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LouisianaVoice 2014 year in review Part Dieu; it just gets weirder and weirder as we barrel with abandon into 2015

Posted in ATC, Budget, Cartoons, Contract, Contracts, Courts, DHH, DOA, Elections, Ethics, Governor's Office, Health Care, Higher Education, House, Lawsuits, Layoffs, Legislators, Legislature, LSU, Media, Office of Group Benefits, Office of Risk Management, OGB, ORM, Privatization, Retirement, Senate, State Police, Veto, Vitter on December 31, 2014| 8 Comments »

In our lowlights review for the first six months of 2014, we were reminded by State Rep. Jerome “Dee” Richard (I-Thibodaux) that we had omitted a major low point in Louisiana politics.

Accordingly, we will preface our second half with the June veto by Gov. Bobby Jindal of HB 142 by Richard and Sens. Francis Thompson (D-Delhi) and Mack “Bodi” White (R-Central) which was pass unanimously by both the House (84-0) and Senate (37-0).

Called by Richard as the only “piece of legislation that would’ve done anything in the form of reform,” HB142 called for a reduction in consulting contracts. Richard said the bill also “would’ve provided transparency in the way the state hands out contracts” and would have provided savings that would have been dedicated to higher education.

“It just made too much sense to Bobby,” Richard said.

Jindal, on the other hand, said the bill would “hinder the state’s efforts to continue to provide its citizens with timely, high-quality services.”

Such high-quality services as paying $94,000 to a firm to assistant students to learn to play during recess; paying consulting fees to Hop 2 It Music Co. or to the Smile and Happiness Foundation.

Jindal also said the bill would “cause significant delays and introduce uncertainty to executing a contract” and would “discourage businesses from seeking opportunities to provide services to the people of Louisiana.”

Which now brings us to the second half of political news that could only occur in Louisiana.

JULY

Troy Hebert back in the news:

Three former ATC supervisors, all black, have filed a federal lawsuit in the Baton Rouge’s Middle District claiming a multitude of actions they say Hebert took in a deliberate attempt to force the three to resign or take early retirement and in fact, conducted a purge of virtually all black employees of ATC.

Baton Rouge attorney J. Arthur Smith, III filed the lawsuit on behalf of Charles Gilmore of Baton Rouge, Daimian T. McDowell of Bossier Parish, and Larry J. Hingle of Jefferson Parish.

The lawsuit said that all three plaintiffs have received the requisite “right to sue” notice from the U.S. Department of Justice pursuant to Equal Employment Opportunity Commission (EEOC) complaints.

So, where are all those savings we were promised?

To probably no one’s surprise except a clueless Gov. Bobby Jindal, the takeover of the Louisiana Office of Group Benefits (OGB) by Blue Cross Blue Shield of Louisiana a scant 18 months ago has failed to produce the $20 million per year in savings to the state.

Quite the contrary, in fact. The OGB fund balance, which was a robust $500 million when BCBS took over as administrators of the Preferred Provider Organization (PPO) in January of 2013, now stands at slightly less than half that amount and could plummet as low as an anemic $5 million a year from now, according to figures provided by the Legislative Fiscal Office.

There is no tactful way to say it. This Jindal’s baby; he’s married to it. He was hell bent on privatizing OGB and putting 144 employees on the street for the sake of some hair-brained scheme that managed to go south before he could leave town for whatever future he has planned for himself that almost surely does not, thank goodness, include Louisiana.

So ill-advised and so uninformed was Jindal that he rushed into his privatization plan and now has found it necessary to have the consulting firm Alvarez and Marcel, as part of their $5 million contract to find state savings, to poke around OGB to try and pull the governor’s hand out of the fiscal fire. We can only speculate as to why that was necessary; Jindal, after all, had assured us up front that the privatization would save $20 million a year but now cannot make good on that promise.

We can save, but we have to let you go…

The Jindal administration announced plans to jettison 24 more positions at the Office of Group Benefits (OGB) as a cost cutting measure for the cash-strapped agency but is retaining the top two positions and an administrator hired only a month ago.

Affected by layoffs are eight Benefits Analyst positions, three Group Benefits Supervisory spots, one Group Benefits Administrator, seven Administrative Coordinators, an Administrative Assist, two Administrative Supervisors, one IT Application Programmer/Analyst and one Training Development Specialist.

All this takes place at a time whe OGB’s reserve fund has dwindled from $500 million at the time of the agency’s privatization in January 2013 to about half that amount today. Even more significant, the reserve fund is expected to dip as low as $5 million by 2016, just about the time Jindal leaves town for good.

Completing the trifecta of good news, we also have learned that health benefits for some 200,000 state employees, retirees and dependents will be slashed this year even as premiums increase.

Neil Riser helps Edmonson revoke the irrevocable:

One of the single biggest state political stories of the year was the surreptitious attempt of State Sen. Neil Riser to slip an amendment into an otherwise nondescript bill ostensibly addressing procedures in handling claims against police officers that would have given State Police Superintendent Mike Edmonson an illegal $55,000 per year retirement boost.

Events quickly began to spin out of control after Riser first denied, then admitted his part in the ruse and as retired state police opposed the move and public opinion mounted against the move, Edmonson, after first claiming he was entitled to the raise, finally relented and said he would not accept the increase.

Meanwhile, Jindal, who signed the bill, was eerily quiet on the issue despite speculation he was behind the attempt to slip the increase into the bill.

State Sen. Dan Claitor, just to make sure Edmonson didn’t go back on his word, filed suit to block the raise and a Baton Rouge judge agreed that the bill was unconstitutional.

The bill, which quickly became known as the Edmonson Amendment, along with the Office of Group Benefits fiasco, constituted the most embarrassing moments for a governor who wants desperately to run for president.

AUGUST

Selective—and hypocritical—moral judgments

Gov. Bobby Jindal weighed in early on the kissing congressman scandal up in Monroe. When rookie U.S. Rep. Vance McAllister was revealed on video exchanging amorous smooches with a female aide, Jindal was all over him like white on rice, calling for his immediate resignation.

Jindal’s judgmental tone was dictated more by the philosophical differences between the two (McAllister wanted the state to expand Medicaid, Jindal most assuredly did not) than any real issues based on morals as Jindal’s silence on the philandering of U.S. Sen. David Vitter who did a tad more than exchange affectionate kisses.

Edmonson Amendment spawns other state police stories:

LouisianaVoice, in its continuing investigation of the Department of Public Safety (DPS), learned that a number of DPS employees enjoy convenient political connections.

  • Dionne Alario, Senate President John Alario’s daughter-in-law, is a DPS Administrative Program Manager;
  • Alario’s son, John W. Alario, serves as a $95,000 per year director of the DPS Liquefied Petroleum Gas Commission.
  • DPS Undersecretary Jill Boudreaux retired on April 28 from her $92,000 per year salary but the day before, she double encumbered herself into the position and reported to work on April 30 in the higher position of Undersecretary. Commissioner of Administration Angéle Davis ordered her to repay the 300 hours of annual leave (about $46,000) for which she had been paid on her “retirement,” but Davis resigned shortly afterward and the matter was never pursued.
  • DPS issued a pair of contracts, hired the contractor as a state employee, paid her $437,000 to improve the Division of Motor Vehicles and ponied up $13,000 in airfare for trips to and from her home in South Carolina. The contractor, Kathleen Sill, heads up a company called CTQ but the company’s web page lists Sill as its only employee.
  • Boudreaux’s son-in-law Matthew Guthrie was simultaneously employed in an offshore job and was on the payroll for seven months of the State Police Oil Spill Commission.
  • Danielle Rainwater, daughter of former Commissioner of Administration Paul Rainwater was employed as a “specialist” for State Police.
  • Tammy Starnes was hired from another agency at a salary of $92,900 as an Audit Manager. Not only was her salary $11,700 more than state trooper Jason Starnes, but she is in charge of monitoring the agency’s financial transactions, including those of her husband.

Thanks, retirees; here’s your bill for medical coverage:

LouisianaVoice was first to break the news that the Jindal administration was planning to force retirees out of the Office of Group Benefits by raising premiums astronomically and slashing benefits.

The news sparked waves of protests from employees and retirees alike, prompted legislative hearings at which Commissioner of Administration Kristy Nichols looked more than foolish in their attempts to defend the ill-conceived plan.

The entire fiasco was the result of the Jindal administrations foolish decision to cut premiums, which allowed the state to be on the hook for lower contributions as well. The money the state saved on matching premiums went to help patch those recurring holes in the state budget. Meanwhile, because of the lower premiums, the $500 million OGB reserve fund shrank to about half that amount as OGB spent $15 million per month more than it received in premiums.

All this occurred just three years after then-Commissioner of Administration Paul Rainwater, in a letter on the eve of the privatization of OGB, promised the continuation of quality service, rates that would be “unaffected” with any increases to be “reflective of medical market rates.” More importantly, he emphatically promised that benefits “will NOT change.”

HHS_2013_SNPS_35_Day

OCTOBER

What premium decrease?

Contrary to the testimony of Commissioner of Administration Kristy Nichols that Buck Consultants recommended that the Office of Group Benefits reduce premiums for members, emails from Buck Consults said exactly the opposite. State Rep. John Bel Edwards (D-Amite) had asked Nichols during legislative committee hearings who recommended the decrease and she replied that the recommendation came from Buck. All witnesses before legislative committees are under oath when they testify.

Surplus, deficit, tomato, to-mah-to:

Nichols “discovered” a previously unknown “surplus” of $320 million in mystery money that set off a running dispute between her office and State Treasurer John Kennedy—an argument that eventually made its way before the Joint Legislative Committee on the Budget.

With a tip of our hat to cartoonist Bud Grace, we are able to show you how that surplus was discovered:

JINDAL SURPLUS SECRET

(CLICK ON IMAGE TO ENLARGE)

Murphy Painter vindicated, Jindal humiliated:

Jindal’s attempted prosecution persecution of fired Director of the Office of Alcohol and Tobacco Control Murphy Painter blew up in the governor’s face when Painter was first acquitted of criminal charges, costing the state nearly half a million dollars in reimbursement of Painter’s legal fees, but Painter subsequently won a defamation suit against his accuser.

Secret survey no longer a secret but “no one” more popular than Jindal:

A survey to measure state employee satisfaction in the Division of Administration (DOA) should be an eye opener for Commissioner of Administration Kristy Kreme Nichols and agency heads within DOA.

Meanwhile, LouisianaVoice has learned that Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) received some exciting news this week when a new poll revealed that no one was more popular among Republican contenders for the GOP presidential nomination.

The excitement was short-lived, however, when the actual meaning of the numbers was revealed.

It turns out that in a CNN poll of New Hampshire voters, Jindal tied with Rick Santorum with 3 percent, while “No one” polled 4 percent, prompting Comedy Central’s Stephen Colbert to joke that Jindal should adopt the slogan “Jindal 2016: No one is more popular.”

To shred or not to shred:

The controversy surrounding the sweeping changes being proposed for the Office of Group Benefits just got a little dicier with new information obtained by LouisianaVoice about the departure of Division of Administration executive counsel Liz Murrill and the possibly illegal destruction of public records from the Office of Group Benefits (OGB) and the involvement of at least two other state agencies.

While it was not immediately clear which OGB records were involved, information obtained by LouisianaVoice indicate that Murrill refused to sign off on written authorization to destroy documents from OGB.

We first reported her departure on Oct. 14 and then on Oct. 22, we followed up with a report that Murrill had confided to associates that she could no longer legally carry out some of the duties assigned to her as the DOA attorney.

But now we learn that the issue has spilled over into two other agencies besides OGB and DOA because of a state statute dealing with the retention of public documents for eventual delivery to State Archives, a division of Secretary of State Tom Schedler’s office.

Reports indicate that Schedler became furious when he learned of the destruction or planned destruction of the records because records should, according to R.S. 44:36, be retained for three years and then delivered to the state archivist and director of the division of Archives, records management and history.

NOVEMBER

Secret grand jury testimony of Greenstein made public:

The Louisiana Attorney General’s office, in an unprecedented move, released the 100-plus pages of testimony of Bruce Greenstein, former Secretary of the Department of Health and Hospitals but the testimony did little in revealing any smoking gun related to the state’s $180 million contract with CNSI. About the only thing to come out of his testimony was the indication of an incredible bad memory in matters related to his dealings with his former bosses at CNSI and a razor-sharp recall of other, more insignificant events.

Approval? We don’t need no stinkin’ approval:

The very first state agency privatized by Gov. Bobby Jindal was the Office of Risk Management (ORM) and after the state paid F.A. Richard and Associates (FARA) $68 million to take over ORM operations and then amended the contract to $75 million after only a few months, the agency was subsequently transferred three times to other firms. The only hitch was a specific clause in the original contract with FARA that no such transference was allowable without “prior written approval” from the Division of Administration. The problem? When LouisianaVoice made an FOIA request for that written approval, we were told no such document existed.

Edwards’ Last Hurrah:

Former Gov. Edwin Edwards, one of the most successful, colorful and charismatic politicians in Louisiana history, lost—decisively. Republican Graves Garrett rode the Republican tide to easily hand Edwards his first political defeat, dating back to his days on the Crowley City Council. Some may remember when Buddy Roemer led the field in 1987, forcing Edwards into a runoff. Technically, though, Edwards did not lose that election because he chose not to participate in the runoff, thus allowing Roemer to become governor. But he would return in 1991 to win his unprecedented fourth term.

DECEMBER

Friends of Bobby Jindal seeking donations:

A new web page popped up seeking donations for the Friends of Bobby Jindal, raising speculations of an attempt at a higher office (president?) since Jindal can’t run for governor again.

The new web page cited a speech by Jindal at a foreign policy forum at which he called for increased military spending.

Gimme the keys to the cars:

The Public Service Commission (PSC) became the second state agency (the State Treasurer’s office was the first) to openly defy Jindal when the administration demanded that the PSC relinquish possession of 13 vehicles as part of the administration’s cost-cutting measures.

We have already examined State Rep. Jerome “Dee” Richard’s attempt to cut consulting contracts which was passed unanimously by both the House and Senate but vetoed by Jindal.

But there was another veto that should be mentioned in context with Jindal’s penny wise but pound (dollar) foolish fire sale approach to state finances.

Earlier this year, State Sen. Jack Donahue (R-Mandeville) managed to get overwhelming passage of a bill that called for more oversight of the tax break programs by the state’s income-forecasting panel.

But Jindal, who never met a tax break he didn’t like, promptly vetoed the bill, saying it could effectively force a tax increase on businesses by limiting spending for the incentive programs.

Only he could twist the definition of removal of a tax break for business into a tax increase even while ignoring the fact that removal of those tax breaks could—and would—mean long-term relief for Louisiana citizens who are the ones shouldering the load. And for him to willingly ignore that fact borders on malfeasance.

Another (yawn) poor survey showing:

24/7 Wall Street, a financial news and opinion company, released a report which ranked Louisiana as the 11th worst-run state in America.

Louisiana, in ranking 40th in the nation, managed to fare better than New Jersey, which ranked 43rd, or eighth worst, something Jindal might use against Gov. Christ Christie if it comes down to a race between those two for the GOP nomination.

Louisiana had “one of the lowest median household incomes in the nation,” at just $44,164, the report said “and 10.7 percent of all households reported an income of less than $10,000, a higher rate than in any state except for Mississippi. Largely due to these low incomes, the poverty rate in Louisiana was nearly 20 percent (19.8 percent) and 17.2 percent of households used food stamps last year, both among the highest rates in the nation. The state’s GDP grew by 1.3 percent last year, less than the U.S. overall.

May we pray?

Meanwhile, Jindal prompted more controversy by having his favorite publisher and LSU Board of Supervisors member Rolfe McCollister run interference in securing the LSU Maravich Center for a political prayer event in January of 2015. The event will be sponsored by the controversial American Family Association and will not (wink, wink) be a political event, Jindal said.

And that, readers, is where we will leave you in 2014.

For 2015, we have an election campaign for governor to look forward to.

Just when you thought it couldn’t get any worse.

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Like Wal-Mart price roll back TV ads, legislative committee likely to force OGB to roll back co-pay, duductible increases

Posted in DOA, Ethics, Governor's Office, Health Care, Legislators, Legislature, Office of Group Benefits, OGB, Privatization, Public Records, State Agencies, Teague on November 6, 2014| 19 Comments »

Two legislative committees charged with oversight of the Office of Group Benefits (OGB) are expected to demand that OGB roll back dramatic increases in health care co-payments and deductibles the agency is attempting to impose on hundreds of thousands of state employees to make up for the Jindal administration’s mismanagement of the agency when they meet in tandem on Friday.

The Senate Finance Committee and the House Appropriations Committee will meet at 10 a.m. on Friday but will not take testimony from the public.

The two committees are expected to instruct Nichols and OGB CEO Susan West to slash the increases in deductibles—some couples’ deductibles increased from $300 to $3,000 under the new plan being proposed by OGB–and co-pays.

OGB has already announced a two-month delay in the implementation of steep increases in prescription drug costs and will refund about $4.5 million in overcharges to state employees.

The Jindal administration is attempting to impose the co-pay and deductible increases as a way to recover hundreds of millions of dollars the administration managed to squander as a cost-savings to the state’s own contributions to employees’ premiums as a means to cover huge gaps in Jindal’s state budget.

The entire scenario reads like the script from an old I Love Lucy sitcom as everything the administration had done with OGB has blown up in its face in an improbable comedy of errors. How more insulting to legislators could it get than for Commissioner of Administration Kristy Nichols to provide false testimony to the Joint Legislative Committee on the Budget on Sept. 25 shortly before abruptly leaving the JLCB meeting to take her daughter to a boy band concert in New Orleans?

When asked point blank by State Rep. John Bel Edwards at that Sept. 25 hearing–before heading out to the Smoothie King Arena to settle into the governor’s luxury box seats for the concert—which actuary recommended that OGB reduce premiums by nearly 9 percent, she testified that Buck Consultants made the recommendation.

But Buck reportedly responded by email within days that it never made any such recommendation and that Nichols’ testimony was in direct contradiction to its recommendations.

A July report from Buck reinforces its claim that it never made any such recommendation. “We did not recommend a decrease of 7% effective August 1, 2012, or an additional decrease of 1.77% effective August 1, 2013. Further, we were not asked to provide any recommended rate adjustments for any fiscal years beyond what we provided for Fiscal Year 2012/2013,” the report says.

When witnesses sign cards prior to speaking before a legislative committee, they are certifying that they understand that their testimony is considered as being given under oath.

Edwards also asked at the hearing that Nichols or West provide him with a copy of that recommendation but he said on Wednesday (Nov. 5) that he still had not received that information. “I still have not received any actuarial recommendations for the 2013 and 2014 premium reductions at OGB,” he told LouisianaVoice. “Nor have they told me that such recommendations do not exist. Clearly, they do not.”

If someone were to set out to demonstrate how incompetent an administration could be, he would be hard pressed to find a better example than the manner in which it has handled the Office of Group Benefits—from firing an effective CEO who built up a $500 million reserve fund in favor of a revolving door approach to subsequent CEOs, to firing experience claims handlers with whom OGB members were comfortable, to hiring a California firm with no knowledge of Louisiana’s medical coverage program to handle telephone inquiries because experienced OGB staff were also fired, to attempting to implement emergency rules to enact the cost increases in co-pays and deductibles without the legally required public hearings, to having to refund $4.5 million in prescription drug overcharges for the same violation of the emergency rules procedures, to first claiming that it was not necessary to invoke the emergency rule and then deciding to do just that, to lying to legislators about actuarial recommendations of premium reductions.

The FUBARs and SNAFUs of OGB are so many and so irreversible that they should give pause to anyone who would entertain even the fleeting notion that Gov. Bobby Jindal is capable of leading the free world when, through his inept surrogates, he has, in less than two years, destroyed a relatively small but viable, efficient state agency.

Jindal and Nichols, of course, have a ready explanation for the OGB financial woes: medical costs have risen and it’s all Obamacare’s fault—never Jindal’s.

It’s the same arrogance level as that was demonstrated by Nichols in another appearance before a legislative committee when, trying to explain budget figures, she said somewhat condescendingly, “Let me dumb it down for you.”

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Jindal’s latest accounting ploy bolsters disturbing perception that his administration is quickly mutating into ‘Enron East’

Posted in Book Review, Budget, Business, Contract, Contracts, Corruption, DOA, Ethics, Finances, Fraud, Governor's Office, Legislators, Legislature, Office of Group Benefits, OGB, Politicians, Privatization, Public Records, Revenue, State Agencies, Teague, Transparency on October 12, 2014| 33 Comments »

When Jeff Skilling took over as President and Chief Operating Officer of Enron in June of 1990, he did so only after insisting that the company convert from conventional accounting principles to a method preferred by his former employer, McKinsey & Co.

In 2001, hedge fund manager Richard Grubman said to Skilling, “You are the only financial institution that can’t produce a balance sheet or cash flow statement with their earnings.” By October of that same year, Enron had begun its death spiral in a historic collapse that would pull the giant accounting firm Arthur Andersen down with it.

The key to Enron’s failure was the mark-to-market accounting method, where anticipated revenues and profits are entered into the company’s books before they are ever received. The system allowed Enron to conceal losses and to inflate profits for nearly 11 years before its house of cards came crashing down.

On Thursday (Oct. 8), nearly seven years into his administration, Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) rolled out a new accounting formula with an alarmingly familiar ring to it.

Jindal, like Skilling, is a McKinsey alumnus.

Commissioner of Administration/Surrogate Gov. Kristy Kreme Nichols announced that the state, instead of having a deficit of $141 million as claimed by State Treasurer John Kennedy, will suddenly have a surplus of $178.5 million, a gaping difference of $319.5 million.

Nichols did not reveal how the $178.5 million was arrived at but Kennedy said the administration is switching to a cash balance form of accounting instead of the modified accrual basis employed by state governments. “If we use the methodology we have always used,” he said, “we don’t have a surplus. We have a $141 million deficit.

“The commissioner says the calculation has been inaccurate for years and it needs to be changed,” he said. “They have to explain why we have been doing it wrong all these years and why the Revenue Estimating Conference is doing it wrong.”

Nichols, an appointed state employee, was less than deferential to Kennedy, a statewide elected official when she sniped back at Kennedy, saying, “I’m surprised the treasurer is not reporting this.” She added that Kennedy is obligated to report available revenue. “He should probably do a review of the accounts to ensure there are no more outstanding revenues he is not reporting.”

Kennedy and Jindal have been at odds for years over fiscal policy, so it was no surprise to see Kristy Kreme, with her super-sized ego, get a little mouthy with the state treasurer. After all, she bolted from a House Appropriations Committee hearing on the Office of Group Benefits on Sept. 25 to take her daughter to a One Direction boy band concert at the New Orleans Smoothie King Arena where she watched from the comfort of Jindal’s executive suite.

Just as Enron misrepresented its finances for years, it now appears that the Jindal administration may be attempting the same tactic, prompting one political observer to say, “If cooking the books isn’t malfeasance, what is? The bond rating agencies and others rely on the CAFR (Comprehensive Annual Financial Report), where the year-end position is officially reported in decision making and they are not going to like this.”

Another Jindal critic asked rhetorically, “What happens when a state ends a fiscal year with a deficit of $141 million but the administration of the day pretends that there is actually a surplus of $178 million? I don’t think there is any precedent for such a thing ever happening anywhere. This is starting to sound like Enron!”

Odd as it may seem to make that comparison, the similarities between Jindal and Enron run much deeper than the latest developments surrounding the new accounting methods. Here are some points about Enron lifted from The Smartest Guys in the Room: the Amazing Rise and Scandalous Fall of Enron (Penguin Books, 2003), a probing book by Bethany McLean and Peter Elkind about the failed energy company: http://www.goodreads.com/book/show/113576.The_Smartest_Guys_in_the_Room

  • The Deutsche Bank once described Enron as “the industry standard for excellence.” Jindal boasted of instituting the “gold standard for ethics” in Louisiana.
  • When the chief accounting officer of Enron Wholesale expressed concern about wholesale electricity sales, she was reassigned. When another employee questioned Skilling on his claim that Enron was going to make $500 million, she was laid off that same day. When state employees or legislators complain or do not vote with the administration, they are teagued.
  • Pollster Frank Luntz said instability and chaos were defining features at Enron and the six company reorganizations in just 18 months were a “running joke” and that Enron’s lack of discipline was “destructive and demoralizing.” Jindal’s penchant for reorganization and reform has created a similar atmosphere within state government.
  • Enron sold assets and booked the one-time proceeds as recurring earnings. Nearly 40 percent of Enron’s 1998 and 1999 earnings came from sales of assets rather than from ongoing operations. Jindal over the past several years has sold state property, buildings, and entire agencies and turned state hospitals over to private entities.
  • Both Skilling and Jindal are alumni of the blue-chip consulting firm, McKinsey & Co., which wrote the Enron business plan and as far back as 1986, advised AT&T there was no future in the market for cell phones. McKinsey also was an advocate of mark-to-market accounting practices.
  • Both Skilling and Jindal thought—and think—like a consultant. Skilling felt that a business should be able to declare profits at the moment of the signing of an agreement that would earn those profits. But just because traders were reporting earnings under mark-to-market accounting, it did not necessarily follow that the money was in hand. See this link: http://theadvocate.com/news/10494146-123/jindal-budget-surplus-questioned
  • A Wall Street banker said of Skilling: “He’s either compulsively lying or he’s refusing to recognize the truth.” Another banker worried that Enron executives were not carrying out their fiduciary duties and questioned “sweetheart deals” negotiated by them.
  • Skilling believed that social policies designed to temper the markets were “wrongheaded” and counterproductive. “Wrongheaded” has been a favorite term invoked by Jindal whenever he has suffered setbacks at the hands of the courts on issues ranging from education reform to a revamp of state retirement plans.
  • When asked a question he didn’t like, Skilling, in a tactic learned from his days at McKinsey, responded by dumping “a ton of data on you.” Jindal’s one outstanding skill is to spew statistics and factoids in rapid-fire fashion that can overwhelm and confuse challengers.
  • Skilling, like Jindal, was considered brilliant and extremely articulate. He, like Jindal, always seemed to have the right answer and whenever he was asked about problems it was always someone else’s fault.
  • Skilling displayed no remorse for his own actions, nor did he have any sense that he hired the wrong people or emphasized the wrong values. (See above.)
  • Enron founder Ken Lay saw himself as a business visionary, much as Jindal portrays himself as a policy guru. Lay traveled the world to offer his wisdom on everything from energy deregulation to corporate ethics to the future of business. (Ditto)
  • At the end, Enron employees’ accounts were frozen even as top executives were walking away with fortunes.
  • Efforts by Enron and Arthur Andersen to avoid reporting $500 million in losses “only pushed the problem further off and added another tangle to the fragile web of accounting deceptions.” Do we really need to elaborate here?
  • Enron executives accepted the argument that wealth and power demanded no sense of broader responsibility which in turn led them to embrace the notion that ethical behavior requires nothing more than avoiding the explicitly illegal, that refusing to see the bad things happening in front of you makes you innocent and that telling the truth is the same thing as making sure no one can prove you lied.
  • Enron’s mission was nothing more than a cover story for massive fraud, much as Jindal’s administration is being exposed almost daily as a sham. The story of Enron, like that of Jindal, was a story of human weakness, of hubris and greed and rampant self-delusion, of ambition run amok, of a business model that didn’t work and of smart people who believed their next gamble would cover their last disaster—and most of all, of people who couldn’t—or wouldn’t—admit they were wrong.
  • Enron once aspired to be “the world’s greatest company” but rather became a symbol for all that was wrong with corporate America, exposing Lay’s flaws as a businessman that could no longer be hidden behind Enron’s impressive but misleading façade and Skilling’s glib rhetoric.
  • Despite Enron’s efforts to camouflage the truth, there was more than enough in the public record to raise the hackles of any self-respecting analyst (read: reporter). Analysts (read: reporters) are supposed to dive into a company’s financial records, examine footnotes and even elbow their way past accounting obfuscations. Their job, in short, is to analyze (re: report).

In the end, of course, Enron crumpled under the weight of its own corruption and mismanagement, destroying thousands of lives and even taking down one of the big five accounting firms in the process.

The Jindal administration with each passing day, with every revelation of some new scandal (the Edmonson Amendment, CNSI, the Murphy Painter fiasco, et al) and with each new flawed policy (the Office of Group Benefits debacle), is looking more and more like a train wreck that will adversely affect Louisiana citizens for years to come.

Just call it Enron East.

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MedImpact problems abound for OGB members; Gingrich, Tauzin linked to company through separate organizations

Posted in DHH, DOA, Health Care, House, Legislature, Office of Group Benefits, OGB, Office of Group Benefits on October 4, 2014| 12 Comments »

You wouldn’t ordinarily expect to see the names of two prominent former congressmen bob to the surface when discussing a health care benefit program for state workers in Louisiana.

But when Office of Group Benefits (OGB) switched to MedImpact, a San Diego company, to provide its prescription drug benefit management services on Jan. 1, the state awarded an 18-month, $350 million contract to a company tied to the 2007 Republican presidential nomination quest of former U.S. House Speaker Newt Gingrich. http://hl-isy.com/Products-and-Services/Pharmacy-Benefit-Evaluator/PBE-Abstracts/2012/MedImpact

And those who listened to testimony last week before the Louisiana House Appropriations Committee learned that the company has proved to be less than satisfactory in handling claims for pharmaceutical benefits.

Gingrich launched the Center for Health Transformation as part of an ambitious consulting and communications conglomerate to let consumers, not health maintenance organizations (HMOs), choose their doctors, medical treatments and hospitals.

While the concept might be a good one on the surface, Gingrich failed to reveal that his idea would greatly benefit drug manufacturers, health insurers and other health care professionals who paid up to $200,000 annually to participate in the center’s operations.

MedImpact was one of those companies who ponied up the big bucks for that privilege.

Sid Wolfe, director of health research for the watchdog group Public Citizen, called Gingrich’s taking money from organizations like MedImpact and then using the weight of his name to advance the interests of those organizations “a massive financial conflict of interest.”

And when Gingrich again flirted with seeking the GOP presidential nomination in 2012, one of the men he chose to co-chair his Florida chairman was Alan Levine, former Secretary of Louisiana Department of Health and Hospitals under Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) and former Secretary of Health Care Administration for former Florida Gov. Jeb Bush.

Even former Congressman Billy Tauzin of Louisiana has entered the picture as co-chair of Medicine Access and Compliance Coalition (MACC), an assortment of health care providers who advocate lower drug prices through the federal 340B Program. http://www.huffingtonpost.com/2013/08/13/billy-tauzin-drugs_n_3719468.html

Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs at discounted prices to taxpayer-supported health care facilities that provide care for uninsured and low-income people. http://www.aha.org/content/13/fs-340b.pdf

The program allows eligible hospitals and community health centers to reduce pharmaceutical costs to patients.

That would seem to be a radical departure from Tauzin’s previous position as head of the Pharmaceutical Research and Manufacturers of America (PhRMA).

You may remember how in one of his last official acts as Congressman from Louisiana’s 3rd District Tauzin of Chackbay in Lafourche Parish, pushed through that 2003 bill that prohibited the federal government from negotiating pharmaceutical costs for Medicare patients. http://www.nola.com/politics/index.ssf/2013/08/ex_rep_billy_tauzin_smack_in_t.html

Right after that legislative coup, the Democrat-turned-Republican went to work for PhRMA, eventually earning an eye-popping $11.6 million per year. http://www.bloomberg.com/news/2011-11-29/tauzin-s-11-6-million-made-him-highest-paid-health-law-lobbyist.html

No sooner had MedImpact came forward with its presentation on ways in which hospitals may be missing out on opportunities to profit from 340B. In that presentation, MedImpact promised hospitals that it could work “with any wholesaler, pharmacy or claims processing service,” providing hospitals “with the lowest prices, maximum flexibility and revenue.”

Then, last December, OGB sent a letter to its members informing them that MedImpact would begin providing pharmacy benefit management (PBM) on Jan. 1. CCF10032014_0001

Medicare-eligible retirees and their Medicare-eligible dependents would be covered by MedGenerations, a subsidiary of MedImpact, supposedly under that same $350 million contract given that there was no separate contract listed for MedGenerations.

Horror stories about MedImpact and MedGenerations began emerging almost immediately.

A Nightmare called Bobbycare: prelude to healthcare ruin (alternate headline: the time has come to privatize Jindal)

Henry Reed, a retired State Fire Marshal’s office employee, testified before the House Appropriations Committee on Sept. 25 that he fought FEMA for hurricane recovery money on behalf of the state but has experienced nothing but frustration with the state’s pharmaceutical management service. A victim of both epilepsy and narcolepsy, Reed said he has to take one medication that costs $2,000 per one-month supply.

His doctor prescribed two pills per day of that medication but “Medimpact informed me they would pay for only one pill per day. Apparently someone sitting at a desk in California knows more about my condition than my doctor.

“I thought I had a good health plan,” Reed said. “I called OGB and they referred me to Medimpact.”

The company simply refused to even approve prescription medications for the son of OGB member Dayne Sherman until he was forced to jump through all types of bureaucratic hoops to get the prescription approved.

So, what is the motivation for Medimpact to arbitrarily cut medications in half or to refuse them outright? Does it get to keep that part of the $350 million that isn’t spent on medications? Does it receive some other incentive to deny or reduce claims? Has it taken lessons from the McKinsey Group, which taught Allstate and State Farm how to delay, deny and defend claims stemming from Hurricane Katrina?

And for that matter, what do MedImpact’s employees think of their employer?

A sampling of postings on a web page that lets employees rate their employers anonymously is not kind to the company:

  • “They can pay you well and give good benefits in exchange for your soul.”
  • “No one is encouraged to think about what they are doing and try to make it better. The leadership team is completely disconnected.”
  • “Great people to work with; lousy leadership.”
  • “Strange, secretive leadership. A lack of clarity, vision and generally poor downward communication.”
  • “Lack direction, unorganized and management sucks.”
  • “Upper management tends to chase bright shiny objects. Burnout is high.”

You can read more here: http://www.glassdoor.com/Reviews/MedImpact-Reviews-E40035.htm

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Baton Rouge newapaper’s praise of Edmonson’s ‘refusal’ of retirement raise is disingenuous and an insult to its readers

Posted in Corruption, Ethics, Judges, Lawsuits, Legislators, Legislature, Media, Retirement, Revenue, State Police on September 20, 2014| 19 Comments »

It’s seldom that I disagree publicly with members of the fourth estate. Besides preferring to focus my energy on reporting on the myriad ways state government falls short of its number one priority of protecting the interests of the state and its citizens, I generally have a deep professional respect for our peers in the media.

I worked for 30-plus years in various capacities—sports reporter, news reporter, copy editor, investigative reporter and managing editor—for several newspapers all over the state, including Monroe, Shreveport, Donaldsonville, Baton Rouge and four separate stints at the Ruston Daily Leader where I began almost 50 years ago. I kept returning at a higher position mostly because of my loyalty to my mentor, Publisher Tom Kelly. I even managed to pick up a few reporting awards along the way, including three for investigative reporting.

A news reporter will never get rich working for a newspaper; the pay just isn’t that good. Those who spend their time sitting through endless hours of city council, police jury, school board and even legislative committee meetings, mind-numbing courtroom testimony and who climb out of bed in the middle of the night to cover a shooting or a fire do so for the love of the profession.

So yes, I do maintain an abiding respect for these dedicated individuals.

But when I see facts deliberately being glossed over and key points ignored in order to protect or project a favorable image of a public official who has deliberately and blatantly attempted to use his position or to manipulate the political system to his financial advantage, I cannot in good conscience keep quiet.

The Baton Rouge Advocate editorial of Friday, Sept. 19, stands out as one of the most unabashedly transparent attempts to pin a bouquet on a state official who recently condoned one of the most underhanded attempts at abusing the legislative process in recent memory.

That attempt, of course, was the amendment by State Sen. Neil Riser (R-Columbia) to Senate Bill 294 in the closing hours of the recent legislative session. The bill, authored by State Sen. Jean-Paul Morrell (D-New Orleans) originally addressed procedures to follow in disciplinary cases for law enforcement officers but was amended to give State Police Superintendent Mike Edmonson special treatment in awarding him an unconstitutional increase in retirement income of somewhere between $30,000 and $55,000 per year.

Riser added the amendment during a conference committee meeting on the bill. Riser was one of three senators and three House members on the conference committee and on the final vote for passage, House members were told, incorrectly, the bill’s passage would create no fiscal impact.

Bobby Jindal’s executive counsel Thomas Enright, Jr., whose job it is to review bills for propriety and constitutionality, gave the bill his blessings and Jindal promptly signed it into law as Act 859.

LouisianaVoice broke the initial story about how the bill allowed Edmonson to revoke his decision years ago to enter into the state’s Deferred Retirement Option Plan (DROP) which froze his retirement benefits at his then-pay level of $79,000 at his rank of captain. By allowing him to renege on his decision which was supposed to be irrevocable, it allowed him to retire at a rate based on his current colonel’s salary of $134,000. Because he has 30 years of service, he receives 100 percent of his salary as his retirement. Thus, the amendment gave him an instant yearly increase in retirement of something between $30,000 and $55,000.

The amendment inadvertently just happened to include one other person, Master Trooper Louis Boquet of Houma, though he was unaware of the amendment and its implications until the public outcry erupted.

A state district judge, ruling on a lawsuit brought by State Sen. Dan Claitor, said the amendment was unconstitutional on several grounds, thereby killing Edmonson’s retirement windfall.

The four-paragraph Advocate editorial on Friday noted that the matter had been “laid to rest” and noted that such furtive bills are common in the Louisiana Legislature. http://theadvocate.com/news/opinion/10299405-123/our-views-a-lesson-for

But it was a single sentence in that editorial that set me off:

“It is to the credit of Col. Mike Edmondson (sic) and Master Sgt. Louis Boquet, of Houma, that they declined to accept the raise because of irregularities in its passage.”

What?!! Besides the misspelling of Edmonson’s name, the editorial completely (and apparently purposefully) omitted key elements of this sordid story.

  • Edmonson defended the amendment and his additional retirement on Public Radio’s Jim Engster Show;
  • He admitted on that same show that “a staff member” had approached him about the possibility of increasing his retirement benefits via the amendment and he personally okayed that staff member to proceed with the legislative maneuver;
  • Neil Riser first denied any knowledge of how the amendment originated but later confessed that it was he who inserted the language into the bill;
  • The legislative fiscal notes (which detail the potential financial impact of pending bills) were not submitted until three days after the session adjourned, evidence that the entire episode took place on the down low, hidden from public view;
  • During a hearing on the amendment by the State Police Retirement System Board, it was revealed that the board’s actuary was initially approached about the amendment “a few weeks” before the close of the session, further evidence that the move was in the works long before that fateful final day of the session;
  • At that same hearing, it was also revealed that the “staff member” who initiated efforts to pass the amendment was State Police Lt. Col. Charles Dupuy, Edmonson’s chief of staff;
  • Edmonson did not reject the raise until the heat from the public and from retired state police officers became so intense that it was politically impossible for him to go through with the charade. The added threat of a lawsuit by retired state troopers and the attacks on the amendment by State Treasurer John Kennedy only served to ensure the foolhardiness of any continued attempts to claim the money;
  • The way the entire affair played out implicated everyone concerned—Jindal, Enright, Riser, Dupuy and Edmonson—in a pathetic attempt to conceal the deed from public view.

In short, Edmonson’s decision was anything but magnanimous. Quite simply, it was forced upon him by the glaring light of public scrutiny—the one thing he feared most.

This silly effort by the Advocate to make Edmonson’s decision seem noble and to make it appear to be anything other than the hands in the cookie jar scenario that it was is a disservice to its readers and an insult to their intelligence.

Perhaps the Advocate should stick to its previous hard-hitting editorials about how nice sunshine is and how lovely the Spanish moss-laden oak trees on the Capitol grounds are.

When John Georges purchased the Advocate from the Manship family, he went before the Baton Rouge Press Club where he made the utterly bizarre statement that he was focused on “not making people angry.”

I’m sorry Mr. Georges, but when you establish a policy of attempting to publish as little offending reporting as possible, that’s a cowardly decision and you’re simply not doing your job.

It was Thomas Jefferson who said, “If I had to choose between government without newspapers and newspapers without government, I wouldn’t hesitate to choose the latter.”

Georges has obviously chosen the former.

And that decision has made the Advocate less of a newspaper, good only for crawfish boils and housebreaking a puppy.

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