Medicaid privatization scam is scam

News today from the biggest, and also least surprising, Louisiana corruption story of the decade.

A special state grand jury in Baton Rouge Tuesday morning indicted former Jindal administration health chief, Bruce Greenstein, on nine counts of perjury related to his involvement in award of a nearly $200 million state government contract.

Greenstein’s alleged untruths occurred during sworn testimony before a state Senate confirmation hearing and at a grand jury investigation. Greenstein lives in Seattle and his attorney was not available. The grand jury returned the charges to 19th Judicial District Judge Louis Daniel.

“The grand jury is not closed so we are continuing our investigation into other aspects of the case,” Assistant Attorney General David Caldwell said. “These lies are part of the coverup of the whole process.”

The action came some 18 months after the Jindal administration abruptly canceled the contract with Maryland-based Client Network Services Inc., citing among other things “improper contact” by then state health secretary Greenstein throughout the bid and award process.

This has been a fun process to watch unfold. It was so obvious and out in the open from the very beginning that everyone knew something was wrong almost immediately. Someday they will teach it in schools.

It began when Bobby Jindal dragged his feet telling the legislature which firm had been selected for the newly privatized Medicaid claims processing contract; "the most lucrative contract in state government".

Then we found out that the contract was going to CNSI which (dramatic music) was the former employer of Jindal's newly named head of Health and Hospitals, one Bruce Greenstein.  This seemed fishy... even to members of the Louisiana State Senate.. who questioned Greenstein about his dubious claim that he had recused himself from the selection process.

In nearly three hours of testimony that took on the appearance of a courtroom drama, lawmakers challenged Greenstein's previous assertions that he erected a "firewall" to keep himself removed from the selection process.

The secretary has acknowledged that he met with officials at CNSI and other companies shortly after taking his state job last September, including a lunch with a CNSI executive during his second day on the job. Greenstein said he could not recall any conversation about the contract.

But Greenstein also has said he was aware that the state's bid requirements were changed after his arrival in a way that made CNSI eligible to apply for the job.

Sen. Karen Carter Peterson, D-New Orleans, asked Greenstein about contradictions between his earlier testimony about a firewall and emails in which Greenstein discussed the bid requirements. "The integrity and the character issues are what we're here about today," Peterson said. "I believe that you have not been truthful."

Greenstein said he had forgotten about some of the contacts until he reviewed the subpoenaed documents, but that his limited involvement did nothing to compromise the selection process. "I was not trying to mislead anyone," he said. "I was a bit nervous at the time. I know for sure that I had no conversations about how the proposals were evaluated."

 He was nervous.  Ok. He wasn't the only one.

Although the winning bidder was selected weeks ago, agency officials had refused to tell lawmakers, citing a state statute that said the contract award had to first be disclosed to a joint meeting of the health-care committees in the House and Senate. That committee might not meet until after the Legislature adjourns June 23.

That brought a torrent of criticism from senators, including allies of Gov. Bobby Jindal, who accused the administration of stonewalling and called Greenstein's integrity into question.

"It seems like somebody is trying to cover something up," said Sen. Jody Amedee, R-Gonzales.

The competing bidders also protested claiming that CNSI had lowballed its estimate. As it happened, that protest fizzled quickly.  But a month later another protest was filed against Greenstein's selections to run the managed care networks that would replace traditional Medicaid fee-for-service payments. 

The difference between the service delivery models is, in the privatized version, the contractor has a bigger black box from which to extract profit while denying services to patients. That's the big grift. It's important to remember that that is still in place.

But the CNSI thing didn't go away either.  In 2013 a Federal grand jury started looking into it prompting Jindal to cancel the contract.

The Baton Rouge-based federal grand jury subpoenaed documents related to the state’s awarding of the contract to the Gaithersburg, Md.-based Client Network Services Inc. Greenstein was a vice president with CNSI from 1995 to 1996.

The company got the contract for Medicaid claims processing in 2011 amid some complaints that the firm “low balled” the price and made erroneous assumptions in its proposal.

The contract was awarded by the state Department of Health and Hospitals and signed off on by the Jindal administration amid complaints from other vendors.

At the time, Greenstein said he took himself out of the contract dealings. Documents revealed Greenstein influenced a change in the solicitation for proposals that allowed CNSI to compete.

Recall, though, that Legislators also had evidence that Greenstein acted improperly at the time the contract was awarded and that they said so.  It was only two years after the fact that the feds finally forced Jindal to stop backing him anyway.  Greenstein resigned shortly afterward.

CNSI still sued the state for wrongful termination of the contract... because now they're left out of the grift and want to get paid somehow.  But, lo and behold, court filings in that case revealed that CNSI are, in fact, some pretty bad dudes.

In the 2009 FBI interviews, former corporate counsel Matthew Hoffman and ex-CNSI controller Jeffrey Weisenborne allege that CNSI owners lied on documents about the company’s financial health to a syndicate of banks that held lines of credit with the firm in the Maryland suburbs of Washington, D.C.

Weisenborne and Hoffman were interviewed in 2009 as part of probe by the U.S. attorney in Maryland’s Southern District.

The FBI reports are a synopsis of interviews with Weisenborne and Hoffman.

Both recount knowledge of anonymous letters received by Bank of America and M&T Bank in fall 2008 that stated CNSI employees were “being threatened for trying to report the company’s true income and that the owners were overstating revenue to the banks” or outlined “a number of fraudulent acts by CNSI. These letters also said the owners had made death threats to employees not going along with the way things were being done.”

Hoffman told the FBI he was threatened on March 7, 2009 during a meeting at CNSI offices in Rockville, Md., according to the report of a Sept. 11, 2009 interview.

The four owners were in the meeting when one of them said that if Hoffman “ever disclosed the misconduct at the company, they would have him killed.” Another owner “stepped in and said they should move on.”

So the firm Bobby Jindal and Bruce Greenstein wanted to put in charge of weighing its own profits against the health and well being of Medicaid recipients already had a history of ... allegedly.. threatening to kill people in order to protect its bottom line.

To be fair, nobody has alleged that Bruce Greenstein was involved in the death threats.  But, it turns out, that the feds did know that he was involved in rigging this contract and that "state officials" were informed of this.

The email shows that federal regulators had alerted state officials of the potential issues with the nearly $200 million contract prior to its award to a company that formerly employed the state’s health agency chief. As secretary of the state Department of Health and Hospitals, Bruce Greenstein was in charge of the agency that oversaw the contract.

Greenstein repeatedly has said he was not involved in the decision to award the contract to his former employer, Client Network Services Inc., the Maryland-based technology firm known as CNSI. But phone records and other data included in the released documents show at least 2,882 contacts between Greenstein and CNSI executives and the company’s lobbyist.

The federal Centers for Medicare and Medicaid Services, called CMS, took the whistleblower’s allegations seriously enough to pass them on to the state attorney general’s Medicaid fraud unit.

Greenstein's attorney responded to that story by saying the constant contact between Greenstein and CNSI's lobbyist was no big deal seeing as how they were both, "prolific texters." 

Neither Greenstein, who returned to Seattle, nor Creighton agreed to interviews. Attorneys for Greenstein and CNSI said the men are longtime friends who stay in close contact.

“The vast majority of the text messages and phone calls are of a personal nature and have nothing to do with the contract,” said John McLindon, Greenstein’s Baton Rouge attorney. “Bruce is a prolific texter, and I’m told that Carroll Creighton texts a lot, too.”

You really gotta like that "vast majority" bit.  If I prolifically text you a bunch of soup recipes and baseball scores but happen to slip like maybe one or two nuclear launch codes in there then what have you got?

Anyway now Greenstein is being indicted for lying under oath about all of this stuff.  But there's one thing that still sticks out and it is this.

Jindal did not respond to a request for comment. Instead, his press office released a prepared statement from Jindal’s executive counsel Thomas Enright: “We have zero-tolerance for any wrongdoing, which is why we immediately acted to terminate the contract when we learned from the AG that improper behavior might have occurred.” He said the office also asked the inspector general to conduct an independent investigation.

According to CMS, the state Attorney General's office was informed about improper behavior in 2011 before the contract was even awarded.  Bobby Jindal cancelled the contract in 2013.  Did the AG just sit on this information for 2 years?  Or did the Governor decide to just ram this thing through anyway?  In other words, what did Bobby Jindal know and when did he know it?