Louisiana Voice

By Robert Burns

With all parties acknowledging the need for an affirmation of her ruling Monday (June 13, 2016) by the First Circuit Court of Appeal, 19^th JDC Judge Janice Clark denied multiple exceptions filed by the Louisiana State Office of Group Benefits (OGB) in response to a lawsuit filed by six retired state employees.

The lawsuit alleges that OGB, which provides health insurance coverage to nearly a quarter of a million state workers, teachers, retirees, and dependents, didn’t follow proper approval procedures calling for prior notice and public comment on significant changes to their health insurance coverage.

Winston DeCuir, Sr., who claimed in oral arguments before Judge Clark that the lawsuit was “moot,” explained that in June 2014, significant changes began to come under consideration for OGB benefits.

When an uproar began that the contemplated changes had not followed proper procedures, former Louisiana Attorney General James D. “Buddy” Caldwell’s Office issued a ruling on September 23, 2014 that, in fact, the rule-making process had been circumvented.

Pursuant to Caldwell’s ruling, DeCuir said, OGB sought an “emergency rule” to take effect because of the urgency of the situation. When Judge Clark inquired, “What triggered the need for the emergency rule?” DeCuir responded that the rapidly-shrinking balance in the reserve fund prompted OGB actuaries to say something had to be done as soon as possible.

DeCuir indicated that genuine concerns existed that, if the rate of decline wasn’t slowed, the system could literally deplete its reserve balance and be left with no funds with which to pay claims. He neglected to say the reserve fund was drawn down from its one-time high of $500 million by the reckless fiscal policies of the Bobby Jindal administration.

DeCuir explained that because of the looming impact the rule change would have on those covered by OGB benefits, on November 23, 2014, OGB issued the emergency rule but also provided simultaneous guidance entailing the additional costs to those covered.

He indicated that some costs would continue to be reimbursed until September 30, 2014 rather than August 1, 2014 as was originally planned.  He also emphasized that full implementation of the changes would not transpire until March 1, 2015 rather than January 1, 2015.

DeCuir noted that the final rule entailing full implementation was implemented on February 20, 2015 to replace the emergency rule. He said that with the required 180-day timeframe for going through normal procedures for rule changes, together with another 180 days to actually implement the changes, OGB’s reserves would have run a very serious risk of being fully depleted before the effects of the changes could take hold.

DeCuir said a public hearing was held on the changes but was “very, very poorly attended.”  He added, “In fact, I don’t know if any of Art’s (Smith, counsel for plaintiffs) clients were even present for the hearing.” Arthur Smith, III, dismissed the hearing as a “sham” designed to accomplish nothing but “window dressing with everything already done.”

Smith then focused his arguments on Jindal’s administration having “drained” OGB’s reserve balances. That statement prompted a sharp retort by DeCuir who said, “That statement simply is not accurate. There was not one dime transferred out of OGB’s reserves to the general fund. What transpired is that premiums charged to members declined. That, in turn, resulted in a decline in the State of Louisiana’s match in that it covers 75 percent of the cost of the coverage.  That is what caused the reserves to decline.”

Judge Clark then asked for reiteration of the fact that no funds were swept from OGB’s reserves to the general fund. Both DeCuir and Michael Adams, another defense attorney representing OGB, were emphatic in stating no such sweeps transpired.

What actually occurred was this: the administration lowered premiums so that its own 75 percent match would be reduced and the money saved from that maneuver was then used to cover some of the recurring budgetary shortfalls experienced by Jindal and a sadly incompetent but compliant Legislature for eight straight years. The decline in premiums, Mr. DeCuir, was not caused by fewer covered employees but by the clumsy shell game perpetrated by Jindal and Co. That statement, Mr. DeCuir, is accurate.

DeCuir indicated to Judge Clark that the plaintiffs may not be happy if they get what they’re ultimately seeking with their lawsuit. He explained that it’s conceivable that plaintiffs could end up owing OGB significant premium dollars if the plaintiffs do in fact ultimately prevail.

In making her ruling, Judge Clark stated: “The Court is of the opinion that plaintiffs have stated a valid cause of action within the four corners of the document.  It’s time for this matter to be presented to the First Circuit, which I understand is now returning from Sandestin, so that these plaintiffs can know whether they can move forward with their claim or have it drained.”

Adams then inquired about the prospect for him to assert Exceptions for Prematurity and Subject Matter Jurisdiction. Clark said that the Exception of Prematurity was too “intertwined” with DeCuir’s exception and therefore denied that exception as part of the day’s proceedings.  When DeCuir inquired if he could reassert the Exception of Subject Matter Jurisdiction, Clark indicated he could “have another bite at the apple, but it needs to be quick.”

Smith wrapped up the proceedings by inquiring about a Motion to Compel he’d previously filed, but Clark said, “Surely that matter can be resolved between the parties.” Adams then indicated that Smith had modified his discovery requests to make it far more narrow and that he believed that a mere meeting between him and Smith ought to be able to negate the need for any hearing on a Motion to Compel.

Adams said after the day’s hearing that he would appeal Clark’s ruling to the First Circuit Court of Appeal.

Judge Clark said if the whole matter proceeds to trial, “It will be a challenge to keep the jurors awake when all those actuaries start testifying.”