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Archive for the ‘ORM, Office of Risk Management’ Category

Attorney General opinion accuses π-yush of parliamentary chicanery in Office of Group Benefits privatization contract

Posted in ALEC, American Legislative Exchange Council, Attorney General, Campaign Contributions, Civil Service, Contract, Contracts, Ethics, Governor's Office, Health Care, Jobs, Layoffs, Legislature, Legislators, OGB, Office of Group Benefits, ORM, Office of Risk Management, Prison, Privatization, RFP, Request for Proposals, Transparency on September 15, 2012| 5 Comments »

A Louisiana Attorney General’s opinion released Friday has accused the administration of Gov. Piyush Jindal of attempting an end run around the legislature in its efforts to privatize the Office of Group Benefits (OGB).

Meanwhile, another state prison is abruptly closed by Jindal.

The eight-page opinion, written by Assistant Attorney General Michael J. Vallan, says that the proposed privatization of the Office of Group Benefits and the ensuing contract with Blue Cross/Blue Shield of Louisiana must be approved by the House Appropriations Committee and the Senate Finance Committee, as well as the Office of Contractual Review.

But don’t expect Jindal to capitulate too easily, for while the opinion, which boiled down to a interpretation of under which state statute the privatization action was taken, is just that—an opinion. It has no force of law and the likely action to be taken by Jindal and the Division of Administration (DOA) is to simply ignore it and proceed as planned.

The only recourse in such a scenario, would be for the legislature to file suit against Jindal to get a determination of which statute should apply in the privatization process—one which effective bypasses legislative authority or one which specifically requires approval of the two committees.

The requirement for approval of the Office of Contractual Review may as well have been deleted from the opinion since the office is a part of DOA and answers directly to Commissioner of Administration Paul Rainwater, making that agency’s approval a virtual given.

The Division of Administration, through OGB issued a request for proposals (RFP) earlier this year and on April 30 issued a Notice of Intent to Contract (NIC) for Administrative Services Only (ASO), meaning for the awarding of a contract to a third party administrator (TPA) to take over the administrative duties for the state’s Preferred Provider Organization (PPO) plan, the High Deductible Health Plan (HDHP) with Health Savings Account (HAS), and the LaChip Affordable Health Plan (LaCHIP).

Blue Cross Blue Shield of Louisiana (BCBS) was already serving as third party administrator for the state’s HMO coverage for state employees and their dependents through OGB and on July 20, OGB issued a report and recommendation to the Evaluation Committee in which it proposed awarding the PPO, HDHP, HAS and LaCHIP business to BCBS as well.

That recommendation was approved by the State Civil Service Commission on Aug. 1.

State Rep. Katrina Jackson (D-Monroe) two days later requested an expedited legal opinion from the attorney general’s office based on her belief that the legislature had to sign off on the awarding of such contracts.

Vallan, in his opinion, said that Louisiana Revised Statute 42:802(B)(8)(b) “clearly provides that any such contract shall be subject to review and final approval by the appropriate standing committees of the Legislature having jurisdiction over review of agency rules by OGB as designated by (statute), or the subcommittees on oversight of such standing committees, and the Office of Contractual Review of the Division of Administration.”

“It is our understanding that the House Appropriations Committee and the Senate Finance Committee are the appropriate standing committees having jurisdiction over OGB rules.

“Therefore, pursuant to the plain language of …42:802, it is the opinion of this office that any contract negotiated by OGB pursuant to the authority granted by …42:802(B)(8) shall be subject to review and final approval by the House Appropriations Committee and the Senate Finance Committee.”

The entire issue hangs on which statute was used in the issuance of the NIC and the subsequent awarding of the contract to BCBS.

“According to OGB,” Vallan said, “the contract at issue was not negotiated pursuant to the provisions of …42:802(B), but was instead negotiated pursuant to the authority provided by Louisiana Revised Statute 42:851.”

While acknowledging that 42:851 does not require legislative approval of contracts, Vallan said, “Our reading of …42:851 is that it applies to situations where a particular state governmental or administrative subdivision, department, agency, school system, etc., intends to procure private contracts of insurance for its respective subdivision, department or agency.

“We do not believe that …42:851 provides OGB with the authority to enter into the proposed contract with BCBS. We are of the opinion that such authority is clearly granted by …42:802. An interpretation of both …42:802 and 42:851 authorize OGB to execute the proposed contract with BCBS would render the provisions of (the two statutes) duplicates of each other and their provisions superfluous and/or meaningless. Such an interpretation should be avoided.”

Vallan said that by enacting 42:802, it was clear that the legislature “has expressed its desire that contracts governing the provision of basic health care services, as well as certain other related contracts be subject to review and final approval by the legislature.

“To interpret …42:851 as offering some sort of alternative route to execute such contracts, thereby escaping legislative oversight, appears to be contrary to the logic and presumed fair purpose the legislature had in enacting …42:802.

“In summary, it is the opinion of this office that the proposed contract between OGB and BCBS is a contract negotiated pursuant to the provisions of …42:802. As such, the contract is subject to review and final approval by the appropriate standing committees of the legislature having jurisdiction over review of agency rules by the Office of Group Benefits.”

Almost lost in all the legalese is the fact that if Jindal’s privatization plan is ultimately approved—by the legislature or by the courts—121 state employees who show up each day to see to it that the medical claims of more than 100,000 state employees, retirees and their dependents are paid in a timely fashion will see their jobs vanish.

Jindal sees privatization through rose-colored glasses—provided him, no doubt, by generous corporate campaign contributors—despite the obvious pitfalls.

Take the Office of Risk Management (ORM), for example. It was the first state agency to be privatized and the company that the state paid $68 million to take over the TPA functions. The takeover was to occur in phases, with the worker’s compensation section one of the first to go and the road hazard section scheduled later this year as the last section to go over.

One of the conditions of the privatization contract was that the TPA absorb displaced ORM employees for a minimum of one year.

In only about eight months after taking over ORM in September of 2010, the contractor, F.A. Richard and Associates (FARA) of Mandeville, was back, asking for an amendment of a tad over $6.8 million to its contract, bring the total to just under $75 million.

Because the request was for an additional 10 percent, legislative approval was not necessary; there is a provision that contractors may get a one-time bump of 10 percent without legislative concurrence.

Legislators were not too happy to learn of that provision but in less than a month, FARA sold out to a company in Ohio which in a matter of only a few more months, sold out to a company in New York.

But here’s the clincher: the contract with FARA contains a clause which specifically says that its contract with ORM may not be transferred or reassigned without prior written approval. When DOA was asked for a copy of the written approval to transfer the contract to each of the out-of-state companies, the response was no such document existed.

So, because of not one, but two flagrant violations of its contract for privatization, ORM is being run by an out-of-state corporation even before all the ORM sections were phased into the contract.

And where are those former ORM employees today? Well, it seems, only a handful of former ORM employees remain there.

OGB remains on the privatization chopping block despite the encouraging legal opinion of the state’s highest legal office. It remains to be seen how it all will play out.

Meanwhile, Jindal, having failed to privatize state prisons as he wished, is simply closing facilities. J. Levy Dabadie Correctional Center was closed earlier this year with nary a word to area legislators of his intent.

On Friday, September 14, Jindal dropped another bombshell.

C. Paul Phelps Correctional Center in DeQuincy is being closed with its 700 medium security prisoners to be transferred to Angola State Penitentiary.

Again, state employees, about 150 of them, have had their livelihoods jerked from under them with no prior warning. About 70 of those will be given the opportunity to transfer to Angola. As for the rest?

Apparently they’re not Jindal’s problem. After all, he likes to say do more with less.

And now, with such a stellar record to back him up, Jindal is turning his attention to the privatization of the LSU Health System and its 10 affiliated hospitals statewide that treat the state’s poor and which train medical students.

Does anyone see a trend?

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What happens when a dictator gains control over education, health care, legislators? Ask Gov. π-yush, campaign donors

Posted in ALEC, American Legislative Exchange Council, Contract, Contracts, Education, Ethics, Governor's Office, Health Care, Higher Education, House, Senate, Layoffs, Legislature, Legislators, LSU, OGB, Office of Group Benefits, ORM, Office of Risk Management, Privatization, Transparency on September 7, 2012| 6 Comments »

Let the dismantling begin.

The LSU Board of Supervisors, packed with 11 of its 15 members who contributed an aggregate of more than $225,900 to Gov. Piyush Jindal’s political campaigns, voted Friday to take the first official step toward what will likely become the complete destruction of the LSU Health System.

The board, which since April has fired, demoted or reassigned LSU President John Lombardi, health system head Dr. Fred Cerise, Interim LSU Public Hospital CEO Roxanne Townsend and LSU System General Counsel Ray Lamonica, voted on Friday to authorize LSU hospitals in Shreveport, Monroe and Alexandria to develop requests for proposals (RFPs) for public-private partnerships for the three hospitals.

Jindal has already slashed $14 million in appropriations for Lallie Kemp Regional Medical Center in Tangipahoa Parish. That represents nearly 35 percent of the facility’s total budget and will mean the loss of surgery, cardiology and ICU services and dramatic cuts to oncology, gynecology and disease management as well as up to 150 staff members who stand to lose their jobs.

Additionally, the LSU Hospital in Bogalusa had its budget cut by $3 million, forcing the facility to close several clinics and to absorb pediatrics into primary care.

In Mandeville, Southeast Louisiana Hospital is slated for closure beginning next month, leaving the Florida parishes, Orleans, Jefferson, St. Bernard and Plaquemines parishes with no state mental health treatment centers.

W.O. Moss Regional Medical Center in Lake Charles also was designated for massive budget cuts and University Medical Center (UMC) in Lafayette was earmarked for $4.2 million in cuts but Jindal said the LSU plan would “protect critical services.

In an apparent effort to head off employee protests, UMC administrator Larry Dorsey notified employees not to attend a public rally—on or off the clock—protesting the cutbacks subject to disciplinary measures. That email was in stark violation of state civil service rules which specifically allow employees to attend such rallies as long as it is on their own time.

The Shreveport Times Friday morning published a story saying that LSU System supervisors would vote later in the day on beginning the process to develop RFPs on public-private hospital partnerships for hospitals in Shreveport, Monroe and Alexandria.

LSU Health spokesperson Sally Croom said the resolution, which was not added to the board’s agenda until Thursday, apparently after Lamonica was forced to resign as general counsel, and after the reassignment of Townsend, would give officials authority to develop an RFP.

Late Friday, as has become the custom of the administration, the announcement was formally made. Robert Barish, chancellor of LSU Health Shreveport, notified “faculty, staff and friends” by memorandum.

“As promised, I wanted to update you on the most recent activity regarding our continuing efforts to ensure a successful future for LSU Health Shreveport in the wake of the federal cuts to Louisiana’s Medicaid budget,” he said. “As you might recall, we were asked to explore several approaches to address the continuing budget challenges or our hospital system.

“Today, the LSU Board of Supervisors authorized us to explore public-private partnerships for our three hospitals. It is important to note that this is being done to see how collaboration with other hospitals might look and whether this may be a workable option.

“We will follow the Board instructions to explore this option, which is among several we are looking at during this fact-finding process. We have been looking at other hospitals which have faced similar situations successfully.

“We are committed to a thorough fact-finding process and exploring possibilities that would ensure continuation of our important missions of education, patient care and research.

“I will keep you updated as more information becomes available.”

It was not immediately known if similar messages were sent to employees of the facilities in Monroe and Alexandria.

The resolution passed by the board said:

• BE IT RESOLVED by the Board of Supervisors of Louisiana State University that LSU Health Sciences Center Shreveport and Health Care Services Division are hereby authorized to develop and seek a Request for Proposal for the purpose of exploring public private partnerships for the LSUHSC-S affiliated hospitals, namely the LSU Medical Center in Shreveport, the E.A. Conway Medical Center in Monroe and the Huey P. Long Medical Center in Pineville/Alexandria and each of the hospitals in Health Care Services Division; and

• BE IT FURTHER RESOLVED that this is necessary for identifying potential partners and long-term strategies which may help ensure the organization’s clinical services and financial stability in light of budgetary challenges caused by the recent decrease in federal Medicaid funding; and

• BE IT FURTHER RESOLVED that the authority to seek a Request for Proposal does not mandate the Request for Proposal be released, nor does it mandate a proposal be accepted should one be released. The President shall have the discretion to authorize the release of the Request for Proposal and to accept the proposal that he deems in the best interest of the university.”

So, there you have it. A figurehead president brought out of retirement to replace a president who had a bad habit of being candid and outspoken is given the final authority to release the RFP and to accept the proposal “that he deems in the best interest of the university.”

What are the odds that this interim president and his hand-picked board will take any action, up and including taking a bathroom break without the approval of Piyush Jindal?

We already have more than sufficient evidence that Jindal is rapidly moving toward successfully destroying public health care in Louisiana. The closure of Charity Hospital in New Orleans following Hurricane Katrina, though nearly three years before he came to power, lay the groundwork for his later actions.

The federal government’s decision to slash Louisiana’s Medicaid appropriation by more than $572 million—along with state cuts of $287 million, bringing the total loss of funding to $859 million—simply gave him a convenient opportunity to accelerate a program he already had in place.

One need only look at what Jindal has done to higher education and public education to see a dangerous trend of cutbacks in crucial public services. His obsession with granting tax exemptions totaling $5 billion a year for corporate donors, transferring funds from parish school boards to private, for-profit schools, and forcing state colleges and universities to increase tuition to cover budgetary cuts has put the state on a dangerous collision course with fiscal reality that will remain long after Jindal has moved on to a cabinet position or in pursuit of higher office.

Jindal won’t be around to answer for his policies…but 144 legislators will be.

And so will Louisiana voters.

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Louisiana is following trend of taking ‘State’ out of state colleges in slow move to privatization of higher education

Posted in Governor's Office, Higher Education, OGB, Office of Group Benefits, ORM, Office of Risk Management on May 31, 2012| 13 Comments »

All but lost in the brouhaha over Gov. Piyush Jindal’s overt moves to privatize the Louisiana Office of Risk Management, Office of Group Benefits, state prisons, Medicaid, the Louisiana Office of Student Financial Assistance and K-12 public education is the quiet but steady erosion of state financial support for state colleges and universities that is pushing higher education toward that same precipice.

Once considered sacrosanct, Louisiana’s state colleges and universities no longer are considered untouchable by legislators. Accordingly, administrators find themselves having to seek funding more and more from private endowments and from tuition increases that threaten to push student costs to a prohibitive level for all but the wealthiest.

And Louisiana is by no means the exception. The trend toward pseudo- and outright privatization is becoming more prevalent in all 50 states as state colleges fall victim to cuts in state aid, the depletion of federal stimulus dollars, tuition increases, caps in enrollment and the elimination of positions. Throw in billions upon billions of dollars in corporate tax exemptions and it’s easy to comprehend the fiscal disaster Louisiana has been courting for decades.

Even as this perfect storm gathers momentum, conservative legislators, led by the American Legislative Exchange Council (ALEC) are pushing to recast state universities in the mold of private corporations.

If this sounds somewhat familiar, it is because state colleges across the country are following the same track as K-12 public education in the conversions to charter schools—another of ALEC’s model legislative crown jewels.

In fact, the plan for higher ed was presented at ALEC’s national convention in New Orleans last August. That meeting was hosted by then-State Rep. Noble Ellington (R-Winnsboro), ALEC’s 2011 national president. Ellington, who did not seek re-election, eased from his House seat to a more comfortable position as second in command at the State Department of Insurance at a salary of $150,000 per year.

ALEC, which purportedly espouses increased transparency in government, restricted access to its New Orleans meeting and specifically barred the media.

And, considering Jindal’s dogged determination to privatize everything public and his penchant for secrecy, it must be no coincidence that ALEC bestowed upon him its Thomas Jefferson Freedom Award at last August’s New Orleans closed-door convention.

Alarming examples of this slow trip down Privatization Lane abound in practically any state one chooses to observe.

In Texas, for example, Gov. Rick Perry, whom Jindal backed in his bid for the Republican presidential nomination, has packed the board of regents at all six state college systems with political allies who, like Perry, adhere to the Republican mantra that colleges should be run like businesses whose “customers are students.”

In Arizona, voters in 2010 approved a state referendum banning affirmative action in state universities, replicating the same action taken in Florida in 1999.

At the University of Virginia, the first public college in America and founded by Thomas Jefferson, the state provides less than 8 percent of the school’s operating budget, down from 28 percent 25 years ago. Things are no better at William & Mary and Virginia Tech, prompting Virginia’s three flagship universities to ask the General Assembly to make them “chartered” universities, which would give them freedom to set tuition and to run themselves.

Of the $1.8 billion cost to operate all 27 of Louisiana’s state universities, colleges, junior colleges and technical colleges, only $734.2 million, or 40.2 percent, came from state appropriations but even that figure is deceiving because Jindal has ordered an additional cut of $50 million.

In February, not long after Jindal submitted his executive budget, then-LSU Systems President John Lombardi, no doubt at Jindal’s behest, sent an email to his administrators asking that they not complain about Jindal’s proposed elimination of 2,837 positions in higher education. Lombardi said that Jindal would appreciate it if the administration acknowledged that the budget “gives higher ed special treatment…”

That “special treatment,” it turned out, was a carrot that Jindal dangled before university presidents in the form of a promise of $100 million for higher education should the governor’s retirement package pass.

It didn’t.

Goodbye $100 million.

And on April 27, goodbye Lombardi as the LSU Board of Supervisors, acquiescing to Jindal’s wishes, unceremoniously fired the LSU president.

A spokesperson for the Board of Regents said that the state only a few years ago provided 70 percent of the funding for state colleges and universities with tuition making up most of the balance. That formula is virtually reversed today with the state providing 40 percent and tuition and other resources providing 60 percent.

This trend toward privatization is not new; it has been taking place for more than a decade, but the implications are only now becoming clear.

As state financial support dwindles and colleges begin implementing double-digit tuition increases, the result is that the school’s mission to provide access to higher education for all suddenly becomes a mission more akin to a private university that caters only to those who can afford it.

Sometimes, even that doesn’t work. When Virginia Commonwealth University bumped its tuition by 24 percent to make up for previous cuts in state appropriations, Republican Gov. Robert McDonnell cut the school’s appropriation even more.

Consequently, as flagships gravitate toward the elitism of privatization, poor and middle-class students are priced out of their institutions and into second-tier schools. This then creates the social stratification of higher education in which the elite colleges are filled with kids from upper income families while kids from poorer backgrounds are relegated to less prestigious schools.

What was it again that Romney said about class warfare? Oh, yes, he said that the Occupy Wall Street protests represented class warfare.

So, when state colleges privatize and their tuition, which currently averages around $7,500 a year (not including room and board), escalates to the private college levels of $25,000 to $40,000 a year, many students who do manage get into those schools will do so only by taking out ever-larger student loans and just who will profit from that?

A few clues:

• Sallie Mae currently has $21 billion in student loans on its books;

• Citi Student Loans, part of Citibank: $5.9 billion;

• Wachovia Education Finance: $5.5 billion;

• Bank of America: $4.9 billion;

• JP Morgan Chase (yes, the one that just reported the $2 billion trading loss): $3.5 billion.

And those loans are guaranteed by the federal government so the lenders are betting on a sure thing, which is more than be said of the students. Even taking the low end of $25,000 tuition plus room and board, a student graduating in four years would exit as a 21- or 22-year-old college graduate, possibly with no job, and with a $150,000 debt (Don’t forget the room and board). Add two years of graduate study and presto! His debt is now $200,000. No wonder he moves back home.

ALEC was ostensibly founded to promote the “Jeffersonian principles of free markets, limited government, federalism and individual liberty.”

One has to wonder if this is what Thomas Jefferson had in mind for his school.

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Irony: Holding Civil Service hearings on the privatization of the Office of Group Benefits in the Louisiana Purchase Room

Posted in Auditor, Civil Service, Governor's Office, House, Senate, Legislature, Legislators, Louisiana Purchase, OGB, Office of Group Benefits, ORM, Office of Risk Management, Privatization, Teague on April 3, 2012| 3 Comments »

If you like irony (and who doesn’t?), you should like this little item:

The State Civil Service Commission will meet Wednesday at 9 a.m. to discuss the proposed outsourcing of the Office of Group Benefits (OGB) plan.

Don’t see the irony yet? Well, consider this: the meeting will be held in the Claiborne Building’s Louisiana Purchase Room.

What could possible be more appropriate—and ironic—than for the administration’s proposal to be held in the Louisiana Purchase Room? The governor, after all, is attempting to sell out 60,000 state employees in general and about 170 employees of OGB in particular who would lose their jobs.

In other developments in and around the Capitol, the governor’s office has been awfully defensive about a report critical of Jindal’s retirement reform legislative package.

A 38-page report by the Dallas law firm of Strasburger & Price cited legal cases in 18 different states as well as seven Louisiana legal cases in concluding that virtually all of the provisions sought by Gov. Bobby Jindal would not stand up to constitutional challenges.

The analysis and subsequent study was commissioned by Legislative Auditor Daryl Purpera and was originally posted on the agency’s web page.

In ordering the report, Purpera must know that he placed his career in jeopardy; Jindal does not take criticism or even mild disagreement lightly.

The governor’s office initially pooh-poohed the report, intimating that the law firm with offices in Houston, San Antonio, Austin, New York and Washington, D.C., in addition to its Dallas office, was unqualified to interpret the intent of the House bills 53, 55 and 56 and Senate bills 51, 52, 42, 47.

In a formal statement, Jindal’s office denied that the additional 3 percent in employee contributions called for in HB 56 and SB 52 would go into the state’s general fund and denying that the additional 3 percent would constitute a tax on state employees.

Under provisions of the Louisiana Constitution, the legislature is prohibited from initiating any tax legislation during even-numbered years.

The governor’s denial was the first indication by his office or any other source that the money from the 3 percent would not be diverted into the general fund.

Everything that has been said up to the time of the governor’s response to the report indicated that the 3 percent would go neither to additional retirement benefits nor to reduce the Louisiana State Employees’ Retirement System (LASERS), but to the general fund.

It is strange that the governor would remain silent for so long on that particular issue and his sudden defensive posture as a result of an independent study should raise more question than answers.

Is Jindal, like Rep. Stephen Carter (R-Baton Rouge) was with the education bills he authored, completely oblivious to his own proposed legislation? [Or should that be the proposed legislation of the American Legislative Exchange Council? ALEC)]

The observation that Gov. Jindal cannot stand criticism is steeped in the reality of what happens when a subordinate differs with the governor.

Jim Champagne was fired when he disagreed with Jindal’s repeal of the state’s motorcycle helmet law. Board of Elementary and Secondary Education member Tammie McDaniel was forced off the board when she resisted the governor. Melody Teague testified against Jindal’s plan to streamline government during a hearing to accept public comment. She was fired the next day and it took her six months to get her job back. Her husband, Tommy Teague, was fired as director of the Office of Group Benefits when he was not enthusiastic enough on the administration’s plan to privatize the agency despite the fact that he took OGB from a $30 million deficit to a $500 million surplus in five years. Then, Martha Manuel was “Teagued” from her position as executive director of the Office of Elderly Affairs after she testified that she had not been informed in advance of the governor’s plans to move her agency from the governor’s office to the Department of Health and Hospitals (DHH).

There are those who would be quick to point out that the legislative auditor does not work for the governor, but for the legislature, and they would be correct.

But there are also those who have observed how this governor works and they understand that he has complete control of a weak and submissive legislature and it would be a small matter for Jindal to come down hard on Purpera through House Speaker Charles “Chuckie” Kleckley (R-Lake Charles).

But if it’s real irony you want, then there is the faint hope that the Civil Service Board might take the same action it die with the proposal to privatize the Information Technology (IT) section of the DHH, which would have put about 60 IT workers on the street.

In that case, back in February, the Civil Service Board simply said no. Board members said there was not nearly sufficient information provided on which they base an informed decision. One member said he had been in banking for most of his adult life and still could not interpret the figures provided by DHH. In short, they just didn’t buy the numbers.

The Civil Service Board is another of those agencies the governor can’t touch—theoretically, at least. The president’s of the state’s private colleges and universities submit nominees to the board and it is from those nominees that the governor is constitutionally bound to make the appointments. And since the private colleges and universities are unfettered by state appropriations and appointments, the image of independence prevails, or should.

Of course, one member of the board is a state classified employee elected by state employees and there could be reprisals for a wrong vote.

The Civil Service board, back in 2010, approved the governor’s proposal to privatize the Office of Risk Management based on projections that such a move would save the state millions of dollars. The results have been questionable at best.

First, the state paid F.A. Richard and Associates (FARA) of Mandeville $68 millions to take over the administration of the state’s agency that insures against loss. Then, less than eight months into its contract, FARA was back seeking a 10 percent increase in its contract, to almost $75 million.

Three weeks after the amendment was approved, FARA sold its contract to an Ohio firm which in turn sold the contract to a New York firm only a few months later.

The contract with FARA contained a clause that written consent was required from the state before any transfer of the contract could be executed. When LouisianaVoice made a public request for copies of the written consent, the Division of Administration (DOA) admitted there were no such documents in existence, meaning the contract was violated not once, but twice.

Traditionally, ORM released its annual report that showed expenditures and other financial data around September of each year.

In an effort to determine how much has been saved by the privatization, LouisianaVoice requested a copy of the agency’s annual report from ORM and DOA only to be told the annual report has not been released as yet.

It would seem reasonable to assume if there were major savings as projected a few years back, the administration would be eager to roll out such supporting documentation.

On the other hand….?

If the Civil Service Board, employing the adage “fool me once, shame on you; fool me twice, shame on me,” takes into account the sloppy manner in which the ORM contract has been handled and the conspicuous absence of that agency’s annual report supporting claims of major savings, opts to dig its heels in on the OGM issue? If the board balks at the governor’s attempts to manipulate the system in order to consolidate his power base?

Now that would be ironic.

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Is the bloom fading from the rose that is Bobby Jindal? Perhaps so. Let’s take a look at a few recent developments

Posted in Campaign Contributions, Contract, Contracts, Governor's Office, Health Care, ORM, Office of Risk Management, Privatization on January 17, 2012| 2 Comments »

BATON ROUGE (CNS)—Gov. Bobby Jindal’s façade of invulnerability appears to be, if not crumbling, then at least in dire need of some major touch-up work.

Barely past steamrolling an opponent who had only about $39 in campaign funds and who yet somehow still managed 17 percent of the vote, Jindal finds himself:

• at odds with the state’s attorney general;

• joined at the hip with a loser in the presidential primaries;

• linked to a firm with contracts in Louisiana that is under scrutiny for cost overruns on a contract with the State of Texas;

• seeing his Medicaid privatization program, being run by several campaign contributors, get off to a less than auspicious start.

All that without re-hashing the ongoing shell game of just who is administering his first privatization project—the Office of Risk Management—at any given time. ORM has been handed off to the third company in just over a year since initially being taken over by F.A. Richard and Associates (FARA).

Nor have we, or anyone else, for that matter, bothered to mention the undercurrent of resentment between Jindal and Lt. Gov. Jay Dardenne.

It’s a poorly-kept secret that Jindal wanted ally Billy Nungesser as the lieutenant governor so that Jindal could privatize the Office of Culture, Recreation and Tourism in order to get his hands on that agency’s $30 million in statutory dedications. Jindal, in fact, hosted a $5,000-a-pop fundraiser on Tuesday to help Nungesser pay off his $1 million campaign debt. It was one of the few fundraisers Jindal attended in-state.

Which brings up another bone of contention between Jindal and Dardenne: Jindal over the past two years has spent an extraordinary amount of time out of state—and continues to do so—attending fundraisers for himself, for other candidates, and to hawk his book.

Yet, not once has he extended the courtesy to Dardenne the second in line for the governor’s office should something happen to Jindal, of informing the lieutenant governor on those occasions when he was out of the state.

His endorsement of Texas Gov. Rick Perry for the Republican presidential nomination—along with the candidate—is in the tank. After a contentious round of debates, caucuses, primaries and millions of dollars spent by PACs by nearly all the GOP hopefuls, it appears that the nomination, barring a major misstep, is Mitt Romney’s to lose.

Speaking of Texas, the Texas General Land Office has placed tighter controls on Kansas City engineering firm HNTB which encountered cost overrun problems with its contract to manage federal grants to Texas communities hit by hurricanes Ike and Dolly.

Gary Hagood, deputy commissioner for financial management at the Texas General Land Office, last week testified before the Texas Senate Committee on Intergovernmental Affairs that HNTB’s no-bid contract may have been improperly procured and that an amendment more than doubling the contract from its original $69 million to $144 million may also have been improper.

The land office assumed responsibility for the contract after the former agency in charge, the Department of Rural Affairs, was dissolved. If an audit determines that funds were improperly spent, the state could be required to repay millions of dollars to the Department of Housing and Urban Development (HUD).

HNTB was also was the lead consultant for Perry’s proposed Trans-Texas toll road system. Since 2007, the firm was paid $112 million by the Texas Department of Transportation for various projects, including $38 million for the toll road project, which was scrapped in 2009.

Ray Sullivan, Perry’s former chief of staff who now works with his presidential campaign, is a former lobbyist for HNTB, which has made nearly $35,000 in political campaigns to Perry since 2007.

The company has at least three contracts totaling $4 million with the State of Louisiana and while it has made several political contributions under its corporate name—$10,000 to the Republican Party of Louisiana, $1,900 to Jindal, and $2,500 to Nungesser, among others—it appears to prefer making its contributions through corporate officers:

• Paul Yarossi, a director in HNTB’s New York corporate offices—$5,000 to Jindal in February of 2011;

• Michael McGaugh of Baton Rouge, a manager for a HNTB-ABMB joint venture—$2,500 to Jindal in June of 2007 and $5,000 in November of 2010;

• John Basilica of Baton Rouge, a manager for a HNTB-CPE joint venture—$2,500 to Jindal in February of 2011;

• Mary D. Hinkebein of Carmel, Indiana—$1,000 to Jindal in February of 2011. Mary Hinkebein is the wife of Keith Hinkebein, a director with HNTB Holdings, Ltd.

HNTB contracts with Louisiana include one for $750,000 with the Department of Natural Resources to provide geotechnical assistance for coastal restoration projects on an as-needed basis; $300,000 with the Department of Transportation and Development to serve as an expert witness “with specialized knowledge of professional engineering fields,” and $3 million with the Office of Coastal Protection and Restoration “to provide the means for engineering assistance for coastal restoration projects on an as-needed basis.”

The $3 million contract is a joint venture with CPE, Inc.

As if that were not enough, barely a month after being hailed as a “hallmark moment,” the first phase of the rollout of the state’s new “Bayou Health” privatized health care system for the state’s poor and uninsured has been plagued by delays, technical difficulties and unanswered questions.

On Dec. 12, Department of Health and Hospitals (DHH) Secretary Bruce Greenstein said all five health plans contracted to manage care under the Bayou Health program were ready to begin operations in nine southeast Louisiana parishes. By mid-2012, he said, the plan would cover two-thirds of the state’s 1.2 million Medicaid recipients.

“This is a hallmark moment in our state’s journey toward improved health outcomes,” Greenstein said.

Instead, callers have complained of long wait times, incorrect information and technical difficulties in dealing with DHH and health-care providers have bombarded DHH with so many questions about how the new privatized system works that DHH has begun holding daily conference calls to address concerns.

The five companies participating in the Bayou Health system include Amerigroup, LaCare, Louisiana Health Connections, Community Health Solutions and United Healthcare.

All five have made campaign contributions to Jindal either directly or indirectly:

• United Healthcare made seven contributions totaling $25,000 to Jindal between November 2003 and December 2009 and $5,000 to the Republican Party of Louisiana in December of 2010;

• Louisiana Healthcare Connections Vice-President Jesse Hunter of St. Louis, MO., contributed $1,500 to Jindal in October of 2008 and McGlinchey Stafford law firm, Louisiana Healthcare’s agent of record, made six contributions totaling $22,000 between September 2003 and March 2011;

• Amerigroup made three contributions totaling $5,500 to Jindal in November of 2003 and in February and September of 2011;

• Community Health Solutions contributed $5,000 to Jindal in January of 2011 and John Fortunato, Jr., vice-president of the corporation’s agent of record, contributed $1,000 to Jindal in May of 2007;

• Neither LaCare nor any of its officers were found to have made any direct contributions to Jindal but the company’s agent of record, Adams and Reese law firm of New Orleans, made five contributions totaling more than $19,000 to Jindal between September of 2003 and December 2008.

Both Adams and Reese and McGlinchey Stafford law firms, it should be noted, also served as registered agents for other corporations, making it impossible to tie their contributions directly to the Bayou Health participating companies.

Recently, when LouisianaVoice made a formal request of the Division of Administration (DOA) for copies of the state contract report provided the Louisiana Civil Service Commission at its monthly meeting, DOA legal counsel David Boggs replied that no such report existed.

The same request was then made to Civil Service and that agency complied immediately.

The report from Civil Service shows that the contracts with LaCare (through its parent company, Amerihealth Mercy of LA., Inc.), Louisiana Health Connections and Amerigroup are for $985.8 million each while Community Health Solutions and United Healthcare have contracts for $68 million each.

The combined amount of the five contracts is almost $3.1 billion.

Finally, there is the simmering rift between Jindal and the state’s elected legal representative, Attorney General Buddy Caldwell, over procedural differences in the ongoing litigation over the BP Gulf oil spill.

Caldwell accuses Jindal of interfering with his handling of the case while Jindal’s chief of staff Stephen Waguespack, himself an attorney, claims the governor has every right to involve himself as the state’s chief executive officer.

At issue is the method in which each prefers to pay attorneys representing the state. Caldwell wants to pay the lawyers a set rate as work is performed while Jindal wants to pay a percentage of the final judgment.

The difference could mean millions of dollars to the state.

Federal Judge Carl Barbier of New Orleans has ordered plaintiff states, of which Louisiana is one, to set aside 4 percent of what could be billions of dollars in settlement money.

Jindal, to the outrage of Caldwell, signed off on a legal document in which he agreed not to appeal any awards made for legal fees.

It is rare, if not virtually unheard of, for one to sign away rights to appeal a verdict. Such action locks the party in on whatever unpredictable decision might come down.

Caldwell said that by agreeing to the 4 percent set-aside for lawyers, Jindal is in violation of both state law and the state constitution to direct money away from the state treasury to private lawyers.

He said his attempts to settle the dispute met with accusations by Jindal’s aides that Caldwell was trying to intimidate the governor.

Waguespack countered that Jindal is not afraid to meet Caldwell.

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