Judge delays lawsuit in Medicaid contract dispute

A Louisiana judge put the brakes Tuesday on a Maryland company’s lawsuit that challenges the Jindal administration’s abrupt cancellation of its nearly $200 million contract to process Medicaid claims.

State District Judge Tim Kelley’s granting of a six-month stay of the civil proceedings came at the request of Assistant State Attorney General Colin Clark and over a heated objection from Baton Rouge lawyer Lewis Unglesby, who represents Client Network Services Inc.

“You’re going to bankrupt my company,” an angry Unglesby said of CNSI during a hearing in Kelley’s 19th Judicial District courtroom.

Kelley, who had refused on May 23 to halt the civil proceedings, said he based his latest ruling on law enforcement investigative files that state prosecutors provided him for a private review.

Clark argued that a stay of the civil proceedings is necessary to protect the integrity of an ongoing state grand jury investigation into the contract selection process.

“I agree with their concerns. I understand their concerns,” Kelley said of the state’s reservations about possible witness tampering in the midst of simultaneous civil and criminal proceedings.

“It is a difficult task,” the judge said. “They are moving forward at an accelerated pace. They need time to do what they’re doing. They’re not walking through it. They’re running through it.”

Unglesby, who sternly rejected any suggestion of witness tampering by CNSI, said an appeal of Kelley’s order to the state 1st Circuit Court of Appeal is a possibility.

“I don’t think you have the authority to do that,” he told the judge.

Kelley said the state is entitled to conduct its investigation “without interruption or compromise.”

Gov. Bobby Jindal’s administration canceled CNSI’s multiyear contract in late March after news broke of a federal investigation into the contract.

State Department of Health and Hospitals Secretary Bruce Greenstein, who had been a CNSI executive, resigned a week later.

Unglesby said state prosecutors have yet to interview Greenstein or anyone with CNSI.

CNSI filed its suit May 6, and a special East Baton Rouge Parish grand jury was impaneled May 23. The state Attorney General’s Office is conducting the probe.

“This (civil) case started before they (the state inquiry) started,” Unglesby argued Tuesday.

Kelley scheduled a Dec. 12 status conference in his chambers to determine whether the stay should remain in effect until Jan. 31 or be lifted.

In its cancellation notice to CNSI, the state Division of Administration cited improper contact between Greenstein and CNSI officials and employees.

CNSI maintains the firm did nothing wrong to win the state contract and was fulfilling its contractual obligations properly before it was fired.

CNSI started work in 2012 on a lengthy transition from the work being done by Molina Medicaid Solutions Inc. The changeover had not been anticipated until sometime in 2014.

CNSI contends the cancellation of its contract will cost state taxpayers nearly $100 million over the next several years.