Louisiana residents should be interested to know that legislators have elected to extend Louisiana’s current multimillion dollar Medicaid claims processing contract for an additional year. The vote on the extension was necessary when the governor effectively fired the company that was approved to take over the contract; thus, necessitating the need to find another company to continue the claims processing.

 

The lucrative $200 million contract was terminated when the Governor of Louisiana cancelled the contract. The contract was awarded to the company based out of Maryland, but allegations arose that the company was given the contract preferentially by the State of Louisiana’s former health secretary.

An ongoing criminal investigation has been launched to investigate the contract’s legality. As a result of the investigation, so far the former health secretary has accrued multiple indictments on alleged perjury charges. The governor’s administration accused him of engaging in inappropriate contact during the bidding process.

He has been accused of allegedly exchanging many phone calls, as well as text messages with company officials. The Maryland based company has been steadfast in its insistence that it acquired the contract lawfully. It is currently in the process of suing the state of Louisiana, alleging wrongful termination.

The contract extension was awarded to a company called Molina Medicaid Solutions, who has been working with the State since 2005. The extension will cost the state an estimated $40 million in 2015, in addition to the $423 million that the state already paid the company since 2005. The $40 million will be paid with a combination of state, as well as federal money.

Clearly, contract disputes can not only be complex, but also have a large economic impact. During such negotiations, it is important to consider having an attorney or law firm look into the legality of contract terms, communications and the like to avoid any impropriety and problem down the line.

Source: FOX Business, “Lawmakers extend Medicaid contract another year, while court dispute rages over cancelled deal,” Dec. 18, 2014