CNSI questions contract termination

The top attorney for CNSI, the firm whose $185 million-plus state contract was abruptly canceled by the Jindal administration, claims the termination was because of a federal investigation, not the quality of the company’s work.

“It appears the only reason for the state’s decision to terminate CNSI’s contract for cause is the existence of a federal investigation in which the Department of Administration was served with a grand jury subpoena ... and the state investigation, which commenced after the state became aware of the federal investigation,” wrote Kathryn T. Harris, general counsel for Client Network Services Inc.

The Rockville, Md., company got the contract, one of the largest awarded by state government, for processing Medicaid claims.

Harris wrote that the federal and state investigations are in preliminary stages and no determinations have been made. The federal grand jury subpoenaed records from the Division of Administration related to CNSI and three other vendors who competed for the contract. The others seeking the business were ACS State Healthcare LLC, HP Enterprise Services LLC and Molina Medicaid Solutions.

“CNSI remains baffled by the state’s decision to terminate the contract and is entitled to be informed of the reason for that decision,” Harris wrote in a letter to DHH officials dated Monday.

The Jindal administration canceled the state contract March 21 after the existence of a federal grand jury became public. Bruce Greenstein, who resigned as secretary for the state Department of Health and Hospitals on March 29, had worked for CNSI earlier in his career.

“CNSI rejects the insinuation in the State’s (cancellation) notice that CNSI did anything improper in connection with the contract,” Harris wrote.

She said the Maryland-based firm has received no written notice specifying how CNSI failed to meet the contract terms.

In the letter, Harris seeks to negotiate a resolution to the alleged contract problem. She set a Friday deadline to hear from DHH officials before seeking administrative appeals with the state Division of Administration.

DHH officials declined requests for comment, referring questions to the governor’s Division of Administration. DOA officials did not responded to requests for comment Tuesday.

Commissioner of Administration Kristy Nichols canceled the contract after news broke of a federal grand jury investigation into its award. A letter notifying CNSI of its firing cites a Louisiana law that states: “if the person awarded the contract has acted fraudulently or in bad faith, the contract shall be declared null and void.”

The March 21 letter signed by Sandra G. Gillen, director of state purchasing, provides no specific information on the nature of the misconduct the state is alleging.

Controversy has swirled around the contract since 2011, when DHH picked CNSI. Greenstein was vice president for health care from 2005 to 2006. Other vendors claimed the company “low-balled” the price.

CNSI had been working on a staged phase-out from current Medicaid claims processor Molina Medicaid Solutions from whom it was to have taken over the work in 2014.

Harris asks DHH Interim Secretary Kathy Kliebert and Undersecretary Jerry Phillips for a meeting to “negotiate resolution of a dispute not of our own making and based on undisclosed facts will be futile.”

Harris said the company has performed all work required under the DHH contract, including an on-time and on-budget rollout of a new Medicaid Management Information System provider enrollment system.

Included was a letter from DHH’s Phillips to Arkansas health agency officials dated Feb. 14 endorsing CNSI and its Medicaid Management Information System platform.