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You can call him governor, you can call him Bobby, you can call him Piyush…..but don’t you ever call him inconsistent

Posted in Governor's Office, Health Care, Legislature, Legislators, OGB, Office of Group Benefits, Prison, Privatization, Teague, Transparency on June 16, 2011| 3 Comments »

Consistent: Unchanging in achievement or effect over a period of time; showing steady conformity to character, profession, belief, or custom; dependable, unswerving.

It’s an adjective that’s not been used very frequently in describing Gov. Bobby Jindal. It should be. The governor has been a veritable model of consistency. As ol’ Casey Stengel would say, you can look it up.

Jindal has consistently tried to unemploy state civil service workers in his repeated attempts to privatize their agencies from under them. He started with the Office of Risk Management, a relative small agency ($100 million budget) in the overall scheme of things.

Flushed at the ease with which that was accomplished, he next turned his eyes on state prisons, the Office of Group Benefits (OGB), and Medicaid.

Those weren’t as easy. The prison plan fell through, at least for this year. OGB has met with considerable resistance from judges, state employees, retirees, and legislators. And the Medicaid plan ran into an unexpected hurdle during confirmation hearings for the secretary of the Department of Health and Hospitals.

He consistently has been out-of-state on fundraisers, book promotion tours, or campaign appearances on behalf of other Republican candidates when he should have been home minding the store that was fast going broke.

He consistently visits Protestant churches, mainly in north Louisiana, to pass around clipboards with forms for church members to fill out, giving their names, phone numbers, mailing and email addresses for future fundraising solicitation efforts.

The only reason his out-of-state trips and church visits have stopped in recent weeks is because of a law that prohibits fundraising activities during the legislative session.

Jindal also has been consistent in withholding information from legislators, reporters, and even the state auditor. His Office of Economic Development refused to provide records requested by auditors who were attempting to perform a routine state audit of the agency. And the Division of Administration (DOA) simply refuses to disclose anything more than the time of day and more often than not, even that’s a half-hour late.

Then there was the infamous Chaffe Report. Without rehashing old news, Jindal hired Chaffe & Associates of New Orleans to perform a financial overview of OGB with the idea in mind to plug the data into his executive budget. When the budget contained nothing relative to the report, it soon became evident that the report’s analysis indicated privatization of OGB was not a good idea.

The public, press, auditors, and even legislators would never have known that, however, had Rep. Jim Fannin and Sens. Ed Murray, Karen Peterson, and Butch Gautreaux not pressed for the report. Even then, DOA attempted to withhold the document.

Jindal has been consistent in that he brooks no dissenting opinion.

During public hearings on governmental streamlining in October of 2009, Melody Teague, a contract grants reviewer for the Department of Social Services, testified against the administration’s streamlining proposals and was fired the next day. She appealed, but it took about six months for her to get her job back.

Then, on April 15 of this year, her husband, Tommy Teague, was fired as CEO of OGB—and he had not even publicly opposed privatization of his agency. He did, however, take OGB from a $50 million deficit to a $520 million surplus in a period of only five years.

His successor, Scott Kipper, had the temerity to tell the Senate Retirement Committee that if nothing changed at OGB, if there was no sale, no privatization, no third party administrator, there was not a single employee he would lay off at the agency. In fact, he told the committee, he had inherited a staff of excellent, dedicated employees. From that moment forward, his days were numbered.

His boss, Commissioner of Administration Paul Rainwater, had only a few minutes earlier testified that OGB staff needed to be reduced by 149 persons.

Finally, there are the confirmation hearings for Jindal appointees which thus far have been an unqualified—but consistent—disaster for the governor.

First, Rainwater sat at the witness table texting as Kipper was grilled by Murray and Peterson, never offering to come to his rescue by clarifying an answer or volunteering to rescue Kipper who twisted slowly in the wind.

Then, when Rainwater reversed himself on his promise to the Senate and Governmental Affairs (S&GA) Committee, made during that same hearing, to make copies of the Chaffe report available to them, Kipper was caught in the middle. His fate sealed, he resigned, effective June 24. At his final board meeting on Wednesday of this week, he received extended laudatory praise from the board.

The confirmation hearings have been the number one entertainment attraction this session.

That’s because of Jindal’s consistent persistence in trotting out nominees with baggage and expecting them to slip by Murray and Peterson. Invariably, the senators ambush the unsuspecting appointees with pointed questions about conflicts of interest or a lack of that now overused word, transparency.

With Rainwater and Deputy Commissioner of Administration Mark Brady, it was the refusal to come forward with the Chaffe report. With Bruce Greenstein, things took a little nastier turn when he refused to reveal the name of the winner of a 10-year, $34 million-per-year contract for DHH.

As secretary of the agency, he assured S&GA Committee members that he took a decidedly hands-off approach in the selection process for the contractor to install and operate the Medicaid Management Information System for DHH.

Despite that, he refused for more than an hour under withering demands to reveal the name of the contractor. When he finally relented, he revealed that the contractor was CNSI of Gaithersburg, MD., a company for whom he once worked.

Then, on Wednesday of this week, Ed Antie of Carencro, a Jindal appointee to the Board of Regents for Higher Education, took his seat in the witness chair to begin his confirmation process before the S&GA Committee.

Things got ugly early.

Murray started the carnage by asking an apparently innocuous question: “Do you have any outstanding contracts with the State of Louisiana?”

“No,” Antie assured Murray.

“Do you know of a company called Sun America?”

Antie shifted uncomfortably before answering. “I own a company, a holding company that’s dormant, that owns a company that owns a company that owns maybe 10 percent of Sun America. I’m inactive.”

“Have you ever heard of LONI?” Murray asked. LONI is an acronym for the Louisiana Optical Network Initiative, a state-of-the-art fiber optics network that connects eight major research universities—LSU, Louisiana Tech, LSU Health Sciences Centers in New Orleans and Shreveport, Southern University, Tulane University, the University of Louisiana at Lafayette, and the University of New Orleans.

“I politicked Sun America to give them a discounted rate for our fiber optics,” Antie said.

“I thought you said you were inactive,” Murray said. “Does Sun America have a contract with the Board of Regents?”

“They may. I was not involved in the negotiations and I have no idea what the contract value is,” Antie said.

“You were given a questionnaire and that question was left blank,” Murray said.

Antie, who heads up Central Telephone, replied, “I didn’t realize that a company from which I was so far removed was relevant.”

“Sun America has a contract with the Board of Regents in the amount of $531,000,” Murray said. “You first said there was no contractual relationship and now there is. Don’t you think that’s relevant?”

“I asked Sexton Gray (Gray Sexton, a Baton Rouge attorney who once headed up the State Ethics Board) and he said to recuse myself from any votes,” Antie said. “I’m not trying to hide anything. I took retirement from the telecommunications industry to serve on this board.”

“Which one of those companies that you mentioned owns Sun America?” asked Murray.

“Central Telephone is my company. It’s just a holding company. Central Telephone owns Network USA, about 30 percent, and Network USA owns Delta Media which owns 10 or 15 percent of Sun America.”

He said Charles Chatelain is the registered agent for Network USA, Delta Media, and Sun America.

“First you said you had no contractual relationship with the state and now we find that your company has a $531,000 contract with the Board of Regents,” Murray said. “You said you didn’t know, but you said you approached Gray Sexton for advice on your apparent conflict.

“In terms of ethics, you may be breaking the law,” Murray said.

Sen. Lynda Jackson (D-Shreveport) observed that Antie claimed that Central Telephone was dormant. “Yet, when you check corporate records with the Secretary of State’s web page, it shows that Central Telephone is in good standing, which means it has filed annual reports,” she said. “Its last report was November of 2010 and it shows that you are the registered agent.”

She said that ethics and conflicts of interest have become a recurring problem of the Jindal administration.

A check by LouisianaVoice also revealed that Antie made three contributions to Jindal’s campaign totaling $5,000. The contributions were made in August of 2007 and in August and September of 2010. His associate, Charles Chatelain gave $5,000 to the Jindal campaign in December of 2009; Network USA gave $5,000 in separate $2,500 contributions in August of 2009 and March of 2010, and Sun America contributed $3,500 to the governor’s campaign in november of 2010.

Jindal appointed Antie to the Board of Regents in January of this year.

At least that’s consistent with Jindal’s legacy of consistency.

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Rainwater throws Kipper, Brady under the bus during confrontational Senate confirmation hearing

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Public Records, Teague on June 1, 2011| 17 Comments »

Members of the Senate and Governmental Affairs Committee, led by Sen. Ed Murray (D-New Orleans), grilled three of Gov. Bobby Jindal’s appointees in 40 minutes of tense confirmation hearings on Tuesday.

The committee will make its recommendations on the confirmations of Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady, and Office of Group Benefits (OGB) CEO Scott Kipper to the full Senate which will then vote on those recommendations.

It didn’t take long for Rainwater’s survival instincts to kick in at the expense of Kipper who, it seemed, had been instructed to say as little as possible but soon found himself in trouble as members of the committee quickly smelled blood and moved in for the kill.

The thrust of the questioning of Rainwater and Kipper (Brady, who spent the first few minutes of questioning fidgeting in his chair, was all but ignored) centered around administration efforts to privatize OGB and the existence and availability of a report generated by a New Orleans firm.

Chaffe and Associates was hired in March by the administration to generate a rush financial analysis of OGB preparatory to the receipt of proposals from financial analysts with experience in negotiating sales of insurance companies.

Committee staff members had received an email from Paul Holmes, an attorney with DOA, that was identical to one he sent LouisianaVoice on Friday (see May 31 posting) that denied access to the Chaffe report, a denial not well received by committee members.

During the questioning process, Rainwater threw his two subordinates under the bus by denying knowledge of conversations between Brady and Kipper relative to keeping the Chaffe report from the public. Rainwater seemed content to leave Kipper twisting in the wind while he busied himself with texting.

Requests by LouisianaVoice for a copy of the Chaffe report were sent directly to Rainwater which would seem to weaken his deniability of any knowledge of efforts by Brady and Kipper to keep the report confidential.

That comment came after Kipper, appearing to be taking directions from higher ups to reveal as little as possible to the committee, first said he had no knowledge that the Chaffe report existed and that he wouldn’t have wanted to see it at any rate because of an existing request for proposals (RFP) on the OGB privatization. He said he feared the Chaffe report might jade his decisions on the RFP if he knew its contents.

Rainwater spent much of the time Kipper was testifying taking notes and openly texting at the witness table, never once coming to the aid of his subordinate to clarify an answer or to assist Kipper when he faltered. Instead, he appeared perfectly willing to let Kipper suffer the wrath of the committee for actions perpetrated by his (Rainwater’s) office.

Murray was incredulous that Kipper, as CEO of OGB had not seen a report that potentially “could affect thousands of people.”

But that was not the most damaging part of Kipper’s testimony. Earlier, he bantered with Murray over the very existence of the report and quickly lost credibility with the committee.

When he asked Kipper if a third party had been brought in to conduct a financial analysis of OGB, Kipper replied, “Not that I’m aware of.” That answer set off a firestorm of questioning from several senators.

Murray later came back to say, “I’m told a report was done but the Legislative Auditor was denied access to that document because it was part of the ‘deliberative process.’ Now we have another report (Chaffe) that was requested by members of the Senate staff and you won’t turn it over. Are you telling this is not true?” he asked.

“I’ve not seen the report,” Kipper said.

“So it does not exist?”

“I have no knowledge that it exists.”

“You’re the CEO of OGB and you’re telling me you have not seen a report that would impact OGB? Other people have seen it. When will you see it?” Murray asked. “Have you asked for it?”

“I have not.”

“This is really disturbing to me that you, as CEO of OGB, have not seen a report that is out there that is so important to so many people,” Murray said. “The report might tell you there is no need to privatize OGB. Don’t you think you need the benefit of that information? Who suggested that Chaffe do the report?”

“I don’t know,” Kipper said.

“You don’t know that either? Who’s running OGB?”

In fairness to Kipper, the Chaffe contract was issued prior to the firing of Kipper’s predecessor, Tommy Teague, on April 15.

Sen. Karen Carter Peterson (D-New Orleans), vice chairman of the committee, raised the issue of transparency with Rainwater.

“Did you commission the Chaffe report?” she asked.

“Yes,” said Rainwater.

“Wouldn’t it be helpful for Mr. Kipper to have the report?”

“He will get the information, obviously,” Rainwater said.

“No, it’s not obvious,” she said. “Why would the CEO of the agency not have the information before making a major decision on the agency’s fate?”

“It (the Chaffe report) was more of a validation of what we already had,” Rainwater responded, not saying that the data validated had been compiled with the aid of Goldman Sachs which helped draft the original RFP on which Goldman Sachs was the lone bidder. “The numbers came back as we thought they would,” he said.

“We’re looking in this hearing at character and judgment. How can I have confidence in confirming anyone if I don’t have confidence in their character, judgment and integrity?” Peterson asked.

“Transparency is something touted by the administration but to withhold information from key department officials is significant.”

Sen. Jack Donahue (R-Mandeville), directing his remarks to Rainwater, noted that Kipper had testified that he did not want to review the Chaffe report.

“That was a conversation between Mr. Kipper and my deputy commissioner (Brady). I was not aware of those discussions.”

“If you spent money on this report, it would seem that everything should be on the table,” Donahue said. “I’m surprised by your answers to tell you the truth.”

“I’m surprised by the conversations my staff has had,” Rainwater countered, again revealing his willingness to deflect criticism onto his lieutenants for actions that, ultimately, were his responsibility.

Peterson returned to Kipper’s testimony about his lack of knowledge about the existence of the Chaffe report. “You testified you didn’t know if the report existed,” she said. “You raised your right hand and took an oath. Are you sure you don’t want to try again?

“The first element in these jobs is integrity. I don’t think that of you, Mr. Kipper. I think you’re fudging. I think you’re teetering and for someone in your position, there is a fundamental element of trust necessary. I don’t have that today. Do you want to try again on that report?”

“Senator, I’ve not seen the report,” Kipper said.

“Do you know the report exists?” she asked.

When Kipper hesitated, she again asked, “Do you know the report exists?”

“I think the report exists,” he responded.

At that point Murray said, “Even after the commissioner (Rainwater) told you the report exists, you still don’t know it exists?”

“I believe it exists,” Kipper said again.

“This is absolutely amazing to me that you can sit there and give answers like that,” Murray said.

“It disturbs me that the CEO of OGB sat there and I had to pull it out of him that the report even existed and even as I was asking Mr. Kipper those questions, his bosses (Rainwater and Brady) sat right next to him and said nothing,” he said.

“I hope you change your attitude,” he said to Kipper. “If you are confirmed, I hope you will take your job more seriously and treat us with more candor.”

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New RFP is OGB sale in poor disguise; Rainwater, Brady, Kipper dodge hearing, avoid answering questions; so much for claims of ‘open and transparent administration’

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Retirement, Teague, Transparency on May 10, 2011| 6 Comments »

The Senate Retirement Committee held its third consecutive week of public hearings on the Jindal administration’s proposed privatization of the Office of Group Benefits (OGB). The only things missing were witnesses and a second request for proposals (RFP) that was substantially different from the first.

Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady, and new OGB CEO Scott Kipper all were no-shows for the hearing, choosing instead to snub their noses at legislators.

Rainwater, who already has been grilled by legislators during the first hearing two weeks ago, vowed to staff members that he would not attend another of the hearings being conducted by committee Chairman Sen. Butch Gautreaux (D-Morgan City), according to sources within the Division of Administration (DOA).

Mark Brady has not attended any of the hearings and Kipper reportedly has been told to stay away from Gautreaux’s committee meetings.

Only DOA Chief of Staff Dirk Thibodeaux bothered to show up for the administration. The only other witness was former OGB CEO Tommy Teague, who testified at length on the history of OGB, the latest RFP which appears to conflict with testimony by Rainwater last week, and of the disadvantages of privatizing the agency or contracting with a third party administrator (TPA).

Teague also disputed administration claims that privatization of OGB would save the state some $10 million per year be reducing the number of OGB employees by half.

The latest RFP was released late last Friday and if anything, appears to reinforce the administration’s determination to sell OGB outright despite claims to the contrary by Rainwater a week ago who said the state would retain control of OGB. “At the end of the day,” he told the committee last week, “we will still have the Office of Group Benefits with 149 employees.”

Teague’s testimony, however, shed considerable light on the language of the RFP that he indicated was misleading and which he said provides insights into the administration’s not-so-well-hidden agenda to keep certain information from the public as well as possibly forestalling any financial audits for a period of three years after signing of a contract with a financial advisor.

He said OGB was created in 1969 by executive order of then-Gov. John McKeithen. “Up to then, each agency more or less shopped for its own health coverage,” he said.

Nine years later, in 1978, OGB was sold. “Overnight, state employees became employees of AdServ Corp., a California software company,” Teague said. “One day they worked for the state and the next day for an out-of-state company.”

The following year OGB was brought back in-house and placed within the Department of the State Treasury and in late 1979, an executive director was hired.

In a scenario that has become all too familiar of late, an employee of the California company testified before the Appropriations Committee and the next day was fired, he said. “Of course he was immediately re-hired by OGB,” Teague said.

Teague’s wife, Melody, was fired in October of 2009 one day after testifying before the Commission for Streamlining Government but it took her six months to get her job back. Then, less than a month ago, on April 15, Teague himself was fired as OGB CEO by Brady. Rainwater attributed the decision to Teague’s lack of leadership even though the agency flourished under his six years as director.

Teague said in late 1980, the decision was made for OGB to go self-funded. “That means that OGB was on risk for all claims,” he said. “With a TPA, you simply pay a third party to answer the phones. The state is still on the hook for risks.”

He said it has taken OGB 30 years to build a network that now includes contracts with every hospital in the state except one. “The most critical component of a TPA is to assess the value of their discounts with medical providers. But all discounts come back to OGB. The TPA is simply paid an administrative fee,” Teague said. “OGB pays the TPA a per employee fee each month, in this case, we pay Blue Cross/Blue Shield $26 per month per employee member.

“With OGB, there are no taxes and no profit and there is no need for a TPA because we have already built our network,” he said.

Teague said he first to OGB in 1980 as an OGB attorney. “I was with the department for eight years and was acting director for one-and-a-half years,” he said. “In early 1990 I was named special counsel for the board and helped set up the PPO network. I left in 1995 to run the Pennsylvania state plan.”

He returned to OGB as CEO in 2006 when former Gov. Mike Foster moved OGB back under DOA. DOA took all power from the OGB board and now it only serves in a planning and policy capacity and the CEO served at the pleasure of the governor.

He said that prior to 2006 OGB was fully insured by Ochsner Health Plan, meaning the insurer (Ochsner) assumed all risk.

“When I was named CEO in 2006, there was a negative fund balance of $36 million,” he said. “As a result of becoming self-insured, we now have a $520 million fund balance because we beat the actuary projections every year.

“Had we stayed with the fully-insured plan in 2006, we would not have the fund balance we now have.”

Teague also debunked the $10 million in savings that Rainwater said the state would realize with the reduction in payroll that would accompany privatization. “We already pay Blue Cross $26 per member per month. A similar arrangement for a Preferred Provider Organization (PPO) with its 41,825 actual employees and retirees would more than offset the $10 million savings realized by cutting staff,” he said.

Sen. Ben Nevers (D-Bogalusa) asked about the other states cited by Rainwater as being more efficient than Louisiana by providing benefits to more people with lower costs and fewer staff but Teague was quick to say it is impossible to fairly compare Louisiana to other states “because we don’t know what the other states are providing. We’re not really seeing what it costs other states. OGB, for instance insures levee boards 50 school systems.”

He said OGB deals with 110 different payroll systems and various commissions. “OGB does a big part of the TPA work because only OGB can. A fully-insured plan is always going to cost more and OGB has some of the best contracts out there right now because of the network we’ve established over three decades.”

Teague questioned the intent of the administration when he said, “If you’re going to remain self-administered and the $520 million fund balance is staying as Mr. Rainwater claimed last week and if you’re looking for a TPA to administer the program, then why do we need an RFP to assess the benefits of OGB? It’s irrelevant. If you need a TPA, why do you need to know the net worth?

“The RFP attachments are all OGB financial statements. A TPA doesn’t need to know the financial statement. A TPA needs to know the monthly call volume, the monthly claim volume, monthly correspondence volume, how eligibility is transmitted, and the vendor payment schedule. The net worth is immaterial.”

“You would want to provide that if you were looking for a buyer,” Gautreaux interjected. “I asked Mr. Teague here today because I don’t understand why we need to hire a financial advisor to contract with a TPA.”

Teague also said one part of the RFP grading system for bidders said cost of services would be worth 25 points but in another section it said the lowest cost proposal would be awarded 30 points. “Which is it?” he asked.

He said the current RFP also left unanswered several questions about when proposals would or would not become public record and that the wording of the RFP would appear to prevent the legislative auditor from examining records for a period of three years following the signing of a contract with a financial advisor.

“It’s really not clear just when the legislative auditor would have immediate access to records,” he said.

Legislative Auditor Darryl Purpera last week testified that Rainwater had refused to provide documents that Purpera’s office is constitutionally entitled to have in order to conduct proper assessments.

The latest version of the RFP was written completely in-house with no assistance from outside as was the first version when Goldman Sachs was heavily involved in the drafting of that document.

The new RFP, however, contains no fewer than four separate references to the sale of OGB and bidders’ experience in sales.

It also provides that OGB’s acting actuary, personnel in the governor’s office, DOA, and the Office of Contractual Review may review any of the proposals and that if contract negotiations exceed 15 days, OGB may cancel the award and award the contract to the next-highest-ranked proposer. Extension of this and other deadlines may be extended at the discretion of OGB.

Conceivably, if the administration does not want the contract to go to the highest-ranked bidder, it could draw out negotiations beyond the 15-day limit as a ploy to awarding the contract to the next-highest-ranked bidder.

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A trend of arrogance permeates Jindal administration

Posted in Civil Service, Governor's Office, OGB, Office of Group Benefits, ORM, Office of Risk Management, Teague, Transparency on May 6, 2011| 13 Comments »

Perhaps it’s only coincidence, but a trend seems to be developing in Baton Rouge and it’s not a very pretty one.

There is a condescending attitude of arrogance that permeates the Jindal administration from top to bottom and the day to day civil servants who work in the trenches are the ones who are feeling the brunt of the administration’s haughtiness.

The attack has been subtle but steady with no letup in sight.

Forget about Jindal’s campaign flyer four years ago in which he pretended to hold state employees in such high esteem (LouisianaVoice post of April 22). That was just political rhetoric that morphed into bitter irony.

State Employee Recognition Day? That was last Wednesday and for the third consecutive year, Jindal signed a proclamation in which he fawned over “dedicated state employees” even as he maneuvered behind the scenes to have legislation introduced last year to abolish Civil Service, to freeze merit pay increases for classified employees but not for unclassified employees (read: political appointees), and even as he moved to privatize everything in sight at the cost of putting mid-career employees on the streets who are not qualified for social security or Medicare. Some of those employees have life-threatening illnesses and will have no medical insurance.

One state employee, Melody Teague, was fired one day after she criticized Jindal during a forum held by the Commission for Streamlining Government. She won her job back but her husband recently evoked memories of the infamous “Saturday Night Massacre” of Oct. 20, 1973, when Richard Nixon fired Archibald Cox and abolished the office of Special Prosecutor.

Tommy Teague, by all accounts, had been doing a superb job as CEO of the Office of Group Benefits. OGB went from a $100 million deficit when he took over to a $500 million surplus and the agency was paying claims within 48 hours.

But on April 15, Jindal decided that Teague was somehow standing in his way of privatizing that agency and Deputy Commissioner of Administration Mark Brady was called on to fire Teague. Unlike Attorney General Elliot Richardson, who resigned rather than carry out Nixon’s orders to fire Cox, Brady was more than up to the task and Teague was shown the door.

All that’s old news. Last week a couple more events, though minor in the overall scheme of things, nevertheless strip away that veneer of piety behind which Jindal prefers to hide. Neither event directly involved Jindal but as was said earlier, it’s the arrogance from top to bottom that makes the latest occurrences seem so typical of this administration.

Let’s take the Office of Risk Management first. This agency was privatized last year at a cost of $68 million to the state with a promise of savings of $20 million per year. The first section to go was Worker’s Comp. That was last July. Less than nine months later, the company that took over ORM, F.A. Richard & Associates (FARA) requested and got approval for a $7 million amendment, bringing the cost to $75 million.

Rep. Jim Fannin (D-Jonesboro) apparently wasn’t too pleased that FARA was seeking more money or that the Division of Administration approved the amended contract. He has placed ORM on the agenda for Tuesday’s meeting of the House Appropriations Committee which he chairs.

But that’s not the story. ORM Director J.S. “Bud” Thompson sent out word to his troops on Thursday that no one from ORM was to attend the meeting.

That is in direct violation of Civil Service rules. In fact, a very recent memorandum just went out to all Civil Services employees from the Department of Civil Service that addresses that very issue.

General Circular No. 2011-009 reminds state employees that the 2011 Regular Session of the Legislature will be taken up mostly with budget issues. “As classified state employees, some of these issues may have a direct impact on you (and) about which you may wish to speak,” the circular said. “Classified employees are prohibited from engaging in efforts to support a candidate, party, or political faction in an election.

“These restrictions do not prohibit classified employees from expressing themselves either privately or publicly on issues that may be pending before the legislature.”

The circular also said state employees who attend legislative hearings must be on approved leave.

Thompson did not respond to an email inquiry from CNS about his new policy—new, because a year ago, ORM employees were allowed to attend Joint Budget Committee hearings on the privatization—but on Friday he did amend his policy to allow one employee from the agency to attend Tuesday’s hearing.

His Friday email, sent to all ORM employees, attempted to justify his decision to limit attendance. “Because of the need to continue our preparations for the July 1st transfer of handling of General Liability claims to FARA and the concern that rising river levels next week might cause us problems in accessing our office, we will allow only one employee to attend that meeting,” he said.

Other lines, or units, will not be involved in preparations for transferring the General Liability line to FARA any more than other lines were involved in last July’s transfer of Worker’s Comp to FARA. In that case, claims adjusters came to work one day and the Worker’s Comp adjusters simply were gone. No pomp, no fanfare, just gone and no one else’s work was disrupted in the least, so the General Liability excuse is a smoke screen easily recognized as such by ORM workers.

Again, though, he is in violation of Civil Service regulations; there is nothing in the regulations that allow him to restrict the number of employees who may attend.

But not to worry: streaming video of the hearing can be accessed by logging onto http://www.legis.louisiana.gov/ and navigating to the proper committee room (5). Thompson’s Friday email also instructed employees they watch the video playback at home but to refrain from viewing it at work. Of course, an enterprising employee could simply plug in his or her headphones and minimize the video and continue working on claims while listening to Thompson’s testimony.

The other event is totally void of any semblance of subtlety.

CNS received an anonymous letter on Friday that contained an email sent from the iPhone of Nick Gautreaux, erstwhile state senator from Abbeville, not to be confused with current Sen. Butch Gautreaux of Morgan City. Nick Gautreaux is the current Commissioner of the State Office of Motor Vehicles.

Dated March 17, the email was addressed to all OMV employees and consisted of only five sentences but it was the third sentence that appeared to hold true to the philosophy of superciliousness that has become the hallmark of the Jindal tenure.

“I am proud of our teams (sic) hard work this past week,” the email began. “All of you have shown a willingness to progress to a higher level of production and customer service.”

Then came that third sentence: “I must say that the individuals who continue to defy change will suffer the wrath of my management team.”

He closed by saying, “I want everyone to know that I have an open door policy. Thanks for the hard work.”

It’s pretty evident that Gautreaux didn’t go to the Zig Ziglar School of Employee Relations. If he did, he was absent on Motivation Day.

Defy Change? Management wrath? Could OMV be next? Holy Privatization, Batman!

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Bobby’s boys grilled on OGB proposed sale during Senate Retirement Committee hearing

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Teague on April 27, 2011| 8 Comments »

Gov. Bobby Jindal’s attempt to sell the Louisiana Office of Group Benefits (OGB) appears to have been sidetracked for at least 60 days, a Senate committee was told in Baton Rouge on Tuesday.

Commissioner of Administration Paul Rainwater attributed the delay to the necessity of drafting a second request for proposal after negotiations with Wall Street banking firm Goldman Sachs bogged down.

A parade of current and former state employees, including one active and one retired state district judge made known their opposition to the proposed sale of OGB to the Senate Retirement Committee here Tuesday.

The committee, chaired by State Sen. A.D. “Butch” Gautreaux (D-Morgan City), heard testimony for more than two hours and, as Gautreaux noted on two occasions, no one present asked to speak in favor of the sale of the state agency that provides medical coverage for 220,000 active and retired state employees and their dependents.

Rainwater, Division of Administration spokesman Dirk Thibodeaux, and newly-appointed OGB CEO Scott Kipper attempted to explain the rationale behind Gov. Bobby Jindal’s desire to place OGB on the auction block in an attempt to garner up-front money to help close a projected $1.6 billion for Fiscal 2011-12.

Members of the committee, along with several state representatives who sat in on the proceedings peppered Rainwater with questions about promises that the sale would not adversely affect OGB members. Those questions were met with vague, indecisive responses that frustrated Gautreaux and at least one member of the House.

State Rep. Rogers Pope (R-Denham Springs) at one point referenced a popular television show to express his frustration at Rainwater’s evasive answers.

Pope, a retired school administrator, is a member of OGB, and asked at one point, “Did I not hear it said here this morning by Mr. Kipper that OGB has a very low administrative cost, like 3.5 percent?”

“That does not mean a private provider cannot do it better,” Rainwater said, adding that the purchase contract would likely stipulate a limit on premiums for five years.

“What happens after five years?” Pope asked. “You and I won’t be here and we both know that. I also heard you say that this has never been done before. Is this (the proposed sale) a trial balloon?”

“We won’t know that until we sit down to negotiate a contract,” Rainwater said.

“Well, if there is no supporting data, how did you analyze this to reach your conclusions?”

“We just think it makes sense to look at something different and more efficient,” Rainwater said.

“You need to be on Dancing With the Stars,” Pope quipped.

State Rep. Hollis Downs also sat in on the proceedings and asked a number of insurance-related, technical questions.

Both Rainwater and Thibodeaux conceded that a private provider would probably have administrative costs of at least 10 to 15 percent because of the need to realize a profit on its investment as well as tax liabilities not faced by OGB.

Rainwater said on at least three separate occasions that there would be “no negative impact on those covered” by OGB but made no mention of any possible impact on any future state employees not now covered.

He said that Louisiana and Utah are the only two states in the U.S. that have their own state administered PPO.

Rainwater said there has been much misinformation bantered about in recent weeks that reports took on the flavor of “a John Grisham novel.” He said the confusion may have cost the administration its opportunity to sale OGB and to involve smaller companies in the process. He denied that Wall Street banking firm Goldman Sachs had any input in the drafting of the recent request for proposals for a financial advisor to do an assessment of OGB and to market the agency to potential buyers.

“Unfortunately, we did not finalize the contract with Goldman Sachs. We have since notified Goldman Sachs that we will not issue a contract because we could not agree on terms,” he said.

Capitol News Service reported last week that it was Goldman Sachs that pulled out of negotiations after the state refused to indemnify Goldman Sachs from any litigation stemming from the sale of OGB.

Gautreaux and fellow Retirement Committee member Sen. Ben Nevers (D-Bogalusa) tag-teamed Rainwater in attempts to learn how the administration could guarantee that state workers would be protected from increased premiums and reduced benefits.

Efforts to elicit guarantees met with only general, vague responses. “We would only negotiate a contract that would favor state employees,” Rainwater said at one point. “We’re not going to create a plan that causes a spike in premiums.”

Rainwater also said there was a “high probability” for reduced claim costs. He said that while 149 OGB jobs would be eliminated, the administration was trying to be creative in its efforts to protect employees.

“There’s nothing creative about selling something,” Gautreaux said. “The state is in the education business and we’re in the hospital business.”

“We’re addressing education with charter schools in New Orleans,” Rainwater said.

“Your belief is not universal as to any improvement in education with your charter schools,” Gautreaux interrupted.

Gautreaux also revealed his growing irritation at his inability to elicit answers to specific questions when Brady, Rainwater, and Kipper repeatedly said they did not have information at their fingertips but would get back to him with it.

“Each of you has a letter from me that I sent notifying you of this hearing. In that letter, I instructed each of you to have this information available today and to have someone here who could address these questions,” he said. “Did you bring anyone with you who has this information?

When told no one was there, he then told Brady, “I want you to get up, go out in that hallway, and call someone who has the answers to these questions. And I want you to get them over here now.”

At one point in the questioning, Rainwater told the committee, “It’s clear in the statute that the Division of Administration has the authority to move forward.”

The law creating OGB does provide that the agency may be sold by the governor without legislative concurrence. But to execute the sale, DOA would need to contract with a financial advisor to assess the value of OGB in order to attract an accurate bid on its purchase.

Any contract with a financial advisor, however, would need legislative concurrence, a point not lost on committee members.

Also testifying before the committee were Judge Bob Morrison of the 21st Judicial District (Livingston, St. Helena, and Tangipahoa), representing the State District Judges Association, retired Judge Ronnie Cox, vice president of the Retired Judges Association, Fred Foret or the Retired State Employees Association of Louisiana, former OGB CEO Tommy Teague, his wife, Melody Teague, and James Taylor, president of the Retired Teachers Association.

Cox said the retired judges were unanimous in their opposition to the sale of OGB because OGB pays claims within 48 hours and the judges are satisfied with the service provided by the agency.

Foret pointed out that Teague took over OGB when it had a $100 million deficit and took it to its current $520 million surplus. “He must have been doing something right,” he said, “so they fired him.”

Teague was fired from his position on April 15. He said no reason was given him by Brady when he was terminated.

Taylor, whose organization has 22,000 members, said he first became aware of the intentions of the administration to sell OGB last fall “before it was even an issue when I began getting phone calls from Ruston retirees.”

He said his membership “is satisfied that this effort is not based on sound judgment. My members are not interested in efficiency if it’s not effective.”

He said a private company would necessarily be driven by profit. “Why change on of the most effective operations in state government? Some of us are too old to buy hope,” he said. “They tell us they’re going to take care of by ‘writing it into the contract.’ I know better than that. I’m also an attorney and I’ve read too many contracts to fall for that line.”

“What’s the rush?” asked Morrison. “The money from the sale is not even in the administration’s proposed budget, so it’s not going to help this year. Title 42.854(C) says in clear terms that money from OGB may not be used for the general fund. That’s the law.

“Now comes HB-32 which would direct the state treasurer to divert any OGB surplus into the general fund. If you amend HB-32 to delete those four lines, we will have time to study this more thoroughly.”

As testimony wound down, Nevers said he hoped there would be “full legislative debate” before executing the proposed sale.

Nevers asked Rainwater when a new RFP would be issued.

Brady said a final draft was expected “within a few days.”

“Did you have any consultants working on the draft?”

“No, it’s being done in-house,” Rainwater said.

“When will it be available?”

“Next week.”

At that point, Gautreaux jumped into the discussion. “What part of this process don’t you want known?” he asked. “What are you keeping from us? What’s the secret?”

“We will do this under Office of Group Benefits rules,” Rainwater answered.

“What part of this RFP will have legislative oversight?” Gautreaux then asked.

“What RFP has ever had legislative oversight?” Rainwater said.

“Thank you,” said Gautreaux.

When Rainwater tried to say that he did not know of a single state that does not provide benefits, Rep. Jack Montoucet (D-Crowley) shot back, “Wisconsin. Ohio,” in apparent reference to controversies that have swirled around employee benefits in those states in recent months.

“You’re going to do a study after you do the RFP? Maybe you don’t need an RFP to see that you have $500 million in the bank. You don’t need an RFP to know that OGB has been doing a good job,” Montoucet added.

Gautreaux expressed his skepticism of Rainwater’s promise to protect OGB members in any contract negotiated. “I’ve looked at a few contracts in my day. The state’s contract with the Saints is a good example of the state’s ability to negotiate,” he said of the contract that obligates the state to pay the Saints millions of dollars per year to keep them in New Orleans and the state’s questionable contract to lease office space from Saints owner Tom Benson at rentals considerably higher than agencies had been paying.

“The way I see it,” Gautreaux said, “we’re gonna take the best run agency in the state and sell it and fire the man who made it the best run agency. We’re moving forward with moving forward, as near as I can see it.

‘I find it curious that the CEO who did such a great job is now on the street. I am at a lever of extreme dissatisfaction. This is not our last meeting on this,” he said.

“You talk about transparency but I haven’t seen that. The public is not satisfied with this proposal. There is no public support for what you’re doing. We are going to turn the fire up even more until we get to the bottom of this,” he said.

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