Gov. Bobby Jindal's health secretary and close ally, Bruce Greenstein, above, is resigning amid ongoing state and federal investigations into the awarding of a Medicaid contract to a company where Greenstein once worked, officials said Friday. (Special to the American Press)
Last Modified: Friday, April 26, 2013 9:43 PM
BATON ROUGE (AP) — Gov. Bobby Jindal's administration said Friday that his former health secretary, Bruce Greenstein, improperly exchanged repeated phone calls and text messages with a company bidding for a lucrative Medicaid contract, creating an "unfair advantage" for the firm.
The administration released a letter outlining its reasons for canceling the state's nearly $200 million contract with Maryland-based Client Network Services Inc., known as CNSI, where Greenstein once worked.
Much of the explanation focused on Greenstein.
Sandra Gillen, the director of state purchasing, wrote that Greenstein and CNSI officials had thousands of communications throughout the bid and contract award process — including on the day DHH made a change that allowed CNSI to be eligible for the contract.
She said the inspector general's office alerted the Jindal administration to the improper communications.
"The hundreds of telephone calls and thousands of text messages between Greenstein and CNSI Management throughout the entire process created an unfair advantage to CNSI and prevented the fair, impartial and free competition among all proposers required," Gillen wrote.
The Medicaid contract award is the subject of federal and state investigations. Gillen said the state attorney general's office advised the Jindal administration to scrap the contract.
Greenstein announced his resignation shortly after details leaked of the federal probe and after the contract was canceled March 21. He has denied any involvement in the contract award.
CNSI officials have pressed for more information about why the 10-year contract for Medicaid claims processing and bill payment was terminated. Gillen's letter was sent to a lawyer for the company and released to the media.
"We will review the letter with our legal counsel, and we will respond appropriately. And we will respond," company spokesman Sonny Cranch said.
Top CNSI officials have said they don't know why the contract award is under investigation and have said the company received it after a fair review process by the state Department of Health and Hospitals, not because of Greenstein.
Greenstein was vice president of CNSI from 2005 to 2006.
Lawmakers raised concerns about the contract two years ago when it was awarded — and questioned the health secretary's involvement. But the Jindal administration still proceeded with the deal.
Greenstein acknowledged under questioning from lawmakers in 2011 that a decision he made in the bid solicitation process made CNSI eligible for the contract. He also met with a top CNSI official within days of taking the health secretary's job.
Gillen said the Jindal administration has learned that around the time Greenstein made the eligibility change, there were multiple phone calls and texts between Greenstein and CNSI officials, "including 16 communications on the day that Greenstein reversed the original DHH position."
"These numerous communications between Greenstein and CNSI Management tainted any semblance of a fair and impartial process and created an unfair advantage for CNSI," Gillen wrote.
Larry Iversen, the CNSI executive who oversaw the company's Louisiana contract, has called the DHH decision a clarification that confirmed CNSI could be eligible as the primary contractor on the work. He said that if DHH officials had made a different decision, the company still would have bid on the job, just as a subcontractor for another firm.
CNSI beat out three other companies for the contract.
Critics said the company underestimated the true cost of the job and made incorrect assumptions to win the bid. CNSI submitted the lowest bid, but didn't get the best technical score among applicants.
Gillen sided with those critics, writing that the company significantly underbid a portion of its proposal. She also said CNSI submitted inaccurate information about its financial status and had a deficient performance after the company started work.
Iversen has noted that unsuccessful bidders protested the decision and the Division of Administration upheld the award to CNSI, and he provided a February letter written by DHH Undersecretary Jerry Phillips in which Phillips praised CNSI's work.