BATON ROUGE, La. (AP) -- Louisiana Gov. Bobby Jindal's administration announced Thursday it is scrapping a lucrative state Medicaid contract that is the subject of a federal grand jury investigation.
Commissioner of Administration Kristy Nichols issued a statement announcing the cancellation of the more than $185 million contract with Maryland-based CNSI, which was supposed to take over Medicaid claims processing next year.
"Based on consultation with the Attorney General's office, today I am terminating the state's contract with CNSI, effective immediately," Nichols said.
A Baton Rouge-based federal grand jury is investigating the Jindal administration's award of the contract, which went to a company where the governor's health secretary, Bruce Greenstein, once worked.
The investigation was first reported by The Advocate. Within hours of the story, Nichols announced the contract's cancellation.
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.
Though Nichols didn't cite the grand jury review, she said in her statement, "We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation."
Greenstein, secretary of the Department of Health and Hospitals, worked for CNSI from 2005 to 2006, but denied any involvement in CNSI's selection.
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.
After CNSI was chosen for the Medicaid work, state lawmakers criticized Greenstein's handling of the contract. 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.
State Inspector General Stephen Street said his office was asked by Nichols to look into the contract award. He offered no further details, saying he'll coordinate with federal and state authorities for any investigation.
Greenstein's office directed all questions about the investigation and contract cancellation to the Division of Administration and refused further comment.