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New Orleans, La. -
New details have emerged about a federal investigation into state Health Secretary Bruce Greenstein. And the company at the center of the investigation says it's going to fight a move by the state to sever its $300 million contract.
Greenstein was the man on the firing line when the state shut down, and then privatized, Southeast Louisiana Hospital. Now, the DHH secretary is on the firing line once again.
Greenstein is the subject of a federal investigation into possible wrongdoing in his department's granting of a contract to CNSI, his former employer, to handle Medicaid claims processing in Louisiana. That contract was front and center as the La. Senate was considering Greenstein's confirmation as state health secretary in June 2011.
State lawmakers grilled Greenstein for over an hour about his potential conflict. Senator Jody Amedee (D-Gonzales) said, "I don't know if we've ever had a situation where a secretary's former employer is, uh, in the game."
Greenstein responded, "I was very sensitive to this process, and firewalled myself from this process."
But after an intense hour-long session, Sen Karen Peterson (D-New Orleans) continued to press Greenstein, "Have you had any conversations with your former employer about this contract... any?"
Greenstein responded, "Yes," adding that they talked about "what we were looking for and what we were interested in, because they were curious."
Peterson continued, "And that caused you to create a firewall?"
Greenstein added, "I had conversations with each and every vendor."
Peterson: "I asked about one, your former employer."
At the same time, Greenstein failed to divulge that his former company had already landed the $300 million contract.
An hour and 20 minutes into that hearing, Greenstein revealed the prized selection, announcing at the hearing after consulting with the department's attorney, "The envelope is CNSI."
Now the matter is under federal investigation, and when the Baton Rouge newspaper The Advocate broke the story, the state cancelled the contract with CNSI.
People familiar with health care billing say regardless of the outcome of the federal investigation, the system will suffer.
"We're going to have to go through the whole bidding process again, and I see further delay in service," said mental health advocate Cecile Tebow.
CNSI issued a statement Friday afternoon, saying it will challenge the contract termination. It employs 100 Louisiana residents, and company officials say they have been working hard to implement a modern Medicaid management system.
"This was poor judgment, and should have been caught two years ago," Tebow said.
Now, the state says it will work with another contractor as it draws up a new request for proposals to fill the gap left by the cancellation of the contract.
State lawmakers are expressing concern about the investigation, especially in light of their earlier protests about the relationship between Greenstein and CNSI.
Senator Petersen tried to block that contract two years ago. She blasted what she says is the Jindal administration's lack of transparency.
The governor was in Monroe Friday and not available for comment but his chief of staff, Paul Rainwater, issued a statement, writing, "We stand by Bruce."
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