for the Fiscal Year 2012-2013. We did not recommend a decrease of 7 percent effective August 1, 2012, or an additional decrease of 1.77 percent effective August 1, 2013. Further, we were not asked to provide any recommended rate adjustments for any fiscal year beyond what we provided for Fiscal Year 2012-2013.”
In fact, according to that same email, Tomczyk said Buck Consultants was asked in late 2011 for its projection of the indicated rate increase for Fiscal Year 2012-2013. “At that time, based on the most recent claims information available, we projected a rate increase (emphasis added) of 1.75 percent needed as of July 1, 2012.”
An earlier email, on Nov. 12, 2013, from Tomczyk to West’s predecessor, Charles Calvi, who served as CEO of OGB from Jan. 9, 2012, to Jan 31, 2014, concluded, “We have not been asked to provide recommendations for rate adjustments since calendar year 2012.”
The consulting firm’s report, dated July 2014, noted significant decreases in several areas of net liabilities to OGB and gains in areas that benefitted the agency’s bottom line, according to two financial experts who were shown the report.
“As I see it, the Buck report directly contradicts the way Ms. Nichols has presented this,” one said. “Unless I do not understand plain English, Buck says, ‘Overall, the plan had favorable claims experience, resulting in a gain.’ How can a clear gain be a loss by anybody’s definition?”
He noted the following:
- The actuarial accrued liability (AAL) for July 2013 was $103 million less than what had been projected in July of 2012, meaning that OGB was in better shape on July 1, 2013, than had been predicted. The AAL also increased by only $157 from last year when it had been projected to increase by $260 million.
- The amount paid in claims was less than predicted and actually decreased the AAL by $195 million—and would have decreased it even more had premiums not been less than projected.
- The report clearly attributes a loss to OGB of $388 million—totally a result of reduced premiums through Fiscal Year 2012 and that this loss was increased by additional decreases in premium rates in Fiscal Year 2013.
- The report, on Page iv, minimizes the effect of the Affordable Care Act (ACA) on these calculations and points out that the ACA provided improvements in Part D coverage.
“I am frankly shocked at this report and what has been said about this whole thing by others,” he said. “Either I am totally stupid or it blows all previous explanations away.”
Edwards, commenting on the contents of the Buck Consultants report, said, “Nothing in this supports Kristy Nichols.”
Louisiana Voice 
Wasn’t Ms. Nichols under oath when she provided this misinformation (lies) as cited above? Is SHE – like former DHH head Barry Greenstein – guilty of perjury??
She was never placed under oath. That may change, however, if she is called to testify again.
I would love to see her try to wriggle out of this lie. Why does she have to be “under oath” to testify truthfully? Doesn’t she have an obligation as a government official to be truthful when carrying out her duties? And remember, this administration has zero tolerance for fraud. Orange really would be a fitting color for her.
She would claim that she did not remember what was on the report, citing that she “reads” so many. She would not admit that the preparation she goes through has nothing to do with truth seeking. In an age of technology, I think that it is past time to eliminate the fiction of “plausible deniability.”
I do think we need to be fair. Mr. Greenstein’s first name is Bruce, and he’s guilty of nothing until a conviction is handed down by a jury which, being honest, I do not believe will happen. Tuesday was the first day of a hearing in the CNSI civil trial that I missed but, judging by Ms. Shuler’s Advicate article, things sure look to continue to be going poorly for the state. I can tell you for a fact that I was in Judge Kelley’s courtroom when David Caldwell (after fighting for months to keep records sealed) had to reluctantly admit to Judge Kelley that the Feds had ceased their investigation and inquiries into the matter. Months prior to that, CNSI’s President said publicly that was the case, but Caldwell would only say, “That’s news to us. The Feds aren’t talking to us.” Bottom line: Caldwell knew the investigation was dead at the Federal level, and now we read from Ms. Shuler’s article http://theadvocate.com/home/10466283-125/judge-compels-testimony-in-cnsi, that an investigator from the AG’s Office met with the informant and his testimony changed between depositions. Caldwell: “We’re not trying to rig a civil case.” If you say so, David!! I didn’t mean to ramble, but I really hate seeing someone “convicted” merely because he’s been indicted, particularly when I feel strongly the AG’s Office has other motives, Caldwell’s declaration notwithstanding.
The legislature is acting like this is amateur hour. The very idea that anyone from the administration is being allowed to say anything to the legislature without being sworn under oath is inexcusable at this point. If, after six years of Bobby sabotaging this state, legislators can’t begin to responsibly fulfill their constitutional roles, then they’re no less guilty than Jindal $ Co. of the wrongs done to Louisiana citizens by the Absentee Governor, Acting Governor Nichols, and their subordinates.
Need to call Jindal, Governor-in-Name Only. Kristy Kreme Nichols, Acting Governor
Sent from my iPhone
>
I wonder two things about Kristy Kreme:
•How does she look herself in the mirror each day?
•Does she even believe anything that comes out of her mouth?
did Nichols perjure herself?
No, she was never under oath.
But Nichols, Gov. Jindal’s proxy, did lie to the legislature and the citizens that it’s supposed to represent. However, if what Tom Aswell, Robert Burns, and Stephen Winham explain bears out, then the administration will have done so with impunity (again).
Attended RSEA Convention and the word is that state retired employees have had enough! Contact Dianne Guillot, RSEA president to offer your support. You do not have to be an RSEA member to offer your support to the cause. We need to contact all the other currently employed/retired state employees of all departments (education, etc.) and make them aware of the need to stand together to fight this! Spread the word to your friends. Contact Dianne Guillot @ 318-396-6275 or Victor Dennis @ 318-623-4547 and offer your support by asking them how you can help! Our voice has to be loud and clear to the legislature and Office of Administration. It is a fact that we will be powerful in numbers. If we move forward in a unified manner, they will not be able to say “no” and we will be able to say, “We fought the battle and won, Amen!” Contact your representative and senator and make them aware of your support to RSEA and their mission. Believe you me, they will take notice and understand that we are not to be taken for granted. We are not stupid. We have worked hard for our benefits. We deserve respect and gratitude for our service to the state. We are not asking for a hand-out. We are asking for what is rightfully ours.
I second the motion.
Indictable? Yes!!
Certainly all they know is spin and spouting falsehoods with straight faces!
Sorry TA! Another exceptional report. Remarkable fact-finding.
Just as Steve Jobs had his, “Oh – and one more thing . . .”, Journalistic giant Tom Aswell will have his iconic, “Not exactly . . .” Great reporting, Tom. We all are indebted to you for your dedication to the truth!
Thank you! Thank you! Where would we be if you were not holding their feet to the fire? Keep it coming!
This whole OGB fiasco just gets deeper and deeper. And where is the “captain of the ship”? Oh yeah, trying to run for president. Bwahaha! He’s really staying away so when the stuff hits the fan perhaps it won’t hit him. I do believe that some stink will fly his way, though. Thank you Tom, for you excellent and enlightening reporting. And thank you RSEA. I pray you go through with this lawsuit because I do believe we, the State Workers, will win.
And also, yes, I call her “testimony” perjury. When you are called to testify or answer questions by a committee you are basically “under oath”, whether or not you put your hand on a bible.
Why, Chairman Fanin, wasn’t she under oath?
Did she not have to sign a card [like everyone else testifying]?
All you people in the Monroe/Ruston/Jonesboro area, Jim Fannin is carrying water for the Governor and Administration every day. It is disgusting. Please do not elect him Senator or anything else.
I suggest that Tom starts two lists and keeps them updated in this blog. One showing the legislators that have come out and actively opposed this abuse of power and anothther with all of them that have been silent or are obviously supporting the Administration.
Then, next fall we can know who NOT to vote for.
From a legal standpoint whether telling lies in legislative testimony is perjury or not is questionable.
As a side note, remember, legislators have conveniently exempted themselves by law from being held responsible for making false statements in their own testimony. Note the last sentence in this little provision in Article III:
§8. Privileges and Immunities
“Section 8. A member of the legislature shall be privileged from arrest, except for felony, during his attendance at sessions and committee meetings of his house and while going to and from them. No member shall be questioned elsewhere for any speech in either house.”
So, the legislators, themselves, can say whatever they want with impunity so maybe putting people under oath is a precautionary move in addition to its ostensible intent.
I have seen people put under oath before their testimony before legislative committees when the legislators had reason to believe they were going to lie to them and I assume they could be prosecuted for something if they did, but I don’t know whether it would be contempt or perjury.
The people testifying under oath are typically insulted by this (and that is, no doubt, part of the intent), but it was my experience being under oath did have the effect of making them much more careful about what they said.
Very interesting.
Greenstein was under oath at one point and that is the basis of several of the counts of perjury lodged against him by the grand jury. Specifically, he is accused on several of the nine counts of lying to the Senate Committee. The others are for lying to the grand jury.
THIEVES , THIEVES , LIERS AND THIEVES WE HERE IT FROM TOM ALL THIE TIME,
But no one has the spine to make them tow the line .
Thanks Tom
I’m tying for a succinct summary of this confusing situation. Is this it?
Jindal took money from OGB reserves and spent it on non-OGB issues. Now OGB members are being asked to contribute more out of their pockets to cover the loss of OGB reserves. The problem is compounded by Ms. Kreme’s apparent less-than-honest comments.
— Please let me know if I’ve got this wrong. Thanks.
Jindal did not take money directly from the reserve fund. More accurately, he prevented state funds from going into the fund.
The state contributes 75 percent of the premium costs for each member. By reducing the premium for three consecutive years, not only members paid less in, but the state also paid less in. The difference between what the state would have paid in without a premium reduction and the amount actually paid in after the rate reduction, was then used to plug holes in Jindal’s budget—a classic shell game or robbing Peter to pay Paul.
So, bottom line, he did not take money directly from the fund balance but did do so indirectly, thus abetting the depletion of the fund balance.
To be sure, it was a calculated maneuver designed to divert money for other purposes.
In addition to what Tom points out (I. e., the use of premium savings to plug holes in the annual budget – in my opinion this was a direct use of money that would have gone to OGB for other things in the budget and was a ridiculous mistake), the reserves were also consumed for the same reason (not enough inflow to pay claims) and that is a very major reason given in the Buck official statement for the severe decline in the reserve fund which was used to meet OGB claims expenses and the liabilities of which must now be addressed. The report assumes this will be accomplished via premium increases over each of the next 5 years to prevent the OGB program from going bankrupt.
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Tom, who paid for the operations of the governors luxury box at the concert? I assume the whole reason to have or use a luxury box is all the food, drinks and other stuff that normal seating doesn’t have? If taxpayers pay for this, why? If its paid for by other means, who and did they report it as a campaign contribution?
It’s part of the concessions made to Benson to keep the Saints in New Orleans. The state gave away the store in that deal, including a provision that whenever the Super Bowl is played in New Orleans Benson gets $1 million from the state. Another provision, which I understand has since been phased out was that every individual affiliated with visiting teams must pay state income tax on 1/16 of their income (16-game schedule, with one being played in Louisiana). But when the State Dept. of Revenue received the check for those taxes, a state check was then cut for an identical amount, payable to Benson.
In exchange for all that, each member of the Superdome committee and the governor get luxury boxes for all events at the Mercedes Benz Dome an the Smoothie King Arena.
Keep in mind the Benson family and its various business interests are major contributors to the various Jindal political campaigns.
Mr Aswell, I can imagine that sometimes you feel that you might be beating a dead horse with this OGB reserve funds scandal. But in this case, please… keep beating it! This horse ain’t dead, and it will continue to kick 230,000 state employees and retirees in the gut for the rest of their lives. My hope is that the state will be court ordered to repay the reserve fund the monies that were shadily drawn down to cover budget shortfalls (so Governor Jindal could be the guy who never raised taxes on the national stage), and the proposed changes to the insurance plans will go away or be greatly moderated. What has been revealed about Buck Consulting is dynamite. RSEA has some very solid information on which to base a lawsuit on behalf of state employees and retirees. I believe the administration Will be held accountable. In this effort Tom, you are making a difference for a heck of a lot of people. Thanks, and I just made my donation.