A special East Baton Rouge Parish grand jury was impaneled Thursday to hear evidence in an 18-month-long criminal probe into the awarding of a nearly $200 million state contract for Medicaid claims processing, state prosecutors told a judge.
Earlier in the day, state District Judge Tim Kelley refused to put the brakes on Client Network Services Inc.’s lawsuit against the state over the Jindal administration’s March cancellation of CNSI’s contract to process those claims. Kelley also ordered the state to release to CNSI some records related to the contract dispute.
Assistant State Attorney General David Caldwell said the state 1st Circuit Court of Appeal in Baton Rouge will be asked to review both of the judge’s rulings. Forcing the state Division of Administration and the state Department of Health and Hospitals to turn over documents to CNSI “could jeopardize the investigation,” he said.
Also Thursday, state Attorney General’s Office investigator Scott Bailey testified in Kelley’s courtroom that the office launched its criminal investigation in December 2011 after an anonymous email was sent to the federal Center for Medicaid Services, alleging irregularities in the awarding of the contract to Maryland-based CNSI.
CNSI’s contract was canceled after a news report that a federal grand jury had subpoenaed documents related to the contract. Then-DHH Secretary Bruce Greenstein, a former CNSI vice president, resigned a week later. In its cancellation notice to CNSI, the Division of Administration cited improper contact between Greenstein and CNSI officials and employees.
Maryland-based CNSI sued the state earlier this month, alleging “bad faith breach of contract.” Corporate officials said in the lawsuit that the firm had done nothing wrong to win the state contract and was fulfilling its contractual obligations properly before it was fired.
“Only the truly innocent file lawsuits and insist on public evidence,” CNSI attorney Lewis Unglesby said Thursday outside Kelley’s courtroom.
Unglesby also suggested that a disgruntled losing bidder likely sent the anonymous email to the Center for Medicaid Services. That bidder “lost fair and square to a superior product,” he added.
“Everything today was a win. It was a very beneficial hearing. We expected to win,” Unglesby said. “CNSI is a good company. It was doing a great job, on time, and for a third of the price that the state’s still being charged today.”
Caldwell stressed after court that “this is just the beginning” and said the Attorney General’s Office is not going to allow anyone to derail the grand jury investigation.
CNSI filed a petition last week asking Kelley to order the state to release records related to the contract dispute. The Attorney General’s Office filed its own petition the next day urging the judge to block the request, saying CNSI was trying to “obtain the identities of state employees who have provided evidence to attorney general investigators and who will be called to testify before the special grand jury investigating this matter.”
Assistant Attorney General Butch Wilson argued Thursday to Kelley that CNSI’s lawsuit and public records request could threaten the secrecy of the grand jury proceeding if not halted for a time.
“We are in a criminal investigation, a grand jury investigation,” Wilson said. “We’re not wasting any time. We’re moving as quickly as we can. At this point in the proceedings, the grand jury should take precedence.”
Unglesby told the judge that the state’s cancelation of CNSI’s contract amounted to “an accusation with no proof.”
“The state can’t stop that by saying we want to call a grand jury,” he said. “We ought to be able to proceed” with our suit.
Caldwell countered that the civil suit raises “serious potential for witness tampering,” and he said the Attorney General’s Office is trying to avoid any monkey wrenches.
“We’ve been at this thing for a year and a half,” he noted, alleging that CNSI is trying to obtain information about the criminal probe through public records requests.
“We’re trying to get a limited amount of time so we can get our witnesses before a grand jury,” Caldwell said. “All we need is a little time to get this thing moving.”
Kelley pointed out that CNSI is “losing tens of millions of dollars waiting on you.” He also stated that many of the documents the company seeks from DHH and the Division of Administration pertain to “public information.”
“It is a public records request, pure and simple,” he added.
The judge, however, said CNSI is not entitled to any communications between the Attorney General’s Office, and DHH and the Division of Administration.
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