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Louisiana AG: Jindal's OGB privatization contract must be approved by legislature

katrina-jacksonThe Louisiana Attorney General, Buddy Caldwell's office, has determined that the proposed contract between the Office of Group Benefits ("OGB") and Blue Cross and Blue Shield of Louisiana, which has been pushed by Louisiana Governor Bobby Jindal's administration in its efforts to privatize state government functions and in this case the Office of Group Benefits requires review and approval by the Louisiana Legislature. 

 

 

According to a press release from Rep. Katrina R. Jackson, "In August, the State Civil Service Commission with the encouragement of Governor Jindal approved the privatizing of Office of Group Benefits, by a narrow vote. This move would eliminate 177 positions, leaving more Louisiana citizens unemployed. This measure did not come before the legislature nor any of its committees for a vote. Representative Jackson questioned the authority to privatize without legislative approval, therefore she requested an opinion from the Attorney General’s office. 

On today, Attorney General Caldwell’s Office released an opinion stating that any contract to privatize the Office of Group Benefits must be approved by the Legislature. Therefore, any action taken by the Civil Service Commission and Governor Jindal to privatize the Office of Group Benefit can not proceed without the approval of the appropriate legislative committees.

Rep. Jackson stated that, “The Office of Group Benefits does not cost the state any money. It is a healthy plan that has always remained viable, while currently offering health insurance to more than a quarter of a million (255,950) Louisiana citizens at a reasonable cost. After learning that the Civil Service Commission is acting under authority it believes was giving to them under La. R.S. 42:802 (B)(8)(a) my office reviewed Section 802 in it’s entirety. A reading of this statue clearly indicate that La. R.S. 42:802 (B)(8)(d), requires that any such contract be approved by the appropriate legislative committee and/or body.

It is my pray that all of my fellow members will join with me and others in not approving this proposal”

Below is the Louisiana Attorney General's Opinion on this issue:

Rep. Katrina R. Jackson Louisiana State Representative District 16

1051 Kansas Lane

Monroe, LA 71203

Dear Representative Jackson:


La. Rev. Stat. 42:802, La. Rev. Stat. 42:851

The proposed contract between the Office of Group Benefits ("OGB") and Blue Cross and Blue Shield of Louisiana, which is to be executed in accordance with and pursuant to the Notice of Intent to Contract ("NIC") for Administrative Services Only ("ASO"), is a contract negotiated pursuant to the provisions of La. Rev. Stat. 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 as designated by La. Rev. Stat. 49:968(8)(21)(c), or the subcommittees on oversight of such standing committees, and tne office of contractual review of the division of administration.


Your opinion request has been assigned to me for research and reply. You have asked for our office's opinion as to whether the Office of Group Benefits may contract with Blue Cross and Blue Shield of Louisiana ("BCBS") to manage all state employee and retiree insurance policies currently handled by the Office of Group Benefits. Your opinion request makes reference to La. Rev. Stat. 42:802(B)(8)(d), which in your view, mandates that any such contract be subject to final approval by the appropriate legislative body committee and/or subcommittee.

It is our understanding that the proposed contract at issue originated pursuant to a Notice of Intent to Contract ("NIC") for Administrative Services Only ("ASO") issued on April 30, 2012 by the State of Louisiana, Division of Administration, Office of Group Benefits. According to the NIC, the Office of Group Benefits ("OGB") intends to contract with a third party administrator, insurer, or health maintenance organization which would work with OGB to accomplish certain key objectives. Such objectives include providing high quality cost effective health care to members, controlling escalating health care costs to achieve greater uniformity of coverage, and minimizing administrative efforts. The NIC solicited proposals from any qualified organization that wished to provide administrative services only for the following plans of benefits: (1) the Health Maintenance Organization Plan ("HMO"); (2) the Preferred Provider Organization Plan


("PPO"); (3) the High Deductible Health Plan ("HDHP") with Health Savings Account ("NSA"); and (4) the LaChip Affordable Health Plan ("LaCHIP"). As a condition of bidding, the NIC required that all proposals be based on providing a nationwide network of the following services: (1) Inpatient Hospital Services; (2) Outpatient Hospital Services; (3) Ambulatory Surgical Services; (4) Physician Services; (5) Customer Service and Support; (6) Mental Health/Substance Abuse; and (7) Disease Management. The NIC further required that each proposer provide a list of network providers who would accept OGB members. Examples of such network providers include participating hospitals, participating primary care physicians, participating specialty physicians, and participating types of mental health/substance abuse providers. The NIC further required proposers to attest to having a minimum of three (3) years of operational experience in providing "nationwide health coverage services."

After receipt of several proposals, on July 20, 2012, OGB issued a Report and Recommendation of the Evaluation Committee and proposed to award Blue Cross and Blue Shield of Louisiana the contract for administrative services only. Since the proposed contract contemplated the elimination of several state government positions, the proposed contract required the approval of the Louisiana State Civil Service Commission. On August 1, 2012, the Civil Service Commission voted to approve the proposed contract.

The question presented involves a matter of statutory interpretation. As recognized by the Louisiana Supreme Court in Pumphrey v. City of New Orleans, 05-979 (La. 4/4/06), 925 So.2d 1202, the fundamental question in all cases of statutory interpretation is legislative intent and the ascertainment of the reason or reasons that prompted the Legislature to enact the law. See In re Succession of Boyter, 99-0761, p. 9 (La.1/7/00), 756 So.2d 1122, 1128. However, when a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the Legislature. La. Civ. Code art. 9; see also M.J. Farms, Ltd. v. Exxon Mobile Corp., 2007-2371 (La. 7/1/08), 988 So.2d 16. On the other hand, if the language of the law is susceptible of different meanings, then it must be interpreted as having the meaning that best conforms to the purpose of the law. La. Civ. Code art. 10. Furthermore, when the words of a law are ambiguous, their meaning must be sought by examining the context in which they occur and the text of the law as a whole, and laws on the same subject matter must be interpreted in reference to each other. La. Civ. Code arts. 12 and 13.


The meaning and intent of a law is determined by considering the law in its entirety and all other laws on the same subject matter and placing a construction on the provision in question that is consistent with the express terms of the law and with the obvious intent of the Legislature in enacting it. Boyter, 99-0761 at p. 9, 756 So.2d at 1129. The statute must, therefore, be applied and interpreted in a manner which is consistent with logic and the presumed fair purpose and


intention of the Legislature in passing it. Boyter, 99-0761 at p. 9, 756 So.2d at 1129.

Additionally, it is also well established that the Legislature is presumed to enact each statute with deliberation and with full knowledge of all existing laws on the same subject. See M.J. Farms, Ltd., supra. Thus, legislative language should be interpreted on the assumption the Legislature was aware of existing statutes, well established principles of statutory construction and with knowledge of the effect of their acts and a purpose in view. Further, under the rules of statutory construction, it is preferential to adopt the construction of a statute which harmonizes and reconciles it with other provisions dealing with the same subject matter. La. Civ. Code art. 13; see also M.J. Farms, Ltd., supra. Still further, punctuation as well as grammatical construction, in general, although never relied upon to defeat obvious intent, may operate as an aid in the construction and interpretation of a statute. Joy v. City of St. Louis, 138 U.S. 1, 32 (1891).

Turning attention now to the statute cited in your opinion request, La. Rev. Stat. 42:802 generally relates to the powers and duties of OGB and provides, in pertinent part, the following:

§ 802. Powers and duties; Office of Group Benefits

B. In addition, the office shall have the following powers and duties: *

(8)(a) To negotiate contracts under the provisions of Chapter 16 of Subtitle III of Title 39 of the Louisiana Revised Statutes of 1950, in the best interests of the office and its covered persons. The Office of Group Benefits is specifically authorized to negotiate and contract directly with the following:

  1. (i)Health maintenance organizations as defined by R.S. 22:242(7),

(ii)A group purchaser as defined in R.S. 40:2202(3).

(iii)A preferred provider organization.

  1. (iv)A health care provider or providers for formation of a preferred provider organization as defined by R.S. 40:2202(5).

(b) The office is specifically authorized to negotiate and contract directly for the following:


  1. (i)Provision of basic health care services and other health care services to the program's covered persons.
  2. (ii)Any other health care plan or systems, including but not limited to any health care service, delivery system, benefits programs, insurance, or any other plan or programs that may be authorized by law.
  3. (c)For the purposes of this Paragraph, the basic health care services provided under a contract for a preferred provider organization or a health maintenance organization shall be those services which are covered under the Office of Group Benefits Schedule of Benefits. Nothing herein shall prohibit the office from adopting rules or regulations to prevent or prohibit adverse selection between programs offered by the office.
  4. (d)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 the Office of Group Benefits as designated by R.S. 49:968(B)(21)(c), or the subcommittees on oversight of such standing committees, and the office of contractual review of the division of administration.

Pursuant to the plain language of La. Rev. Stat. 42:802(B)(8), OGB has the authority to negotiate certain contracts under the provisions of Chapter 16 of Subtitle III of Title 39 of the Louisiana Revised Statutes. La. Rev. Stat. 42:802(B)(8) further provides that OGB is authorized to negotiate and contract directly with certain entities, such as health maintenance organizations, preferred provider organizations, and health care providers for the provision of basic health care services, as well as the provision of any other health care plan or system, including any health care service, delivery system, benefits programs, and insurance.

La. Rev. Stat. 42:802(B)(8)(d) 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 La. Rev. Stat. 49:968(B)(21)(c), 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 La. Rev. Stat. 42:802, it is the opinion of this office that any contract negotiated by OGB pursuant to the authority granted by La. Rev. Stat. 42:802(B)(8) shall be subject


to review and final approval by the House Appropriations Committee and the Senate Finance Committee, as well as the Office of Contractual Review.


After review of the NIC, it also the opinion of this office that the proposed contract would be a contract governed and negotiated pursuant to the authority granted by La. Rev. Stat. 42:802(B)(8). As such, the proposed contract between OGB and BCBS is subject to review and final approval by the House Appropriations Committee and the Senate Finance Committee, as well as the Office of Contractual Review.

La. Rev. Stat. 42:802(B)(8) clearly and unequivocally provides that OGB has the authority to negotiate certain types of contracts. As stated above, those contracts generally include contracts between OGB and various entities governing the provision of basic health care services' and/or the provision of any health care service, delivery system, or benefit program, etc. For those types of contracts, final legislative approval is required.

There are numerous references throughout the NIC which describe and define the type and scope of services sought to be procured by OGB under the ASO contract. The NIC further contains certain restrictions on the type of companies that were eligible to propose for the ASO contract. For example, the NIC provides that OGB intended to contract with a third party administrator, insurer, or health maintenance organization. Further, proposers were required to attest to having at least three (3) years of providing nationwide healthcare coverage services. Additionally, all proposals were required to be based on a nationwide network of services, such as inpatient hospital services, outpatient hospital services, ambulatory surgical services, physician services, etc. In our view, such references and limitations clearly show that the NIC solicited a contract for either the "provision of health care services and other health care services," or "any other health care plan or systems, including but not limited to any health care service, delivery system, benefits programs, insurance, or any other plan or programs that may be authorized by law." See La. Rev. Stat. 42:802(B)(8)(b). As

La. Rev. Stat. 22:242 defines basic health care services as "...emergency care, inpatient hospital and physician care, outpatient medical and chiropractic services, and laboratory and x-ray services. The term shall include optional coverage for mental health services for alcohol or drug abuse. With respect to chiropractic services, such services shall be provided on a referral basis at the request of the enrollee who presents a condition of an orthopedic or neurological nature necessitating referral, the treatment for which falls within the scope of a licensed chiropractor... " La. Rev. Stat. 22:242 defines health care services as "...any services rendered by providers which include but are not limited to medical and surgical care; psychological, optometric, optic, chiropractic, podiatric, nursing, and pharmaceutical services; health education, rehabilitative, and home health services; physical therapy; inpatient and outpatient hospital services; dietary and nutritional services; laboratory and ambulance services; and any other services for the purpose of preventing, alleviating, curing, or healing human illness, injury, or physical disability. Health care services shall also mean dental care, limited to oral and maxillofacial surgery as performed by board qualified oral and maxillofacial surgeons...."


such, the provisions of La. Rev. Stat. 42:802(B)(8)(d) are applicable to such a contract and legislative review and approval is required.

We note that a question has been raised as to whether or not the contract at issue was in fact negotiated pursuant to the provisions of La. Rev. Stat. 42:802 (B). According to OGB, the contract at issue was not negotiated pursuant to the provisions of La. Rev. Stat. 42:802(B), but was instead negotiated pursuant to the authority provided by La. Rev. Stat. 42:851.

Our review of the NIC issued by OGB fails to reveal any indication as to what statutory authority OGB relied upon in issuing the NIC. Nonetheless, our review of the NIC reveals a clear indication of the type of services sought to be procured by the NIC. We are of the opinion that these services are of the same type referenced in La. Rev. Stat. 42:802(B)(8).

La. Rev. Stat. 42:851 also relates to the procurement of health and accident insurance and provides, in pertinent part, the following:

§ 851. Authority for employee benefit programs; payroll deduction for payment of premiums

A. The state of Louisiana, through the Office of Group Benefits and each of its governmental and administrative subdivisions, departments, or agencies of the executive, legislative, or judicial branches, and the governing boards and authorities of each state university, college, or public elementary and secondary school system in this state are authorized to:

  1. (1)Procure private contracts of insurance covering their respective employees, officials, and department heads, or any class or classes thereof, and the dependents of such employees, officials, or department heads under a policy or policies of group health, accident, accidental death and dismemberment, and hospital, surgical, or medical expense benefits.
  2. (2)Adopt, administer, or operate or contract for all or a portion of the administration, operation, or both of a self-funded program for that purpose.

B. Each such private contract or self-funded program, the premiums of which are paid in whole or in part with state funds, shall be approved by the Office of Group Benefits, except that any city or parish school board may enter into such private contract or self-funded program without approval. The employee or retiree eligibility provided in such private contract or self-funded program


must be identical to the eligibility provided in the Office of Group Benefits programs.

*

H. (1) Nothing herein shall be construed as limiting the authority of the office to adopt, administer, or operate or to contract for all or a portion of the administration, operation, or both of a primary self-funded program or additional programs with premium rate structures and state contribution rates which are different from the primary program.

*

In our view, the provisions of La. Rev. Stat. 42:851 are not applicable to the proposed contract between OGB and BCBS. La. Rev. Stat. 42:851(A) clearly provides that certain entities have the authority to procure private contracts of insurance covering their respective employees, officials, and department heads, etc., under policies of group health, accident, accidental death and dismemberment, and hospital, surgical, or medical expense benefits. La. Rev. Stat. 42:851(A) and (H) further provide that these entities have the authority to adopt, administer, or operate or contract for all or portion of the administration, operation, or both of a self-funded program for that purpose. A review of La. Rev. Stat. 42:851 fails to reveal any requirement to submit any such contract to any legislative standing or oversight committee, nor any requirement to submit any such contract to the Office of Contractual Review.

Undoubtedly, the contracts referenced in La. Rev. Sat. 42:851 relate to a "benefits program" and would very likely call for the provision of "basic health care services" as indicated in La. Rev. Stat. 42:802. However, it is the opinion of this office that the authority granted by La. Rev. Stat. 42:851 is different from the authority granted by La. Rev. Stat. 42:802. Our reading of La. Rev. Stat. 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. In these situations, the state of Louisiana, through the Office of Group Benefits is required to collaborate with the particular entity and ultimately approve any such contract. See La. Rev. Stat. 42:851(B). We do not believe that La. Rev. Stat. 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 La. Rev. Stat. 42:802. An interpretation that both La. Rev. Stat 42:802 and 851 authorize OGB to execute the proposed contract with BCBS would render the provisions of La. Rev. Stat. 42:802 and 851 duplicates of each other and their


provisions superfluous and/or meaningless.2 Such an interpretation should be avoided. Boyter, 99-0761 at p.9, 756 So.2d al 1129.

Clearly by enacting La. Rev. Stat. 42:802, 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 La. Rev. Stat. 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 La. Rev. Stat. 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 La. Rev. Stat. 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 as designated by La. Rev. Stat. 49:968(B)(21)(c), or the subcommittees on oversight of such standing committees, and the Office of Contractual Review of the Division of Administration.

We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.

Yours very truly,

JAMES D. "BUDDY" CALDWELL ATTO Y GENERAL


 


MICH       J. VALLAN

Assist           Attorney General

JDC/MJV/chb

 

 

2 if La. Rev. Stat. 42:851 is to be read as giving OGB the authority to execute the proposed contract with BCBS, then the question becomes how can OGB approve its own contract as required by subparagraph (B) of La. Rev. Stat. 42:851?

 

 

              

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