State says criminal probe justifies delay
A state district judge ruled Tuesday that a Maryland firm’s civil lawsuit can proceed against Louisiana government over the abrupt cancellation of a nearly $200 million Medicaid contract.
State prosecutors immediately filed notice they would seek reconsideration of the ruling by 19th Judicial District Judge Tim Kelley, of Baton Rouge.
The state argued a six-month delay of proceedings in the civil lawsuit is necessary to protect the integrity of an ongoing state criminal probe involving Client Network Service Inc. and the contract award.
The civil lawsuit seeks damages for the state revoking the contract. A special state grand jury is investigating alleged improprieties into how the contract was awarded. CNSI denies doing anything wrong.
Kelley’s decision came after Lewis Unglesby, the Baton Rouge attorney representing CNSI, argued that the state — unbeknownst to his client — submitted confidential information to Kelley on which he relied to halt proceedings.
Initially, Kelley had rejected state efforts to delay the civil litigation filed by CNSI, then reversed course after state attorneys shared with him documents containing what is described as “sensitive information” related to its criminal probe.
Unglesby argued that attorneys for CNSI had not been given notice about Kelley’s receipt of some documents for private review or a chance to argue against their use.
“They made a strategic decision to influence the court ... without giving notice to us,” Unglesby said. “They can’t just select who they want to let know things.”
“If you didn’t have notice, we are going to have to revisit this whole thing,” Kelley said.
While he lifted the stay, Kelley refused to give CNSI’s attorneys the access to the documents they wanted.
Kelley said he had been led to believe by state attorneys that CNSI was aware of the situation. He said he reviewed the documents delivered to his office and conducted no conversation with the Attorney General’s Office about them.
Kelley’s lifting of the court stay came after some two hours of testimony and arguments that involved his receipt of two sets of documents — at separate times — related to the Attorney General’s Office criminal investigation. Kelley also recounted his remembrance of what transpired.
CNSI will have an opportunity to challenge use of the documents, which Kelley has put under court seal, as well as seek their release.
The Attorney General’s Office is using a 2012 law change that permits district attorneys to seek stays on civil proceedings when related criminal investigations are in process.
Assistant Attorney General Butch Wilson said the documents must be protected because of “the extreme sensitivity of the information” shared with Kelley. “We are not talking about run-of-the-mill criminal evidence,” he added.
“It’s very important for us to protect the integrity of these documents,” said David Caldwell, the assistant attorney general who is deputy director of the criminal division. He suggested witness intimidation could occur if the information provided Kelley were to get out.
Wilson added, “How else are we going to get information before the court to justify a stay order.”
The Jindal administration in March canceled CNSI’s multiyear contract to process payment requests by health-care providers for services under Medicaid. The government-paid program insures about one-fourth of the state’s population and the $200 million contract is one of the largest let by state government.
The administration acted after news broke of a federal grand jury probe into the way the contract was awarded to CNSI. The Attorney General’s Office then announced it too had been looking into the CNSI award.
CNSI officials have denied any wrongdoing. State health Secretary Bruce Greenstein, a former CNSI executive, resigned a week after the contract’s cancellation. The state Division of Administration cited improper contact between Greenstein and CNSI officials and employees in its cancellation notice.