In a surprise move on Thursday, the State of Louisiana through the office of Governor Bobby Jindal has terminated a controversial contract which is now the subject of a federal investigation.
In a email statement from Christy Nichols, the Commissioner of Administration for the State of Louisiana issued late Thursday afternoon:
Commissioner of Administration Kristy Nichols issued the following statement today regarding the state’s contract with CNSI for processing of Medicaid claims:
“Based on consultation with the Attorney General’s office, today I am terminating the state’s contract with CNSI, effective immediately. The state will work with the current contractor, Molina Medicaid Solutions, to provide services during this transition and until a new RFP, overseen by the Division of Administration, is completed.
“We have asked the Inspector General to look into this matter and provide assistance. We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation.”
The move appears to be in response to a federal investigation reported earlier today by the Advocate.
According to The Advocate, a federal grand jury is investigating the Jindal administration’s award of a $185 million contract.
The Baton Rouge Advocate has written that "The Baton Rouge-based federal grand jury subpoenaed documents related to the state’s awarding of the contract for Medicaid claims processing to a company for which the state’s health chief once worked."
The health chief in question presumably is Bruce Greenstein who replaced Jindal's first Secretary of Louisiana Health and Hospitals during the close of Jindal's first administration.
In pertinent part, The Advocate states:
Client Network Services Inc., called CNSI and based in Gaithersburg, Md., was awarded the contract in 2011 amid some complaints that the company “low balled” the price and made erroneous assumptions in its proposal.
The contract was awarded by the state Department of Health and Hospitals and signed off on by the Jindal administration amid complaints from other vendors.
At the time, state health secretary Bruce Greenstein, a one-time CNSI executive, said he took himself out of the contract dealings. Documents revealed Greenstein influenced a document change that allowed CNSI to compete.
Commissioner of Administration Kristy Nichols said the state Division of Administration complied with the federal subpoena and delivered the documents requested. She said the subpoena was handled by the division’s general counsel and she only recently became aware of its existence.
“They processed the request like all subpoena requests. They simply produced the documents and moved forward,” Nichols said. “We have zero tolerance for any wrongdoing and are fully prepared to cooperate.”
Nichols released a copy of the subpoena in response to a public records request filed by The Advocate.
The subpoena was issued by U.S. Attorney for the Middle District Don Cazayoux. The documents were to be returned to the grand jury room by Jan. 30. Cazayoux declined comment Thursday.
The subpoena requested documents, financial information of proposals made by CNSI and others making proposals.
According to the Advocate, Greenstein was not immediately available for comment although the department released a prepared statement in response to questions denying knowledge or information regarding an investigation.
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(Photo: Bruce Greenstein)