State attempts to delay Medicaid lawsuit

The Jindal administration is trying to delay a lawsuit in which CNSI is challenging its dismissal as Louisiana’s Medicaid claims processor, alleging the firm did not use state appeals channels first.

It’s an added argument to efforts by the state attorney general’s office to put the brakes on the lawsuit until completion of a special grand jury probe into alleged improprieties in the $200 million contract’s award.

“I can tell you we are still very much hot on the case,” assistant attorney general David Caldwell said Thursday. “We are on target. It’s a massive investigation.”

In the petition, Jindal administration lawyers argue that Client Network Service Inc. did not go through the state administrative appeals process to challenge the canceling of the contract before going to court.

“The argument we are making is that it’s premature and there’s no subject matter jurisdiction yet,” said state Division of Administration general counsel Liz Murrill. “You have to go back and start in the right place. The judge has no power to act.”

Maryland-based CNSI filed a lawsuit seeking damages for the state’s abrupt cancelation earlier this year of a nearly $200 million multi-year contract for Medicaid claims processing.

In scrapping the contract, the Jindal administration cited Louisiana law which states “if the person awarded the contract has acted fraudulently or in bad faith, the contract shall be declared null and void.” In a subsequent letter, state officials noted alleged improper contact between then-health secretary Bruce Greenstein a former CNSI official and company executives and employees, among other reasons.

CNSI has denied doing anything wrong.

The state attorney general’s office has previously argued a six-month delay of proceedings in the civil lawsuit is necessary to protect the integrity of an ongoing state criminal probe.

The state health agency motion was filed in connection with proceedings in state District Judge Tim Kelley’s court. Kelley had initially agreed to delay the civil proceedings based on confidential information he had received from the attorney general’s office. Kelley lifted the stay earlier this month after CNSI attorneys said they had not been made aware of the situation so they could challenge the document sharing.

Caldwell said the state will once again re-urge the stay based on the criminal investigation.

Meanwhile, CNSI attorneys have filed notice that they intend to depose former state health chief Greenstein in connection with the lawsuit.

Greenstein resigned his state job after news broke of a federal grand jury investigation into the contract’s award. After a federal grand jury subpoena came to light, the Louisiana attorney general’s office said it had been looking into the contract award as well, then a special state grand jury was empaneled.

CNSI’s CEO Adnan Ahmed went before the Arkansas Legislative Council earlier this week to complain about the company’s disqualification on Medicaid claims processing work there. The company was “deemed non-responsible” because of a Louisiana reference check.

Louisiana withdrew a glowing recommendation by state Department of Health and Hospitals Undersecretary Jerry Phillips written a month prior to the company’s firing and after the revelation of the federal probe.

Ahmed told Arkansas officials that there is no “active federal investigation.”

“The only federal investigation we are aware of was focused on the Louisiana Procurement, not CNSI. The only activity in that investigation was the issuance of a subpoena directed at the state of Louisiana, seeking the proposals and financials of all the bidders,” Ahmed said.

“Following review of all documents from the state, what is known to date is that the federal investigation was not pursued no other subpoenas were issued, no further action was taken. No one at CNSI was ever contacted.”

Caldwell questioned how Ahmed knew the status of the federal investigation “when the feds don’t tell us anything.”