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Archive for the ‘Contract, Contracts’ Category

Notable Quotables (in their own words)

Posted in Contract, Contracts, Governor's Office, Health Care, Privatization on June 12, 2013| Leave a Comment »

“Claims for federal matching funds cannot be based upon estimates or projects. Please add language that describes the actual historical utilization and trend factors utilized in the calculation.”

“Are the (private) hospitals required to provide a specific amount of health care service to low income and needy patients?”

—Questions posed to the state in a Jan. 30 letter to the Louisiana Department of Health and Hospitals by Bill Brooks, Associate Regional Administrator, Division of Medicaid and Children’s Health Operations in Dallas.

“If we were to deny these contracts, we will not be able to provide these services to the citizens. I believe the hospitals would close.”

—Louisiana Civil Service Commission member Scott Hughes of Shreveport, commenting on his switching his vote from opposed to the privatization contracts for hospitals in New Orleans Houma, Lake Charles, and Lafayette to a vote in favor. At the same time, Hughes said he still had concerns over whether federal officials (CMS) would approve Medicaid financing necessary to bring the Jindal budget into balance. His concerns centered around questions about some of the financial data provided by the administration.

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Civil Service Commission reversal okays hospital contracts but really unforgivable sin is the absence of two members

Posted in Boards, Civil Service, Contract, Contracts, Health Care, Layoffs, Privatization on June 10, 2013| 31 Comments »

That one State Civil Service Commission member, D. Scott Hughes of Shreveport, changed his vote that allows the privatization of four state hospitals should come as no surprise. Many of you who logged comments on last week’s post even predicted it.

But for two members to skip a meeting of such importance is simply unforgivable.

For that reason alone, commission member Dr. Sidney Tobias of LaPlace and commission Chairman David Duplantier of Mandeville should resign immediately.

The board, sans Tobias and Duplantier, met Monday to reconsider the proposed contract between the state and Biomedical Research Foundation of Northwest Louisiana for operation of the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe, between the state and Southern Regional Medical Center and Terrebonne General Medical Center to take over Leonard J. Chabert Medical Center in Houma and between the state and Lake Charles Memorial Hospital to take over in-patient care and medical education from W.O. Moss Medical Center in Lake Charles.

The result was predictable: Last week the vote was 4-3 against acceptance of the contracts but on Monday it was 3-2 in favor.

All the vote did was seal the fate of nearly 4,000 employees who can now anticipate being laid off from their jobs effective June 23.

Keep in mind the decision hinged on a contract approved by the LSU Board of Stuporvisors which contained some 50 blank pages and which contained no financial provisions or termination clause.

Last week’s decision to reject the contract was because commission members said they need more details about financing arrangements. Are we now to believe that over the course of a weekend, sufficient financial information was filled in on those blank pages to satisfy the commission?

We understand that Dr. Tobias is a dentist and as such, has a busy schedule. But if his schedule is such that it is impossible to attend meetings at which the future of 4,000 state employees hang in the balance, then he has no business serving on the board and should resign immediately.

The same goes for attorney Duplantier. You either are in a position to serve or you are not. There can be no gray area in matters of this magnitude.

We bet if a meeting held the potential of costing either Duplantier or Tobias a major share of their clients or patients (read: income), there would be no way to keep them out.

Ego carries you only so far. If you like to boast to your friends that you’re on the Civil Service Commission but you do not have the time to attend a meeting at which 4,000 people lost their jobs, then you’ve lost something even greater; you’ve lost sight of your purpose.

At that point, Tobias and Duplantier become just two more egocentric narcissists with no real concern for others.

How can you face yourselves in the mirror?

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LA. not the first state in which CNSI contracts have come under scrutiny but you’ll need a program to follow players

Posted in Contract, Contracts, Governor's Office, Health Care, Transparency on June 9, 2013| 34 Comments »

Even as he was tweaking the bid specifications that would qualify Client Network Services, Inc. (CNSI) to submit a proposal for a $185 million contract with the Department of Health and Hospitals (DHH), Bruce Greenstein must surely have known of problems his former employer had experienced in other states.

In a related story, LouisianaVoice has learned that James Gorman, a senior technical advisor for the Center for Medicare & Medicaid Services (CMS) founded a company, HWT, a subsidiary of OptumInsight, a “trading partner” with Bayou Health, the program through which most of Louisiana’s Medicaid recipients receive health care services.

CMS is a federal agency within the U.S. Department of Health and Human Services (DHHS) which is charged with working in partnership with state governments to administer Medicaid. CMS must also give its stamp of approval on state contracts with companies such as OptumInsight and CNSI.

Greenstein worked in Seattle for Microsoft prior to his being named DHH Secretary by Gov. Bobby Jindal in July of 2010. Prior to that he also worked for the U.S. Department of Health and Human Services (DHH) where he oversaw the state Medicaid programs in the Northeast. He led the federal government’s efforts in working with states in reforming state Medicaid programs—a position that would have afforded him intimate knowledge of the workings of companies like CNSI, OptumInsight and others.

Then-DHH Secretary Greenstein awarded but then refused to identify CNSI as the winner of the contract a year ago. His refusal threatened his confirmation by a Senate committee before he finally relented and named CNSI.

Greenstein worked for CNSI in 1995 and 1996. He told the Senate committee that he had constructed a “firewall” between him and CNSI so that he could not influence the awarding of the contract. But emails obtained by the committee revealed that Greenstein and CNSI executives exchanged dozens of emails during the selection process.

Protesting the award at the time were unsuccessful bidders ACS State Healthcare of Atlanta, Ga., and Molina Medicaid Solutions of Long Beach, Calif.

ACS claimed that CNSI deliberately low-balled its cost. CNSI subsequently obtained a $9 million amendment, increasing the cost to $194 million and then requested an additional $40 million immediately prior to word that the FBI had subpoenaed all CNSI records from the Division of Administration.

Had the second amendment been granted, the cost would have been close to the $238 million bid of ACS but the CNSI contract was cancelled by the administration as a federal grand jury investigation got underway. That investigation is still ongoing.

While at CNSI, Greenstein was vice president for Healthcare. While there, he focused on state healthcare systems and claims payments and vital records systems.

Given his experiences with Medicaid systems and given the fact that he resided in Seattle at a time when CNSI was experiencing a multitude of problems with its system in Washington, it’s difficult to imagine that he was unaware of problems the company was having when he “tweaked” the bid specifications to accommodate his former employer.

In 2006, CMS launched an investigation into ongoing problems with the State of Maine’s web-based information management system. CNSI was contracted for that work in 2001 at $14.5 million, but the costs quickly escalated to $70 million as complaints began coming in almost immediately. CNSI had never built a Medicaid billing system before landing the contract with Maine and the company missed its 2002 deadline for completion as well as several subsequent deadlines. Even after the system finally went live in 2005, it malfunctioned and for more than a year the state had to send out estimated payments to Medicaid providers.

After only three days it was learned that the new system had sent 24,000 claims (about 50 percent of all claims) into a “suspended” file.

Normally, suspended claims were those that were either rejected or which contained minor errors. The original system had suspended only about 20 percent of the claims.

Now, instead of payments, doctors were receiving no payments and when they resubmitted the claims, the new system installed by CNSI automatically rejected them again because it was programmed to reject any claim it had already rejected.

Claims had to be processed by hand by state employees but they could process only 1,000 claims per week. Even when the rejection rate was reduced to 20 percent, doctors complained that it was still rejecting legitimate claims.

Doctors, dentists, hospitals, clinics and nursing homes received no payments for services for weeks at a time and some practices were forced to close their businesses or to take out loans to pay their bills.

The experience was much the same in Washington State where hundreds of thousands of claims went unprocessed, causing some doctors and clinics to cease taking new Medicaid patients until they got paid for the ones they’d already treated.

Glitches in the CNSI system resulted in the suspension of thousands of claims which, like those in Maine, had to be processed by hand. By November of 2010, there was a backlog of about 271,000 suspended claims.

One medical center said the state was about $3.8 million behind in payments.

A CNSI spokesperson attributed the problems to managerial mistakes and not deficiencies in the product. “We did not understand the magnitude of such an implementation,” he said. That would seem to be an understatement as the original contract cost of $71 million ballooned to $164 million.

In Michigan, a 2006 three-year, $51.5 million contract was amended no fewer than five times and the contract amount currently is $227.2 million.

And now, the State of Illinois, in an apparent effort to circumvent public bid laws, has entered into an interagency agreement with Michigan to create a shared Medicaid Management Information System (MMIS) to serve both states with CNSI getting the contract for both states.

One of the common threads connecting Illinois and Louisiana is OptumInsight, which reported $1.3 billion in corporate revenues in 2008. OptumInsight has a contract with Illinois to administer its MMIS exchange.

Besides serving as a “trading partner” with Bayou Health, OptumInsight is a wholly-owned subsidiary of UnitedHealth Group. UnitedHealth Group, in turn, offers benefits through two companies, UnitedHealthcare and Optum. UnitedHealthcare has an $83 million consulting contract with DHH to provide enhanced primary care case management. Bringing things full circle, Optum has three operating divisions: OptumHealth, OptumRx and OptumInsight.

If all that is confusing to you, don’t feel bad. The question is how difficult will it be for the federal grand jury to sort all this out so that it can make a determination of whether or not any laws were broken with Louisiana’s contract with CNSI?

A second, even more interesting question is why did the Jindal administration, in cancelling the CNSI contract, issue the self-serving statement that it would not tolerate corruption when there has been no trial or even any formal charges filed?

Third, and most important of all, if Jindal is so intolerant of corruption, why did he allow Greenstein to “resign,” but remain on the job for an entire month before his departure?

It would seem at this point that the answers to all three questions lie with Greenstein and those answers may well rest on what kind of deal he can make with federal prosecutors—depending, of course, on whether the investigation reaches the point of indictments.

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Civil Service Commission rejects LSU Hospital privatization by 4-3 vote but re-hearing is already set for 8 a.m. Monday

Posted in Boards, Civil Service, Contract, Contracts, Governor's Office, Health Care, LSU, Transparency on June 5, 2013| 52 Comments »

Gov. Bobby Jindal had another roadblock thrown in his path to privatization of four LSU hospitals on Wednesday when the State Civil Service Commission, by a 4-3 vote, rejected the state’s contracts with private hospitals to take over state-run facilities in New Orleans, Lafayette, Houma and Lake Charles.

The matter has already been scheduled for a re-hearing on Monday at 8 a.m. in the Louisiana Purchase Room on the first floor of the Claiborne Building at 1201 North Third Street in Baton Rouge.

In taking the action, commission members complained that the information provided by LSU was insufficient.

Really? A contract with 50 blank pages was not enough? The commission perhaps needed some specifics—like an offer and an acceptance and a termination clause?

It should be noted that the commission did not vote to reject the administration’s layoff plans relative to the privatization of the Interim Hospital in New Orleans, University Medical Center in Lafayette, Leonard Chabert Medical Center in Houma and W.O. Moss Medical Center in Lake Charles.

Civil Service Director Shannon Templet must make a decision on the layoff plan by next Tuesday in order for the layoffs to become effective on June 24.

But if the privatization plan is not approved, the hospitals would necessarily have to keep nearly 3,000 classified employees on the job in order to keep the hospitals open.

Dr. Fred Cerise, the former head of the LSU Health System who was fired by Jindal (through the Board of Stuporvisors, of course), said on Wednesday that the Centers for Medicare & Medicaid Services (CMS) still has not given the go-ahead for the hospital privatization plan and without that approval, everything else is moot.

Cerise said the state plans to use the $110 million that Children’s Hospital in New Orleans is paying to take over the Interim Hospital (formerly Big Charity before that facility was abandoned after Hurricane Katrina and a new structure built) will be used by the state to leverage greater matching funds from Medicaid.

“But if CMS does not approve the plan, the state will have to repay Medicaid for any excess money it received on the basis of that $110 million,” he said, adding, “I don’t think there’s any way CMS is going to give its stamp of approval to this plan.”

Dr. Michael Kaiser, Chief Executive Officer of the LSU Health Care Services Division, said he would ask the commission to reconsider its decision. He said the commission would be provided with the agreements between LSU and the private companies.

“I’m not sure what they intend to show the commission on Monday,” Cerise said, “but there’s no way they can show a savings when contracts for privatizing two of the hospitals (Chabert and Moss) don’t even contain any financial details.”

That, of course, raises the question of just why was the commission not provided copies of the agreements in the first place. Did Kaiser expect the commission to simply rubber stamp the privatization plan as it has in the past and as the LSU Board of Stuporvisers does on a regular basis with anything Jindal sends over?

In the past the Board of Stuporvisers has done Jindal’s bidding without question—from the firing of LSU President John Lombardi, LSU System General Counsel Raymond Lamonica, and Drs. Roxanne Townsend and Cerise, to operating in complete secrecy to hire a new LSU president who possesses credentials that are questionable at best, to approving essentially blank contracts for the takeover of LSU hospitals in Shreveport, Monroe, Houma and Lake Charles. The contracts consisted of about 50 blank pages and contained no mention of financial terms, specific offers, acceptances or termination clauses.

And for the privilege of doing Jindal’s bidding, members of the Board of Stuporvisers get to metaphorically lick the master’s hand with campaign contributions totaling about a quarter-million dollars between them.

All of which raises another question that no one has asked to this point but one for which there is a desperate need for an answer:

• When was the last time the LSU Board of Stuporvisors took any action during this governor’s administration that supported academics and was not done to achieve a political agenda—Jindal’s political agenda, to be specific?

Anyone? Bueller? Bueller? Anyone?

Kaiser, in the wake of the unexpected rejection of the administration’s plan by the commission, only now bemoans the fact that in anticipation of approval of the privatization, the public hospitals have no money in the state budget for the new fiscal year that begins on July 1.

That would be because Jindal did not include funding in his budget back in January because he was certain his privatization plan would be approved.

Somewhere out there, the ghost of Jim Nabors as Gomer Pyle is flashing a big, innocent grin and saying to Bobby Jindal, aka Barney Fife, “Sur-PRISE, Sur-PRISE, Sur-PRISE!” (Our apologies to Barney Fife.)

Kaiser said the administration would have to try and determine what other action could be taken if the privatization is not approved.

More than 3,500 employees work at the four hospitals. Of that number, 2,953 are classified, or Civil Service rank-and-file employees. The remainder are unclassified and do not enjoy Civil Service protection. Their layoffs do not have to be approved by the commission.

More than half of the classified employees (1,690) are employed at the Interim Hospital in New Orleans. The remainder are at University Medical Center in Lafayette (487), Leonard Chabert Medical Center in Houma (556) and W.O. Moss Medical Center in Lake Charles (220).

It will be interesting to see if any legislators from the affected areas show up for Monday’s Civil Service Commission re-hearing. Republican House Speaker Chuck Kleckley is from Lake Charles.

Other Calcasieu Parish House members include Democrats Michael Danahay, A.B. Franklin, and Dorothy Sue Hill and Republicans Brett Geymann, John Guinn and Ben Hensgens.

Calcasieu senators include Republicans John Smith, Ronnie Johns and Dan “Blade” Morrish.

House members from Lafayette Parish include Democrats Terry Landry, Jack Montoucet, Stephen Orgego and Vincent Pierre and Republicans Taylor Barras, Stuart Bishop, Nancy Landry, and Joel Robideaux.

Senators who represent Lafayette Parish are Republicans Elbert Guillory, Johathan Perry, Page Cortez and Fred Mills.

Terrebonne/Lafourche parish House members include Republicans Gordon Dove, Sr., Joe Harrison and Lenar Whitney of Terrebonne and Democrat Jerry Gisclair and Independent Jerome “Dee” Richard, both of Lafourche. Richard, by the way, was present at Wednesday’s commission hearing.

Representing Lafourche and Terrebonne parishes in the Senate are Democrats Troy Brown and Gary Smith and Republicans Norbert Chabert and Bret Allain.

Orleans Parish House members include Democrats Neil Abramson, Jeffery Arnold, Austin Badon, Wesley Bishop, Jared Brossett, Walt Leger and Helena Moreno. Orleans Republicans include Raymond Garofalo, Christopher Leopold and Nick Lorusso.

Senators who represent Orleans include Republicans A.G. Crowe and Conrad Appel and Democrats Karen Carter Peterson, Jean-Paul Morrell, David Heitmeier and Edwin Murray.

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LSU Board of Stuporvisors gives away store with improbable blank contract for private operation of four state hospitals

Posted in Campaign Contributions, Contract, Contracts, Governor's Office, Health Care, LSU, Privatization, Public Records on June 4, 2013| 25 Comments »

Depending upon which source you consult, there are from four to six essential components of a contract that make the document legally binding.

The LSU Board of Stuporvisors apparently is unaware of any of them.

• There first must be an offer.

Okay, this one’s a little broad. There was an offer…of sorts. The Biomedical Research Foundation of Northwest Louisiana offered to assume administrative and operational control of the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe.

Likewise, Southern Regional Medical Center and Terrebonne General Medical Center offered to manage the Leonard J. Chabert Medical Center in Houma and Lake Charles Memorial Hospital offered to take over in-patient care and medical education from W.O. Moss Medical Center which will cease operating as a hospital.

But after that, it gets a little sticky:

• There must be an acceptance.

Acceptance is defined as an “unconditional agreement to the precise terms and conditions of an offer.”

To that end, the Board of Stuporvisors came off looking like Larry, Moe and Curly trying to match business acumen with Warren Buffett.

Or Jethro Bodine in negotiations with Donald Trump. You get the picture

The Board of Stuporvisors’ approach to this major enterprise was more akin to the manner in which car dealers attempt to sell a major consumer product with the cheesiest, most offensive television ads possible.

Simply put, there were no specifics in the contract—only 50 or so blank pages to be filled in later.

• Consideration: the payment exchanged for the promise(s) contained in the contract.

Without a specific offer, there can be no financial terms (consideration) and accordingly, no acceptance.

• Termination Clause: allow a contract to be ended without cause, though some courts have held that the clause cannot be invoked without cause.

So thus far, we have no specific offer, no financial terms (consideration) and no termination clause—only an acceptance of a vague offer—all of which brings up the fifth component of a legal contract:

• A contract must be recognized as valid by the courts and subject to the court’s ability to compel compliance.

It’s hard to imagine a contract being recognized as valid by any court anywhere (except possibly in Louisiana) where there is no specific offer, no acceptance of a specific offer, no financial terms and no termination clause.

Finally, we have the strongest, most binding qualifier of all for a legal contract:

• Competent Parties: parties to a contract must be competent and authorized to enter into a contract.

Wow, that’s a toughie.

Competent?

Hell, the LSU Board of Stuporvisors just gave away the store. How competent is that?

Competent?

Let’s ask a few simple questions of the board members, seven of whom own their own businesses, three are in government/public service, one is a banker, one is a publisher, one is a doctor and one is an attorney:

• Would you, as an executive, doctor, banker, attorney or business owner, allow your company, firm, practice, publication, or bank to enter into a contract with no stipulations, no conditions, no financial considerations—all to be filled in at a later date by someone other than yourself, after the contract has been signed by all parties?

We didn’t think so. So, why would you commit LSU and the State of Louisiana to such an ill-advised agreement?

Competent?

The LSU Board of Stuporvisors just named as the new president of the state’s flagship university a man whose highest academic achievement was that of assistant professor before he succeeded his father to the presidency of Murray State University in Kentucky as if he was the heir to some throne and then was named by his personal friend and benefactor, the chancellor of the University of California system, as president of California State at Long Beach. How competent is that?

Competent?

The Board of Stuporvisors put up a determined fight to keep secret the list of candidates for the LSU presidency.

It’s almost as if they were guarding a highly classified state secret.

Or hiding something.

What could they have been hiding?

Who knows? With the propensity for secrecy that has become the trademark of the Jindal administration, everything is concealed from view. Remember, it was Gov. Bobby Jindal who invented the term “deliberative process” as an all-encompassing term to protect his office from the public’s right to know what its government is up to.

It is Jindal’s Department of Education that has been sued at least three times in efforts to pry public information out of that shadowy department.

It was in Jindal’s Department of Health and Hospitals (DHH) that a controversial $184 million contract was awarded to the former employer of then-DHH Secretary Bruce Greenstein—a contract that is now under the microscope of federal investigators.

One has to wonder at this point how hard a legal battle the Board of Stuporvisors would wage against efforts to determine specifics of the hospital contracts.

Why are we so jaded, so cynical?

We’re not; we’re realistic, pragmatic. We connect the dots. Let’s review.

• Item: The Biomedical Research Foundation of Northwest Louisiana offered to assume administrative and operational control of the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe.

• Item: The President and CEO of the Biomedical Research Foundation of Northwest Louisiana is John F. George, Jr., M.D.

• Item: John F. George, Jr., M.D., is a member of the LSU Board of Stuporvisors.

• Item: John F. George, Jr., M.D., made two contributions of $5,000 each to Jindal’s 2007 and 2008 campaigns.

• Item: The Jindal administration dismissed talk of a conflict of interest by pointing out that George will not receive a salary as president and CEO of the foundation, thereby allowing him to remain as a (voting) member of the LSU Board of Stuporvisors.

• Item: On Oct. 25, 1996, the Louisiana State Board of Ethics ruled that Natchitoches Times Publisher Lovan Thomas was prohibited from participating in a decision by the Board of Trustees for State Colleges and Universities to contract with the Times for printing services and that the participating question “cannot be cured by recusal since (state law) prohibits an appointed member of a board from curing a participating problem through disqualification.”

And lest we forget, there are always those pesky campaign contribution reports that members of many boards and commissions must wish we would forget.

We won’t. We can’t.

Let’s take a quick look at those who found it in their hearts to support Jindal financially and were subsequently rewarded with coveted seats on the LSU Board of Stuporvisors:

• Hank Danos: $18,500;

• Robert “Bobby” Yarborough (former Jindal Campaign Treasurer): $45,000;

• Scott Ballard: $5,000 from his company, WOW Café & Winery Franchising;

• James E. Moore: $21,000 from Moore and his company, the Marriott Courtyard of Monroe;

• Stanley Jacobs: $10,000 from Jacobs and his wife;

• Scott Angelle: $4,000;

• Ray Lasseigne: $17,232 from Lasseigne and his company, TMR Exploration;

• Blake Chatelain: $28,000 from Chatelain and his wife;

• Rolfe McCollister (former Jindal Campaign Manager): $18,000;

• Jack Lawton, Jr.: $61,000 from Lawton, his business interests and family members;

• Chester Lee Mallett: $15,000;

• John George: $10,000.

What’s even more difficult to fathom is that 12 of the 15 members of the LSU Board of Stuporvisors actually coughed up more than a quarter-million dollars for the privilege of serving as a pack of submissive lap dogs for the governor—obviously with no will of their own.

So now, salary or no, George is allowed to serve as President and CEO of the foundation while also serving as a voting member of the LSU Board of Stuporvisors which, in its collective wisdom, has just approved a contract for his foundation to take over the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe—a contract with millions of dollars and hundreds of state jobs at stake—and a contract which contains 50 blank pages but which also:

• contains no specific offer;

• contains no acceptance of a specific offer;

• contains no termination clause and from all appearances to our admittedly layman’s mind;

• is susceptible to a challenge by some indignant taxpayer(s) or group of affected hospital employees in that it could be interpreted as invalid because of the court’s inability to compel compliance, and

• has no competent parties—at least on the LSU Board of Stuporvisors’ side of the bargaining table.

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