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Where was Jindal on decision to name Shetler to University of Louisiana Board? Answer: counting campaign donations?

Posted in Boards, Campaign Contributions, Governor's Office, Higher Education, Politicians on June 20, 2013| 4 Comments »

Carl Shetler is a survivor and now he serves on the University of Louisiana Board of Supervisors after having helped place one of the universities he now helps govern on NCAA probation a quarter-century ago.

For three years, in 1971-1974, Shetler served as an assistant coach and main recruiter for the McNeese State University (MSU) basketball team during his tenure.

You’d think he would know better than to openly flaunt NCAA rules but it was learned that others took ACT tests for two prospective basketball players.

Edmond Lawrence, who first said he would sign with the University of Southwestern Louisiana (USL—now the University of Louisiana Lafayette), changed his mind after he was promised money if he would sign with McNeese.

Shetler and then head basketball coach Bill Reigel were fired in 1974 but in 1986 Shetler, who by then owned an automobile dealership, was among a group of Lake Charles businessmen who provided illegal jobs, money and cars to McNeese basketball players.

The other businessmen, as identified in a June 15, 1992 letter from McNeese Athletic Director Robert Hayes to SLC Commissioner Bill Belknap, included Henry Carter, owner of a local Popeye’s Chicken franchise; Johnny Abraham, owner of a Lakes Charles grocery story; local attorney William Baggett, former construction company owner Bobby Nicholson and Bob Keyes, whom Hayes said he did not know.

Joe Dumars, who would go on to star with the Detroit Pistons, was one of those who received money from the boosters.

Another player, Mike Marshall who transferred from the University of Kansas to McNeese, said he was paid “thousands of dollars” by Cowboy boosters when he played for McNeese.

The NCAA and Southland Conference (SLC) Commissioner Dick Oliver placed McNeese on two years’ probation in 1987 and the SLC forced McNeese to disassociate itself from Shetler and the other businessmen.

McNeese was also forced to forfeit rights to all revenue generated by SLC members during the 1986-87 and 1987-88 academic years in men’s basketball and its number of scholarships was reduced to 11 for both years.

The NCAA further instructed the university:

• For each of the “disassociated boosters,” please indicate what steps were taken by the institution to advise them of the conference penalty. Please include with your response the dates such action occurred and all relevant written material including, but not limited to copies of correspondence to the disassociated boosters, internal memorandum and news releases;

• For each of the “disassociated boosters,” please indicate what ongoing efforts were made by the institution to ensure that the university’s relationship with these individuals remained severed. Please include all copies of all relevant written materials;

• For each of the “disassociated boosters,” please indicate each and every contribution, whether monetary or otherwise, made by them to the McNeese athletics department, an athletics booster organization of McNeese, or any other non-profit association affiliated with McNeese. In connection with this request, please provide a list for the years 1986-97, 1987-88, 1988-89, 1989-90 and 1990-91 of all individuals making contributions, whether monetary or otherwise, the McNeese athletics departments, an athletics booster organization of McNeese, or any other non-profit association affiliated with McNeese;

• For each of the “disassociated boosters,” please indicate whether they have employed McNeese student-athletes. In connection with this response, please provide a list of all those employed and (the) dates of employment;

• For each of the “disassociated boosters,” please indicate whether they have been involved in the promotion of McNeese athletics in any way including, but not limited to, membership in booster organizations, associations with coaching staff members, attendance at booster functions, advertising in McNeese publications, signage at McNeese facilities or the sponsorship of radio/television programming involving McNeese or any staff member of McNeese.

But even that crackdown didn’t last. Shetler, through former athletic director Sonny Watkins and MSU President Robert Hebert, was soon calling the shots again.

His presence was so obvious that MSU soon began to mean Mr. Shetler’s University, one reporter wrote at the time. Coaches and athletic directors came and went—all while Shetler called the shots from his auto dealership on LA. 14. Another joke emerged as Northeast Louisiana University and USL were changing their names to the University of Louisiana Monroe (ULM) and University of Louisiana Lafayette (ULL), the same reporter wrote: McNeese, the line went, would become the University of Louisiana at Highway 14.

Shetler even prevailed upon Hebert to hire Kirby Bruchhaus as head football coach. Bruchhaus resigned after only one season when it was revealed that he regularly bet on professional and college football games, a major NCAA violation.

So how is it that Shetler, who has displayed little concern for rules, came to be appointed not once, but twice, to the University of Louisiana System Board?

He was first appointed by former Gov. Edwin Edwards in June of 1992, less than two weeks after Hayes’ letter to the SLC that identified the businessmen who paid McNeese players. His appointment took effect on Jan. 1, 1993. Shetler even served as board chairman and chairman of the athletic committee where he was in charge of overseeing the very rules he so openly violated.

Parenthetically, in case you think the names Edwards and Shetler ring a bell, they do. Shetler’s son, Ricky Shetler was a casino consultant and close friend of Edwards’ son, Stephen Edwards and when the cheese got binding in his 1998 federal grail, the younger Shetler turned on his friend, cutting a deal with prosecutors to testify against Stephen in exchange for a lighter sentence.

Carl Shetler was again appointed to the board in July of 2008, this time by Jindal.

That raises the obvious question: did anyone in Jindal’s camp make even a token effort to vet this appointment?

The same question could be asked of Edwards.

The difference, of course, is Edwards never hid behind a façade of wholesomeness and all things good. He was a rogue and didn’t care who knew it. It was that candor that endeared him to voters.

Jindal, on the other hand, tries to project an aura of respectability and goodness, a “gold standard” of ethics, if you will.

So where was the application of that “gold standard” in this case?

For that answer, as always, follow the money.

Shetler, besides lavishing money on athletes at McNeese, is not above tossing a little cabbage in the direction of Jindal.

Shetler, Rosier Shetler (same address), Shetler Rental Service, Shetler Rental Properties and McDrig’s, Inc. (same post office box as Shetler Rental Properties) all combined to pour some $48,000 into Jindal’s gubernatorial campaigns of 2003, 2007 and 2011.

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Campaign finance ethics fines mount up; collections? not so much since Gov. Jindal’s ethics ‘reform’ hyperbole of 2008

Posted in Commissions, Ethics, Governor's Office, Politicians, Transparency on June 19, 2013| 10 Comments »

Gov. Bobby Jindal loves to travel across the country telling anyone who will listen about the “gold standard” of ethics reform he singlehandedly passed to strengthen Louisiana’s ethics laws as one of his first acts upon taking office in 2008.

Except it simply isn’t so.

There are more than 981,000 reasons that indicate Jindal’s boasts are just so much hot air, devoid of any substance.

More than 300 candidates for local, state and national offices, many of them attorneys (and more than a few disbarred attorneys) owe more than $891,500 in fines for filing campaign finance reports late or not at all.

Moreover, 25 political action committees (PACs) owe an additional $90,000, according to figures provided by the Louisiana Board of Ethics.

So, just how is it that so many fines and such a large amount—at least four candidates had accrued penalties in excess of $25,000 each—have managed to go uncollected for so long (some dating as far back as 1999)?

For the answer to that, we have to go all the way back to January, 2008, Jindal’s first month in office. One of his first acts was to call a special session of the legislature to pass his “ethics reform” package that effectively gutted the State Board of Ethics. Ten of the board’s 11 members resigned in protest—seven of those because the “reform” legislation transferred ethics enforcement power from the state ethics board to administrative law judges, a move that rendered the board useless.

Next question: What’s so wrong with turning enforcement power over to administrative law judges? Well, for starters, the administrative law judges are selected by an appointee of the governor, hardly a hands-off, arms-length, non-political approach to ethics. In fact, Elliot Stonecipher, a Shreveport demographer and political analyst, observed the Jindal package created a situation in which “we could have people with a relationship with the governor (enforcing ethics laws).”

For decades the ethics commission had full authority to bring charges, hear cases and impose penalties on public officials accused of wrongdoing. No more.

Former Ethics Chairman Frank Simoneaux, who has been critical of the manner in which the ethics board and the administrative judges have interacted on issues, said he agrees that the responsibility for investigating and deciding ethics cases should be split but that administrative judges are not the method that should be employed.

Oh, and there’s this: Jindal proposed the legislation while he was under investigation by the Louisiana Board of Ethics. The timing of his “reform” measures has to be considered at least somewhat suspect, given that the ethics commission cited Jindal’s campaign for campaign finance disclosure violation just before Jindal pushed through his package.

Examples of outstanding ethics fines for late campaign finance reports include:

• Richard C. Bates, a 2006 candidate for 24th Judicial District Judge (Jefferson Parish) who has since been disbarred: $2,600;

• Michael Bell, former legislative assistant to former Sen. Wilson Fields (now a district judge) and himself an unsuccessful 2011 candidate for the state senate: $3,260;

• District Judge Wilson Fields, unsuccessful 2010 campaign for First Circuit Court of Appeal: $1,000;

• William Bowman: unsuccessful 1997 candidate for St. Helena Parish Clerk of Court: $2,720;

• Raymond Brown: unsuccessful 2004 candidate for Orleans Parish Sheriff: $9,500;

• Douglas Castro: unsuccessful 2005 candidate for Orleans Parish Clerk of Court: $10,420;

• Albert Donovan, former legal counsel to Gov. Edwin Edwards, 2003 unsuccessful candidate for Secretary of State: $39,500;

• James Fahrenholtz: 2000 and 2004 candidate for Orleans Parish School Board: $41,000;

• Sandra Hester: unsuccessful 2004 candidate for Orleans Parish School Board: $10,660;

• Percy J. Marchand: unsuccessful 2007 candidate for Orleans Parish state representative: $26,600;

• Robert Murray: unsuccessful 2003 and 2007 candidate for state representative: $16,900;

• Donald Ray Pryor: unsuccessful 2002 candidate for Orleans Parish Registrar: $36,200;

• Gary Wainwright: unsuccessful 2007 candidate for Orleans Parish District Attorney: $30,700;

The Ethics Commission is so weakened by Jindal’s 2008 ethics revamp that it is not only unable to collect outstanding fines but it is even powerless to prevent those with unpaid fines from running in subsequent political races.

Enforcement is just as ineffective with political action committees.

The United Democratic Ballot, Inc., for example, owes $14,000 in unpaid fines dating back to 2002.

Others include:

• The Westbank Independent Coalition (Jefferson Parish): $8,000 in 2003;

• The African American Voters League: $9,000 in 2002;

• Baton Rouge Youth Movement: $8,000 in 2011 and 2012;

• Home Builders Association of Central Louisiana: $8,000 in 2010;

• Independent Rx PAC: $3,500 in 2010;

• Shreveport Committee on Political Education: $4,400 in 2006 and 2010;

As a reward for his comments critical of Jindal’s ethics reform package, Simoneaux was not re-nominated to another five-year term on the board—effectively fired—by the Committee on House and Governmental Affairs in April of 2012.

Ethics, like beauty, are in the eye of the beholder. Put another way: those who have the gold are making the rules.

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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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CMS wants more answers to Louisiana hospital privatization plan; millions of dollars in Medicaid funding hang in balance

Posted in Commissions, Governor's Office, Health Care, Layoffs, Privatization on June 12, 2013| 17 Comments »

The Louisiana Civil Service Commission notwithstanding, the state may not yet be out of the woods with its plan to privatize nine of 10 LSU hospitals and clinics that provide medical care for the state’s poor and uninsured and which provide training sites for many of the state’s medical students.

A spokesman for the Center for Medicare and Medicaid Services (CMS) in Dallas said on Wednesday that it still has not received answers to all its questions put to the state in a Jan. 30 letter and the continued flow of hundreds of millions of dollars in federal Medicaid funds could hinge on satisfactory responses by the state to those questions.

The Civil Service Commission on Monday reversed an earlier vote and approved the contracts for the takeover of four hospitals in Houma, Lafayette, New Orleans and Lake Charles.

That approval, however, was based on criteria that did not appear to fall within the purview of the commission. Commission member Scott Hughes of Shreveport said since the commission’s previous vote of last week, the legislature approved a budget for next year that assumed the privatization of the hospitals. That action, he said, would leave no money available to operate the hospitals through LSU if the deals had been rejected.

A lawsuit against the City of New Orleans by the New Orleans Civil Service Commission—not unilateral administration or legislative actions—has traditionally been the precedent the commission considers when presented with layoff plans from state agencies. That decision said that administrations “do not have the unfettered discretion to potentially decimate the civil service system by eliminating all civil service positions to privatization.”

That ruling also said the city must turn over “all documents and other evidence which (might) enable the commission to determine (1) whether any civil service employees will be involuntarily displaced from civil service and if so, (2) whether the contract was entered into for reasons of efficiency and economy and not for politically motivated reasons.”

The question of whether the contracts will produce greater efficiency and economy remain unanswered because the contracts for the privatization of the four hospitals contained insufficient financial details.

Hughes changed his vote of opposition last week to one of approval on Monday after Michael Kaiser, chief executive officer of the LSU Health Care Services Division described the financial arrangements in a general overview with few specifics.

Kaiser said a reduction in federal Medicaid financing to the state would force the closure of facilities. He even listed a number of closures that were under consideration before the lease deals—all of which apparently helped Hughes see the light and to become a convert. “If we were to deny these contracts, we will not be able to provide these services to the citizens,” he said. “I believe these hospitals would close.”

So apparently the procedure is to delete funding from the state budget, thereby creating a crisis by throwing the continued operation of the hospitals into doubt and forcing the Civil Service Commission to do the governor’s bidding by accepting the contracts and in the process, throwing some 4,000 employees out of work.

The CMS spokesperson on Wednesday said, “CMS does not play any role in the actual privatization of the hospitals. “However, as part of the privatization, the State of Louisiana is modifying the Medicaid reimbursement to those hospitals. The change in reimbursement requires the submission of State Plan Amendments (SPA). CMS currently has received some of the necessary SPA and they are under review.”

When asked to be more specific as to the number of SPA responses, he replied, “We’ve received two or three but we don’t have a firm number on how many the state would need to submit.”

Last Jan. 30, Bill Brooks, associate regional administrator for the CMS Division of Medicaid and Children’s Health Operations in Dallas, sent a six-page letter to Ruth Kennedy, director of the Bureau of Health Services Financing for the Department of Health and Hospitals (DHH) in which he requested additional clarifying information which he cautioned had the effect of “stopping the 90-day clock” for CMS to take action on the proposed State plan amendment (SPA) which “proposed to revise the reimbursement methodology for inpatient hospital services to establish supplemental Medicaid payments to non-state owned hospitals in order to encourage them to take over the operation and management of state-owned and operated hospitals that have terminated or reduced services.”

Brooks said a new 90-day clock would not begin until his office had received satisfactory responses to his requests.

A CMS spokesperson on Wednesday clarified that stipulation. “By regulation, we have 90 days from initial submission to review, disapprove or request additional information,” he said. “When we request additional information and the state formally responds, we have an additional 90 days to review and approve or disapprove.”

He said CMS has no control on how long it may take the state to respond. “These are complex state plan amendments, so you can assume that requests for additional information will occur.”

One of the requirements that Brooks cited was one which said CMS “must have copies of all signed standard Cooperative Endeavor Agreements.” He also asked the state to provide all Intergovernmental Transfer (IGT) management agreements and “any other agreements that would present the possibility of a transfer of value between the two entities.”

He said, “CMS has concerns that such financial arrangements meet the definition of non-bona fide provider donations as described in federal statute and regulations.

“Detailed information needs to be provided to determine whether the dollar value of the contracts between private and public entities had any fair market valuation. There can be no transfer of value or a return or reduction of payments reflected in these agreements,” he said.

“Additionally, whether the State is a party to the financial arrangement or not, the State is ultimately responsible to ensure that the funding is appropriate.”

Brooks asked, “How many entities does the State anticipate will participate in this arrangement? Please submit a list of all participating hospitals, all transferring entities doing the IGT, and the dollar amount that the transferring entities will IGT. Please describe how the hospitals are related/affiliated to the transferring entity and provide the names of all owners of the participating hospitals.”

In the case of the Leonard Chabert Medical Center in Houma, the lessee is listed as Terrebonne Medical Center of Houma but in reality, Ochsner Medical Center of New Orleans will be taking over operations of Leonard Chabert.

“What is the source of all funds that will be transferred?” Brooks asked. “Are they from tax assessments, special appropriations from the State to the county (parish)/city or some other source?

“The State plan methodology must be comprehensive enough to determine the required level of payment and the Federal Financial Participation (FFP) to allow interested parties to understand the rate setting process and the items and services that are paid through these rates,” Brooks said. “Claims for federal matching funds cannot be based upon estimates or projections. Please add language that describes the actual historical utilization and trend factors utilized in the calculation,” he said.

Brooks also asked if the private hospitals destined to take over operations of the state facilities are required to provide a specific amount of health care service to low income and needy patients. “Is this health care limited to hospital only or will health care be provided to the general public? What type of health care covered services will be provided?” he asked.

The CMS spokesperson on Wednesday said if CMS disapproved an amendment, “there would be no federal dollars provided for the changes proposed in the State Plan Amendment.”

“No federal dollars” could translate to hundreds of millions of dollars for a state already wrestling with suffocating budgetary constraints.

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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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