BATON ROUGE, La. (AP) — A company whose Medicaid contract with the state is the subject of a federal grand jury investigation said Friday it will challenge a decision by Gov. Bobby Jindal's administration to cancel the agreement.
Maryland-based CNSI, which once employed Jindal health secretary Bruce Greenstein, was supposed to take over Medicaid claims processing next year. After the federal investigation became public, the governor's Commissioner of Administration Kristy Nichols announced the more than $185 million contract was being scrapped.
CNSI in a statement said the contract was canceled without notifying the company. CNSI spokesman Sonny Cranch said the company was consulting with attorneys about how it might challenge the decision.
"CNSI will pursue every legal avenue available to the company," Cranch said.
The Baton Rouge-based grand jury is looking into how the contract was awarded by the administration. Greenstein, secretary of the Department of Health and Hospitals, worked for CNSI from 2005 to 2006, but denied any involvement in the selection.
However, the health secretary's handling of the contract was criticized by lawmakers when CNSI was announced as the winning bidder nearly two years ago.
Nichols said Thursday the decision to cancel was made in consultation with the attorney general's office. She said her office was cooperating fully with the federal investigation.
CNSI got the 10-year contract in 2011, beating three other companies for the work, but critics said the company underestimated the true cost of the contract and made incorrect assumptions to win the bid. CNSI submitted the lowest bid, but didn't get the best technical score among applicants.
The company said unsuccessful bidders protested the decision and the governor's Division of Administration upheld the award to CNSI.
"We have been working on the implementation of this new Medicaid system for Louisiana for well over a year and recently reached an important milestone in that process with a timely launch of a critical component of the system," CNSI President Adnan Ahmed said in the statement.
Under questioning from lawmakers in 2011, Greenstein acknowledged a change he pushed in the bid solicitation made CNSI eligible for the Medicaid contract, and he met with a top CNSI official within days of coming to the health secretary's job.
The grand jury's subpoena issued to the governor's Division of Administration requested all documents submitted by companies that bid for the work and documents that show the date and time each response was received by the state.
Greenstein's office directed all questions about the investigation and contract cancellation to the Division of Administration and refused further comment. Asked about Greenstein's future in the Jindal administration, the governor's chief of staff Paul Rainwater said in a statement, "We have confidence in Bruce."